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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 our children. I'm your host, Richard Wolf. Today's program has a title. I don't always do that, but I wanted to do it this time. And the title is the Center Cannot Hold. And for those of you that know the English history of poetry, that's a line. It's a line from William Butler Yeats poem the Second Coming. The line as a whole reads, things fall apart. The center cannot hold. And my argument with you, and for you today, is that the United States, our capitalist economic system, our political economy, is in a position where the center cannot hold because indeed things are falling apart. William Butler Yeats, in this, as in so many things, understood much better than those around him, what was coming. What is the center in the United States politically? It is a monopoly, a monopoly of two political parties, their establishments. And by that, let's be very specific, by establishment I mean Reagan and Bush on the Republican side and Clinton and Obama on the Democratic side. Those establishments have worked out a very cozy monopoly. And here's how it both of them subsidize and support the capitalist economic system and no other economic system as their priority. They simply disagree on how best to do that. And we have two parties to work out that disagreement. They share power back and forth between one another in a very, usually very comfortable, casual almost kind of way. The ritual of elections and all of that and the flipping from one to the other, which has had the effect, as most of you know, of making most Americans only very tangentially interested in what these parties are. And do both parties preside over coalitions. At the head of the party, in terms of what really makes the decisions are a relatively small number of people. In both cases, those people are Wall street, the business elite of this country, the CEOs of the big corporations. And the Republican side, they organize a coalition because of course, business and CEOs and Wall street are tiny, altogether tiny minorities of the American people. They could not govern, they couldn't win an election for dog catcher. There's too few of them. So they need a coalition. They need to ally, to gather under their tent a large number of people by persuading those people that there's something in it for them to do that. So on the Republican side, who is in that coalition? White supremacists, we learned again, because they're prominent now, sometimes they're less so. Evangelicals, nativists, you know, the anti immigration people, rural Folks, small businesses, gun enthusiasts, people with military connections, social conservatives, religious people. Not all in each group, that's not necessary. But big blocks of those people defined by those particular words are the targets and usually the successfully included in the Republican Party coalition. The Democrats do their kind of the equivalent once again, the people at the top. Corporate CEOs, Wall street, bankers, big businesses are the core, the core of the leadership, the core of the donorship, the people who keep it going. But they build a different coalition there. In the Democratic case, they ally with women, with non whites, with immigrants or the descendants of immigrants, with the rather more schooled or educated, with the more technically developed and focused, with the younger and with the more secular. You all know this. This is the game. And the two coalitions struggled to hold on to who they got and maybe bring in some of what the other ones got. And they do that to each other. And it goes on and on, and it did for much of the post World War II period, pretty comfortably. But it's not working now. And it's not working because these coalitions are falling apart. Why? Because the system is. Because the goodies that can be handed out, whoever is in power, aren't as goody, aren't as big, aren't as available as they once were. American capitalism is having a harder time of it again. Look at how poorly we did as a system against Covid. Look how badly we've crashed Both in the 2008 and 9 economic collapse and the one that we're still emerging from now. This is a system in trouble. And as it's in trouble, the people at the top, the ones in charge, are following policies that are interesting. They're pushing the burden of adjusting to all these failures onto those who can least defend themselves, working class people, and especially the poor. They don't want to build up social programs to cope with our decline. They want to limit them. They don't want to do anything that might lead to taxing the corporations and the rich to pay for the kinds of social programs needed to really offset the economic decline we're in. If there aren't enough jobs, the government should provide them. It's what we did in the 1930s that can't even be discussed. We created Social Security, we created unemployment compensation, we raised the minimum wage in the middle of the Great Depression when people said there's no money to do these things. There's always money to do it if you want to do it. Politically, they don't want to. So the Republicans are saying that to their coalition. Well, we have to take care of those at the top. The economy is in trouble. The pie that we cut up the pieces for, to give each other pieces, that pie is shrinking. It's an easy time. When the pie is growing, everybody gets a little more. And those with a big piece can take an even bigger piece because the rest of us, even though we're not keeping up with our relative size, are doing better. That's not the case when the pie is shrinking and the American capitalist pie is shrinking. Our businesses have left the United States. They're making money and hiring people in Brazil or India or above all, China. Yes, I know we make noise about China. Meanwhile, the investments continue to flow there. So the pie is shrinking here. The. There's no way out of that. In 2020, literally, the pie got smaller. The GDP shrank in the United States and by a good bit too. And so the Republicans are saying to their base, among the rich and the CEOs and the big spenders, we're gonna preserve your peace. Which means if the pie is getting smaller and we're gonna keep your peace, we're really going to stick it to somebody else whose piece is going to get smaller even as the pie gets smaller. That's the working class and especially the poor. You can begin to see there the splitting of white and black because that helps you take care of a part of the working class as you go down and really savaging another part. This is very important to understand. That's the, the Republican Party and they're getting pushback. They're getting pushback from the working class that is being shrunk. They want something. They don't want to help the poor because they've been trained that way. And the poor that are part of them don't know quite where to go. Should they