A (0:10)

Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives. Jobs, debts, incomes, our own and those of our children. I'm your host, Richard Wolff. I want to begin by commenting on something I've commented on before. I have introduced over the last few months a notion that is relatively new to me too, that US capitalism, something that has been an ascendant reality in the world for quite a while, has come to a turning point. After 100 to 150 years of remarkable growth and expansion, it has peaked. And that we are now in a phase of considerable long term decline. I don't say that with any pleasure or with any sense of satisfaction. I say it because it's crucial to help us understand where we are and how we can make this phase a of our existence as a nation and as a planet less dangerous and less frightening than it needs to be. Okay, let me give you then two statistics about a declining system. The first is something in the news these days that you all know about. One of the richest countries in the world has just lost two 20 year wars to two of the poorest countries in the world. That cannot be coincidence, that cannot be happenstance. That's about fundamental changes going on around us that we would be better off thinking about and taking into account. The second statistic you, likewise, I suspect, already know. The United states has roughly 4 to 4.5% of the population of this planet. But even though we are one of the richest countries, and even though we have a well developed medical system, we account for 20% of of the deaths from COVID These are remarkable statistics. We have the companies to make what it takes to cope with the virus. We have the trained personnel, we have much of what is needed, just like we have a highly developed military. But if your system is in a decline, then there are a thousand parts that are moving in ways you wish they didn't and produce outcomes you wish they didn't too. It's a sign of system decline. Let me turn then to the updates for today's program. I begin with an investment, an acquisition by one of the largest investment companies in the United States, which Moody's. They're very famous for providing ratings of companies, debts and stocks. Moody's, they just made a purchase for $2 billion of a company you probably never heard of, RMS. What does RMS do that led Moody's to spend $2 billion to buy it? Here's what RMS does. It models climate change risks for businesses that are worried all around the world that climate change, climate Disasters, you know, floods, droughts, fires, all those things we're all aware of. Now, how is it going to affect this business? That business? Is there a profit opportunity here I can exploit? Is there a cost I can avoid? RMS will tell you and Moody's, guess what? They think that's a big business they want to be in on. So here's my In a capitalist system, we can't get together all of the businesses and all of the employees and our government to deal with a problem that confronts us all. Collective action around this subject matter very hard to come by. But meanwhile, individual companies want to be sure and spend big bucks to know how to avoid a cost and how to make a profit from the very disasters we as a community seem incapable of coping with. Tells you something about what a private economic system does. I want to turn next to the infrastructure. You know, that bill that the Republicans and Democrats have been fighting over for months. But I want to talk about what's at stake. Infrastructure, roads, bridges, harbors. All of those things we probably don't think about, but which are crucial. And I want to make sure everyone understands how and why they're crucial. I'm going to take the example of roads. If you don't maintain your roads and bridges as we have not done in the United States, here's what happens. And engineers have done the work. The wear and tear on vehicles, cars and trucks is worse if the roads aren't maintained. Every one of those little bumps, every one of those little potholes does its job on your undercarriage, on your tires, on your axles, on your car. Engineers have estimated that the poor quality of American roads is costing every vehicle owner 300 bucks a year. Wow. Now let me talk to you about that extra $300 is not just what you as an individual with your car have to pay, although it's quite a tax if you think about it, on you. But I want you to think about all the companies that can't compete in the world economy because they have a bigger cost than people in many other parts of the world who maintain their infrastructure. So when they give an estimate of what it cost them to produce something, they have to take into account that the trucks will go more slowly, that they'll have to spend more money to maintain or replace their trucks and vehicles and vans. It all adds up. And it's a very self destructive mistake. And that leads me to the next point. People are complaining. It's such an enormous amount of money. It's an enormous amount of money because we haven't Done it year in and year out. We've neglected our infrastructure. Had we done it along the way, which every sane person knows we should have done, is it wouldn't have been this big amount of money we're now confronted with. That's just the failure to understand what infrastructure maintenance means. And so why have we been neglectful? And the answer is it's our capitalist system. It's really not hard to understand. Put yourself in the position of a politician, any politician, a mayor, a governor, a representative, it doesn't matter. Here's what they're basically people and businesses who want a lot of services, and people and businesses who don't want to pay taxes to produce those services that they want. Putting the politician in an impossible position. You're judged according to the services you provide, and you're judged according to the taxes you don't collect. You know what the solution is? Partly it's borrowing money, which is why our governments are in debt beyond all words. The United States government is the biggest debtor in the world. But that's not the only solution. The other solution is, especially if you get criticized for having debts on top of everything else, is to just not do services where they won't be seen. That's called your infrastructure. Postponing the fixing of the road, postponing the redoing of the bridge, postponing the re digging of the harbor. Whatever it is, it's built into our system to neglect it. And so here comes my sad commentary. Watching the Republicans and Democrats debate this bill is an exercise in pathetic. Why? Because the conservatives don't want to spend the money. Really? You want to fall even further behind the rest of the world by doing this? And the liberals, the Democrats, they want to spend the money. Well, it makes more sense to spend the money. But notice what neither of them is talking the system