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- [00:10]
A
Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, jobs, incomes, debts, hours, our children's. And I'm your host, Richard Wolf. Before jumping into the updates that begin today's program, I wanted to make two very brief comments. The first one is simply to say, as I know is true for many of you, that I was deeply moved by the comments of Alexandra Ocasio Cortez on the floor of the United States Congress, explaining for those who need to hear it, that being cursed at by a conservative Republican congressman using gender specific denigrating terms is something women have had to deal with for so long that it's kind of refreshing that a young, new dynamic member of the Congress has the courage and the insight to call it for what it was and what it is. Bravo to her and bravo to all of those who I'm sure were moved by her eloquence as she made her case and and did it powerfully. The other quickie for me has to do with Jeffrey Bezos. I know I mention him fairly often, but if you're the richest person in the world, it goes with the territory. He has now roughly 160, $170 billion. That makes him not only the world's richest man, but a man possessed of money, which, if it were taken away from him, could do a lot more good than leaving it in his pocket. So I want to make a suggestion. Suppose we took $20 billion from Mr. Bezos. He would then only have, say, roughly 140 billion. He wouldn't have to cry very long because he would still be the richest man on Earth. But. But we, the people of the world, would have $20 billion. And here's a suggestion of what we might do. That would be more than enough money to set up the greatest vaccine hunting laboratories the world has ever seen. Imagine a United States that committed that kind of money to a sustained hunt for an anti COVID 19 vaccine that would be made available to the whole world. Compare leaving the 20 billion in Mr. Bezos's bank account where he can let it sit and accumulate or do whatever he pleases with it, versus my suggestion. The first option is good for him and bad for the rest of the world. And the second option is good for the rest of the world and still leaves him the richest man on earth. You choose. My first update for today is called the Quiet Fleecing of the American People. I wanted to give you a glimpse into something often happening behind closed doors. It's full of a kind of lesson of what goes on? First of all, it has to do with the state of Kentucky. Second of all, it has to do with the public pension funds of the state of Kentucky. These are huge funds in the billions of dollars that are built up as every state employee, teachers, firefighters, all of them put aside a certain amount of money in their weekly paycheck that goes into their pension fund. And that fund accumulates over the 20, 30, 40 years that they do their work for the people of Kentucky whom they serve. The state of Kentucky then takes all of that money and hires a management company to invest it. And the job of the management company is to do the best they can so the pension values accumulate over time, hopefully more than enough, enough to pay the public employees of Kentucky when they reach retirement age, so that they have a decent retirement as part of their payment for all the years of service. Now, this all makes perfect sense, but the corruption here is deep and affects every one of the 50 states. I'm going to talk to you about Kentucky, but. But it applies more or less everywhere else. Here we go. Two of the biggest money management firms who manage many state pension funds are Blackstone Group and KKR. Mr. Steven Schwarzman is the head of the Blackstone Group. He's a billionaire. And two of the leaders of KKR are Henry Kravis and George Roberts. They're also billionaires. Keep that in mind. Here's the deal. They charge the state of Kentucky pension funds a fee for managing the money, and they also require that their expenses for doing that be reimbursed. That money comes out of the pension monies set aside by all the employees, so there'll be less money to distribute to the pensioners. The, the more the fees and the expenses mount up. And now we introduce Daniel Cameron, the new Republican Attorney General of Kentucky. He has gone to court, filed suit against Schwarzman, Blackstone Group, Kravis and Roberts and kkr. He charges them with making very bad investments that were personally profitable to their companies, but personally profitable to them, but not good at all for the many, many thousands of employees of the state of Kentucky. One of the things he points out and what the news reports have now pointed out, is that the reason, or at least part of the reason why the contract went to that company and those two companies might have something to do with the fact that those two companies include individuals who gave large sums of money to Senator Mitch McConnell of Kentucky. That's right. And to the Trump administration that Mr. McConnell is so close to. It's always good to give money if you're looking for contracts, isn't it? But here's the best part. I love it. Mr. Schwarzman owns an airplane company. So do Kravis and Roberts. Independently, little company. They own airplanes. Their pension fund managing companies, Blackstone and kkr, use the planes to fly their pension managers back and forth between New York and Lexington, Kentucky. And every time they do, Blackstone pays its own chairman's airplane bills and gets reimbursed, you guessed it, out of the pension funds set aside by the teachers and firefighters and clerks who work for Kentucky, ripping off the average person