give up on the Republican Party? Should they support more extremes in the Republican Party? Their situation, as I will go into after the break of this program, is, is becoming harder and harder. On the Democratic side, the same thing, but their coalition is splitting in a different way. There. The split is between the old establishment, kind of neat and the progressives kind of neat. The other way the old establishment says we can do business as usual. We will be less harsh than the Republicans, but. But we too have to face the shrinking pie. I mean, they don't say this yet because it's not politically correct to say honestly what's happening to American capitalism. We are forever recovering, we're forever growing. It's always this make believe, don't tell the truth. But they know. And their policy of the establishment, the Bidens, the Obamas, the Clintons, is to be less harsh than the Republicans. That's always been the pitch of the Democratic Party establishment. We're not as bad as them. That's, of course, particularly easy to play now, having had Trump for four years. But that's what they want. The progressives are saying to their credit, no, no, no, this crisis is serious. You've got to do a lot more. More. This isn't just being less harsh than the Republicans. The climate crisis, the racial crisis, the COVID crisis, the economic crash. The progressives are saying, you've got to do more. And hidden here behind the splitting of these coalitions is a threat to even if no one says it, the threat on both sides is you better hold this coalition together even as it's straining to fall apart. Because if you don't hold it together, you can kiss the elections of the future goodbye. You won't be in power again, and maybe not for a very long time, because that coalition is the only way you get to be in power. So Whichever group of CEOs and Wall Streeters and big donors run each party are aware that if they don't manage economic decline of a US Capitalism in a way that holds their coalition together or maybe even expands it, they are facing not just the carrot of what might come to them if they do it, but the stick of what will happen to them if they don't. It's a very serious moment in American politics, as serious as any that this country has faced in its history. And when we come back after the break, I'm going to want to talk to you about the details of this breakup and what the odds are about the two different ways it can work itself out in the months and years immediately ahead of us. And they are going to shape a great deal of what happens to the United States inside. And I haven't even today the time to go into what we do talk about on other days, which is the fact that we're going through this crisis at a time when the United States has the most serious economic competitive editor in the last century, namely the People's Republic of China. We've come to the end of the first part of today's show. Before we get to the second, I want to remind you our new book, the Sickness is the When Capitalism Fails to Save Us from Pandemics or Itself, is available@democracyatwork.info books. I also want to thank our Patreon community for their ongoing and invaluable support. If you haven't already, Please go to patreon.com economicupdate to learn more about how you can get involved. Please stay with us. We will be right back with the second half of today's program. Welcome back, friends, to the second half of today's Economic update, which, as I explained, is entitled the Center Cannot Hold, a line taken from a poem by William Butler Yates. I want to continue the conversation by talking about the disintegration of both of the coalitions, the Republican and the Democrat, that we discussed in the first half. But now I want to introduce the dark side, if you like, or maybe I should say darker side, and that is repression, political repression, when a society is on the down trajectory. And I want to argue with you, as I have in earlier programs, that much of the history of the United States, from independence until around the 1970s and 80s, was a ride up on the capitalist rollercoaster. We were growing. We took over the entire land mass of North America other than Mexico and Canada. We traveled west. We eliminated the native population that we found there, herding them into reservations as settler colonies often do, and we were profitable and we were productive, and we brought in an army of successive waves of immigration to do the work. It was a ride up of profitability and economic growth. And it led in the United States to this notion that we are exceptional, that maybe God loves Americans a little bit more than he or she loves anybody else. Every generation will live better than the one before all of that. The problem with it was it didn't understand capitalism. Capitalism, like every other system, goes up and then it goes down. It's really not a question of whether. It's usually a question of when and how. Starting in the 1970s and 80s, it became clear when and how the baton was being passed. Capitalism was moving on just like it had built up Detroit and then dropped Detroit, built up the main lumber industry and paper industry and then dropped it, built up the photography industry in upstate New York and then dropped it. So it was happening to the United States as a whole. Profits were greater in India, China, Brazil, and capital went where the profits beckon. And that left the United States unable to continue the rise up. But we postponed facing it from the 1970s and 80s to the present. The United States became a pioneer in a new way, borrowing money like there was no tomorrow, which in terms of capitalist growth was correct. There wasn't one. And so we have record levels of personal debt, corporate debt and government debt off the charts, growing like never before in American history. All of them. And that kept the illusion going that the American dream was still available, that with hard work and study, you would get into the promised land of two cars, a vacation, a country house, whatever. But it wasn't true. And the crash of 2008 and nine is the key moment when it suddenly became clear we can't carry this level of debt. That's why it's called the subprime mortgage crisis. We can't. We can't borrow our way out of this. Or put it more accurately, we've borrowed as much as we can support. It's over. And the ride down is never much fun, especially not compared to the ride up. So what are the two parties going to do as the ride goes down, as the pie, if you allow me to continue with the metaphor, shrinks? Well, one thing is everybody grabs hold, trying desperately to hold on to whatever they had because somewhere they're beginning to register is going down. And that means those least able to defend themselves can't defend themselves compared to everybody else. And that creates many more social problems. It aggravates old social problems that were never solved but were able to be kept under