that produces the neglect. So even if the bill is passed and the Democrats spend a lot of money, nothing has been done to deal with a system that produces this neglect. Year in and year out here in New York City, we are constantly confronted with exploding water mains. And then the headline the last time this water main was changed was 100 years ago. Oh, hello. That's why it explodes. It's an amazing story in which you don't want to see the systemic problem. You just want to make a fix, even if it's late and even if it doesn't address the systemic problem. My third update for this part of the first half of our show has to do with population change. And it's quite important to America's economic future. The 2020 Census results are now in. The white population of the United States between 2010 and 2020 dropped by 8.6%, whereas the people of color rose all of them. The biggest, the Hispanic, the second biggest, the Asian, and the third biggest, African American. African American modestly rose 5.6%, but white people dropped 8.6% and Hispanic and Asian people rose in the double digits. Everything is changing. Let me give you an example. Texas. If you divide this population this way, roughly 40% of Texas is white, 40% of Texas is Hispanic, and 20% of Texas is black. Think about that and what that means. You can be sure the political parties in this country are thinking very hard about this. You know, our political parties are coalitions. At the top of both Republicans and Democrats are big corporations. And our richest people, they're minorities. In this society, most of us are employees. We're neither rich nor do we run corporations, nor do we own them. In order for them to keep control of this society, either of those two parties, they have to build coalitions with the mass of people. The Republicans have traditionally built it with businessmen and women, white people, religious people. You all know this. The Democrats have tilted more towards unions, towards employees, towards people of color, towards women and so on. But when the population changes, the parties scurry. The Republicans are terrified. They've built an alliance around white, and white is shrinking. What are they going to do? Well, you can see what they're doing. Two things. That's the strategy of the Republicans. Number one, get more of those shrinking white people to vote. Get them very excited, get them riled up, get them to be fearful that as they become a minority, they. They may get treated by the new majority the way they treated minorities the last 200 years. And the second thing Republicans are doing is cutting back voting by those people who might not vote Republican. It's across the country, and the Democrats, if I had time, are doing their share. The country is divided because of a desperate rush by these political parties to try to cope with a changing population that may shift our politics in fundamental ways. We've come to the end of the first part of today's show, and as always, I want to thank all of you whose support makes this show possible each week. In particular, we'd like to thank our Patreon community and other regular monthly supporters. If you haven't already, Please go to patreon.com economicupdate or visit democracyatwork.info to learn more about how you can support this show. Please remember to follow us on Facebook, Twitter and Instagram. And if you're watching this on YouTube, be sure to hit the red subscribe button below. Stay with us. We'll be right back. Welcome back, friends. Welcome, friends, to the second half of Economic Update today. I want to begin by talking about some comments made by Boris Johnson, the Prime Minister of the United Kingdom, and echoed by several of the ministers in Boris Johnson's government. Here's what they said about the end of the US Occupation in Afghanistan. Boris Johnson wanted the world to know that he had known all about it months and months ago, maybe even years ago. He saw it coming. He had wonderful foresight, according to him, we have to say according to him, because he was absolutely silent in any public sense about any of this, having been for a long time a well trained, docile British leader. And he made it sound, as his ministers did, that they were against withdrawal, suggesting in the words of others, that the British are prepared to fight right down to the last American to hold on to these sorts of losing propositions. And I think there's something there that's important for us to talk about. The world is made up of powerful countries and less powerful ones and there are crucial alliances binding them one to the other. And these losses in Iraq and in Afghanistan and the performance around Covid are making allies of the United States wonder whether they may have made a mistaken choice. Put yourself in the position of the British. They decided to cope with their problems, the problems of British capitalism at the end of its empire, by blaming and scapegoating Europe, voting to break from Europe, to leave Europe in the so called Brexit phenomenon and to throw their alliances even more dependent on, yeah, the U.S. and now the U.S. is withdrawing and the British are forced to wonder, and boy, will they be silent about this too, whether they have climbed into the wrong alliance. And you can be sure many other countries are wondering too. You know, the UK is much weaker than the United States. If poor countries, countries in Asia, Africa, Latin America push against Britain, what's it going to do? It isn't the United States. It has nowhere near the capabilities. And then too, having the war in Afghanistan in the news with the positions and the pictures, that was very useful to a Conservative government in England who wanted to champion anti immigration mentalities, especially in a country where a sizable portion of the immigrant population is Muslim and comes from South Asia. Now those headlines will be gone, the war is over and the militancy against immigrants will be a harder row to hoe. The UK has problems. Cheering on the United States in that sad catastrophe in Afghanistan is not a smart move. It's not a sympathetic move. It ranges somewhere between sad and pathetic. My next update has to do with something also in the news. A great deal long supply chains. Here's what that phrase means. Over the last 40 years, American corporations increasingly relocated out of the United States. And they did that for very simple reasons. Profit was the main one and here's the second one, profit. And now the third one, you guessed it, profit. They could pay much lower wages in China or in India or in Brazil. Not only that, but those were the growing markets in the world. The United States was a quote unquote mature market, which means it isn't growing very fast, but the markets over there were. So by moving to China, you got a twofer, you got cheaper workers and a fast growing market which every