quietly and steadily. It's the American way. My next update has to do with the disintegration of capitalism. Property insurance companies are getting appeals from businesses that have lost a lot because of COVID because of the economic crash. And of course, the insurance companies are using lawyers to deny these claims to get out of them. You know the insurance racket, don't you? The job is for us to pay the premiums and the job is for them to get out of paying our claims at least as best they can. Because all bets are off now. The system is falling apart. The old game where you pay your premium and then at least you get something when you have a loss. Oh, no, no, no, not anymore. Now it's a question of how much money you have. How many lawyers can you hire? How hard can your lawyers fight? How big a budget have you given them to fight so that you don't have to pay what you were supposed to pay and other people will have to pay you what they were supposed to pay because you're not willing to to give them the break you're asking the people you owe money to give you. You got it. It's a lesson in what the real golden rule means. Those who have the gold get to rule. My third update has to do with a wonderful moment CNN captured. And I want to give them credit. They must have had a helicopter or a drone flying over Niagara Falls. And they captured there a lovely moment, the passing of two tourist boats, one based in the United States and one based in Canada. And the pilot of the drone or the helicopter noticed something and I want to pass on the implications. He noticed that the U.S. boat was 50% full. Lots of people on the boat crammed together on the deck to look at Niagara Falls. On the Canadian boat, it was 15% full. Sparse space between the people. Well, in case you didn't know, Canada does not allow Americans into Canada these days. It's too dangerous. The United States, as of the moment, that these two ships passed behind or in front of Niagara Falls. The United States was just arriving at 4 million coronavirus cases. Canada has 114,000. I adjusted those to per person. Here in The United States, 1.2% of our population has now gotten this disease. In Canada, three tenths of 1% per person. We are. The United States is four times. The average American is four times more likely to get that disease than the average Canadian. No wonder they won't let us in. My next update has to do with the Acena Retail Group. You may not know their name, but you'll know some of the chains that they own. Ready? This is very typical. The names you know, you think of often as independent companies. They're not. Here's what the Acena Retail Group, Ann Taylor Loft Dressbarn, Lane Bryant and others, 2,800 stores in Mexico, Canada, but mostly the United States. They've just declared bankruptcy. That means they're joining another list I want to present to you to make sure you have it in your mind. J.C. penney, J. Crew, Brooks Brothers, Neiman Marcus. And there are more. Now, I'm not just interested that these companies are collapsing and that they will fire tens of thousands of people and they will not reopen many of the stores they're closing. But I want you to hear that the company announcement of all of this said we are protecting stakeholders, people who have a stake. But of course, this is flat out phony and false. They're not. They're firing all those people, taking away their jobs, taking away their incomes, not only hurting all those people and the innocent members of their family, but for whom. They are doing nothing to build a transition, but they're also destroying the communities. Because with closed stores, taxes aren't earned. And taxes mean the city and the state don't get the money they once had. And they will cut back their services, hurting people yet again. Those are stakeholders. They have a big stake in all of this, but they're not being taken care of. The company is taking care of its own. And since I opened with Jeffrey Bezos, let me close this part of the program with Jeffrey Bezos again. Over the last 18 weeks, he has added somewhere in the neighborhood of $25 billion to what he owned. So my eyes caught a story from Pittsfield, Massachusetts. There was a closed school that had been opened up for 50 homeless people, but they had to be thrown out again because there weren't enough funds to keep this school open. $25 billion for Mr. Bezos, but not enough for 50 homeless people. Welcome to America. 2020 we've come to the end of the first part of today's show. Please remember to subscribe to our YouTube channel. Follow us on Facebook, Twitter and Instagram. Please be sure to visit democracyatwork.info our website to learn more about our shows, our Union Co Op Store, and the two books we've published, Understanding Marxism and Understanding Socialism. Last, but certainly not least, thanks to our Patreon community for their ongoing support. Stay with us. We'll be right back with today's guest, Professor Jomo Kwame Straight Sundaram. Welcome back, friends, to the second half of today's Economic Update. It is a great pleasure for me to renew an old friendship with Jomo Kwame Sundaram, who is our guest today. He writes on economic development, which he has been doing for a very long time in a wide variety of books and magazines. He was a professor of economics until 2004 and then he became, for 10 years, 2005-15, assistant secretary general for Economic Development in the United nations system. He received the Vasily Leontieff Prize for Advancing the Frontiers of economic thought in 2007, Jomo, which is how I've known him all my life. Welcome and thank you so much for spending some time with us.