graduate of business school never knows where you're supposed to be. So they left. And instead of getting the parts for some company in Chicago from Tennessee or Indiana, you've got them from Bangladesh or Shanghai. In other words, long supply chains are not a mystery. They're a direct result of the private decisions of American corporations to make more profits for by producing far away parts or all of what they sell. And they didn't want to deal with that vulnerability that comes with a long supply chain. And so we see problems arising for US capitalism. Remember once, one we saw a few weeks ago, a few months ago now, that funny angled ship in the Suez Canal that got stuck and suddenly all the things we need in the United States that come from Southeast Asia and pass through the Suez Canal couldn't do. Turned out it was vulnerable. You know, you could have handled that if the companies that were now vulnerable had made sure to dig that canal a little deeper than it used to be and make it a little wider than it used to be and to establish the ways to handle a stuck ship. They didn't want to spend the money out of their enhanced profits, so they neglected it. Just like they neglect infrastructure, just like they neglect all the ecological side effects of the investments they make. Well, they didn't protect their long supply chains, but don't blame the supply chain or the weather or the Suez Canal. And here's the one that's getting the attention now in the mainland of China, which is the country upon which long supply chains depend the most. They're having what is called in the American press a resurgence of COVID And as a result, they have shut down one or more of their major ports, thereby Blocking the supply chain because it's frozen. The ports aren't working. Well. Now let's look at that because it tells us so much. First, I want to make sure we all understand that the media in the United States talk about surges in China, and they use the same word for surges here, but they had nothing to do with one another. I'm going to use the date of August 10, which is when I looked at these statistics. That was a time of a surge. How many new cases happened in the People's Republic of China on August 10th? 111. That's right. 111 people were diagnosed with new cases of COVID on August 10th in the United States. The number of new cases diagnosed was 162,900 new case. Let me be sure you all get this. China had 111. The United States had 161,000. Calling both those things surges gets you the same insight as referring to a flea and an elephant as animals. It's not wrong, but it is real close to what we always used to call lying. But the Chinese, with four times the population of the United States, they have a lockdown policy. What we do not do in the United States, they close it down to prevent it from becoming anything like what the United States now accepts as routine. And so they shut down the port. And our long supply lines are a problem. And let me be clear with you all what the problem is if the goods don't come here. Meanwhile, the United States is filling the world full of new money. You're going to get an inflation. The scarcity of the goods that can't be supplied are adding to the pressure for profit prices to be raised because goods are scarce on top of all the money chasing those goods. So it's going to affect us by producing an inflation, which of course makes the inequality of this country worse because poor people are less able to protect themselves against inflation than rich people. The world is connected. You cannot escape. And the long supply chain conversation should acknowledge what it's really about. Allowing private corporations to pursue their profits no matter what the fallout, no matter. No matter what the social costs, without them taking any responsibility for any of it. In fact, there's a bunch of these companies using the excuse of supply chain problems to raise their prices, even if they're not affected by them. The last update we'll have time for is about a particular company. But the story is powerful and so I wanted to share it with you. In several American cities there is a chain of gourmet specialist Butchers. In fact, they call themselves Craft butchery, Whatever. Exactly. That means the name of the company, Fleischers. I found this amusing because the German word for meat is Fleisch and a Fleischer is the butcher. So either these folks were originally German or they're playing a Germanic trick on all of us. It's an investor chain, very profitable. And here's what happened. Back in July of this year, some signs appeared in several of their shops. They're both on the east coast and the west coast and perhaps elsewhere too. Some of the signs said Black Lives Matter and some of the signs said lgbtq. And apparently there were workers in many of these butchers who were partial to having those signs in the window. One of the major investors, a big real estate developer from San Francisco, gave a call to the CEO of Fleischer's Craft Butchery, man named John Adams, I kid you not, John Adams. And told him that as a major investor, he wanted those signs removed. And so John, dutiful CEO investor, had them removed. Or he tried to. The workers then did something interesting. The workers said, no, you are not going to remove the signs. When he insisted they quit. On July 23, they walked out demanding the return of the signs. Walking out meant they withdrew their labor. And once again the capitalists learned that you can have a beautiful shop and spectacular tools and fantastic raw meat, but without that butcher, you got nothing. You're not going to make a nickel in profit, which is what you're in the business to do. And the big investor wrote an apology letter. But it was too late. The workers weren't ready to go back. They felt unappreciated. As of this report to you this the stores are still closed. Not clear whether and how they will open. Why do I tell you this story? Is it about workers having power? Not really. Yes, the workers had power. They always have the power. Those of you listening to me who work for a living, you have that power too. What I want to leave you with is this. Suppose that power were used in yet other ways. Suppose that power was the workers saying, you're not going to pay us $25 an hour making $80 an hour from the work we do. No, no, no, no, no. And in fact, you're not going to make anything because we're going to run this business in a different way. We're going to call it Fleischers too. It'll be a worker co op and we will collectively do the work, get the profits ourselves. What do we need the capitalist for? That might be a day when workers power translates into the kind of system change somewhere most of us know we need. Thank you very much for your attention. I hope you found this program of interest. And I look forward as always to speaking with you again next week.