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Thank you very much for having me.
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Rick okay, from your perspective in East Asia, tell us from that perspective what the impact of COVID 19 has been and is likely to be on the economic development project that is so focused on fundamental to the goals of the countries in your region.
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The responses by the various government societies in Asia have been quite varied, but in East Asia particularly, and also in Southeast Asia, in places like Vietnam, Laos, and in South Asia in Kerala, the responses have been very prompt, have been quite effective, and have basically succeeded in containing contagion from the pandemic without resorting to stay in shelter lockdown measures, which have been the most disruptive economically. Unfortunately, as we know, in most of the world, things were not done sufficiently early and adequately in order to avoid having stay in shelter lockdown measures. And so this is the basic difference in Northeast Asia. So even in China, where the COVID 19 virus appears to have begun, we find that the stay in shelter lockdown was confined to Wuhan City and the surrounding three provinces. It was not extended to the many other provinces of China. And so economic disruption was there mainly because of the requirements of physical distancing, which are part of the preventive and precautionary measures of which governments have successfully adopted. Very importantly, there has also been in these societies tremendous mobilization all of government effort. In other words, it has not simply been treated as a public health issue or as an economic issue, but various other parts of society of the government have been involved in the effort. Also, very importantly, whole of society mobilization has been important. This is important for us to recognize because in many ways we have a whole of society mobilization comparable, for example, to wartime efforts when society is mobilized to deal with the crisis. So we find that where such measures were taken sufficiently early and sufficiently and adequately, the disruption, economic disruption has been much less than where lockdown measures have been imposed in much of the rest of the world. Even relatively poor countries like Vietnam and Laos, as well as the poor state of Kerala in southwest India, have been very successful. Some of these governments have been left wing governments, as in Kerala as well as in Vietnam and Laos. But in other places, of course, in Northeast Asia and Japan and, and Korea and Taiwan, we have essentially capitalist economies which have been quite successful in keeping, in containing the crisis. What is important, it seems to me now, is to try to minimise the disruption and the disruption of livelihoods which have been very important, particularly in societies which have resorted to stay in shelter, lockdown measures.
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Yeah, you know, here in the United States we are very distressed because we have a government that was systematically not willing to mobilize the whole economy, constantly dividing state from state, city from city, giving ambivalent messages and recommendations. It's been really a disaster. And it has been a lesson for Americans that other societies are much better, whether they are socialist or capitalist, much better at mobilizing the country to fight a national problem like this than countries which have been celebrating the so called private economic system, which proved to be very poor at that kind of mobilization. In England, in the United States particularly. All right, let me shift a little bit here in the United States, although we know it's about the election here that's coming up in November, there is a sudden increase in very provocative hostilities towards China from the United States. Is this a cause of concern in East Asia? How is this viewed and is it viewed differently from the electoral focus that I just gave it?
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I think undoubtedly the disruption which has been taking place has begun much earlier. In fact, I would date it to the Obama administration when there was a so called pivot to Asia. The intent then was to basically try to contain the economic rise of China. And the intent today remains the same. Of course, the current policies and recent policies have been much, much more belligerent. President Trump's popularity ratings were highest when he had concluded the last trade agreement at the end of last year and very early this year with China. So it's not clear to me that he really benefits all that much. But as has been typical with his and other regimes, it is a way of externalizing or blaming the other, so to speak, for the problems which are currently facing in the United States. Of course, there are many reasons why China is a particularly convenient target to blame. But the hostility towards China now involves much more than the United States. It has been able to mobilize a number of allies, most significantly Japan. But also other countries have been mobilized as allies in trying to contain China. And this of course creates a lot of problems, particularly for East Asian countries, including Southeast Asian countries, which have been involved in what are called supply chains. Much of what is produced here is not necessarily sent directly to the United States or to other economies, but it involves Chinese intermediate products and so on and so forth. Many of these supply chains are likely to be disrupted by the hostilities. And these hostilities have involved Japan as well. Japan has called upon its companies investing in China to withdraw from China to either onshore them, that means located in Japan. But because you have virtual full employment there and you also have very high labor costs in Japan, it is more likely that they will locate elsewhere. But the disruption has been quite serious. But very importantly as well, it is quite possible that a desperate precedent may resort to actually trying to have so called limited military conflict. And this bothers me a great deal. Those of us in Southeast Asia see such a military conflict as most likely to begin in Southeast Asia. Mrs. Thatcher famously won her re election in 1983 by starting the war in Falklands. And of course, George Bush turned his electoral fortunes around to get reelection with the Iraq war. So the use of war, of military conflicts for political advantage is not particularly new, but it's very worrisome, particularly for us. Of course, there has been a great deal of attention to what has been going on in India, on the border of China with India as well as with Pakistan. But both those countries are nuclear powers and it would be much, much more difficult to try to contain a conflict there. So it's much more likely that such a conflict will begin in the South China Sea. And this is part of, part of the reason why there's a great deal of concern and trepidation in this part of the world.
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Thank you, Jomo, that was really very helpful. I wanna jump. Cause we have limited time. If you have a pandemic, and if you have it at the same time that you have a severe cyclical crash of capitalism, On a scale that reminds us of the Great depression of the 1930s. And then you add to that the tensions between the United States and China with, with their effect. You are loading up the problems of a global capitalism to the point where I want your opinion, is the system going to survive? Are we accumulating networks of problems that are simply not going to be dealt with adequately by the conventional tools that were designed to deal with an economic downturn, but not one that has a pandemic attached to it and not one that has a struggle between the two major powers? I mean, it's too much. At least that's the perspective many of us have. I would like your take on all of that.
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My own expectation and fear is that the system will survive precisely because there is no alternative available. There is. It is difficult to develop an alternative system at the global level in a spontaneous fashion. That's simply not going to happen. And so what we will probably have given the nature of the problem right now is survival of the most powerful elements which can emerge out of this crisis. So I expect, for example, that finance capital will continue to be dictate the nature of investment decisions. As we all know, the stock market indices in the United States and elsewhere remain surprisingly robust. And this has got to do a great deal with a number of elements which are very peculiar to the stage of capitalism which we are in right now. So the kind of financialization which we have seen which have been worsened since the end of the Clinton administration with the end of the Glass Steagall act of 1933, the second of the two Glass Steagall Acts, and a number of other changes which have been taking place in the United States as well as elsewhere in the world have seen the ascendance of Wall street over Main street, if you will, or what the British would say, the ascendants of the City of London over High street and basically the ascendance of finance capital over more productive capitalism. And this I think is the fundamental problem which we face in many parts of the world today. Now what has happened right now is that we see an alternative capitalisms emerging in other parts of the world, world including in places like China. And these capitalisms right now are still much more oriented towards production, oriented towards serving certain kinds of needs. And we are going to see a much, much more, a greater mix of systems emerging out of this crisis. But it's not clear right now what the outcome is likely to be.
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Jomo, I wish as always that we had much more time, but that has been very, very helpful. To give Americans, particularly another perspective, another way to think about these kinds of things. It reminds me of the wonderful clarity of your writing. You've been sending me your articles. I'm much obliged. I share them all over the place. I would urge people, go to the web, go to the Internet, find the work of Jomo Kwame Sundaram. You will learn a great deal about global capitalism today. Thank you all for watching. Thank you, Jomo, for being on the program, and I look forward to speaking with you all next week. Sam. Sa.