wraps because things weren't getting tight. We all have that in our personal lives anyway. We know. We really do know. And so what's beginning to happen quietly, locally, in a dispersed way, is repression. Masses of people in increasingly desperate circumstances take chances, push back, not because they want to, but because they have to. I learned recently about a network of something I had never imagined, which is my fault. Diaper banks. The United States has 200 diaper banks across this country. They collect unused diapers, disposable diapers, from those who have them. Their children have outgrown them. They bought more than they needed, and they give them to a bank which hands out free diapers for people who have children who need them but can't afford them. It costs $80 to $100 a month to be per child to have the disposable diapers. And by the way, their prices are being raised as I speak, between 5 and 10%, making it even harder. So we have to distribute free. This is a country that calls itself one of the richest in the world. You can forgive a man or a woman trying to get diapers for the healthy baby being put in a kind of charitable, please give me a free diaper position. Think about it. And so there are those who sense the growing bitterness, the growing upset, the growing desperation and want to repress. And it shows up in our gun violence, in our police's behavior because we ask these police to step in and solve a problem they couldn't possibly solve because it's an immense social and economic problem, and you don't solve that with the police. But the Republicans are going with those who are fearful that something from below might come up and threaten what little they have, as they're worried about losing it. So they're a bit more on the repressive side. The Democrats go the other way. They're afraid. They do repression, too, but they're afraid that this repression can go quickly from being a way to keep the lid on to being a provocation of those you're repressing to think about and to undertake much more active efforts to improve their situation in a desperately declining economic system. Republicans fear the consequences of repression more than the repression. Excuse me, the Democrats fear it more than the Republicans push it. But that can change at any time. In short, these issues are breaking these coalitions apart because inside each of them, there's disagreement about repression, about guns, about, you name it, it's falling apart. The center cannot hold. That's why Mr. Trump is as powerful on his side. That's why it's possible to have Marjorie Greene and people like that. And on the Democratic side, that's what fuels Bernie Sanders and AOC and the rising number of people challenging the whole idea of the monopoly of the two big parties even as they work inside one of them. I'm talking, of course, about the socialists active within the Democratic Party calling themselves progressives, which is fine, that's what they are. But these parties are not in a position to resolve this. The tensions inside each party, the acrimony between the parties. Let me give you just a couple of examples. Having set the frame a few weeks ago, Mitch McConnell, the head of the Republican Party, publicly denounces big business CEOs. He's furious that they are upset about what Republicans are doing to limit voting across the country, and particularly in the state of Georgia. You shouldn't be meddling in politics, says Mr. McConnell, who has been courting them and their money his entire political career. What's going on? It's very dangerous for the leader of a party to denounce big business and CEOs. They are the leaders of his party. They are the donors. And what are those companies doing meddling? Why aren't they quiet? The answer is they're afraid now, too, as capitalism goes down. They are still American companies. They still have big investments in this country. They still count on the market in this country. They don't want social conflict. They don't want mass repression or the resistance to it, because it disrupts their workforce, it disrupts their markets, it disrupts the business. They don't want it. And if they think, as they clearly now do, that the Republicans are pushing the envelope, are provoking, are going in the direction of a dangerous kind of repression, as in stopping black people and poor people from voting, that this is going to blow up. They don't want it. And they told the Republicans, and the Republicans aren't listening, because if they can't go in that direction, they fear losing the election. So they're in an impossible situation. But impossible situations are symptoms and signs of the situation spinning out of control. Biden is trying, for his part, to mollify the progressives. He does have some progressive tax proposals. They're modest, as I've tried to explain, but they're real. They're much better than Trump's. He's going somewhere, but he's terrified because how's he gonna get them through? The Republicans are gonna block them, and at least some Democrats may go with the Republicans from Arizona, with West Virginia and so on. What's he gonna do? There is only one solution. He can go to the mass of people and say, hey, help me put pressure. But to mobilize the mass of people, if Mr. Biden were to dare go in that direction, hands the party over to the people best positioned to mobilize. And that's the progressive, because they had to do that to get into the Democratic Party apparatus. They know how to do it. They're experts at it. That's too dangerous for the establishment, so they can't go there. So that's their dead end. And meanwhile, the whole society is grappling. Police shootings, Black Lives matter, all of it are signs of the cracks. I can't predict any better than anyone else whether the parties will come up with some way to paper over their differences. They may. It's possible. Right now doesn't look real good. And again, I haven't factored in the growing competition from China, which is having its effect left, right and center. I can tell you this, that the bold spending plan of trillions and trillions of dollars that the Biden administration proposes is definitely better than Trump. But the vast bulk of that money is going to go into contracts, federal government contracts with big businesses to repair roads and bridges and all of that. And the other part of it is going to go in grants to states and cities and counties. And you know what they're going to do with the money. They're going to sign contracts with big companies to do what they have to do there. And those big companies are going to use that money the way they use all their money over the last 50 years. We know the answer. They're going to give big pay packages to their CEOs. They're going to give fat dividends to their shareholders. They're going to spend money to automate and get rid of jobs that can make them profits. We know what they're going to do. They're going to reproduce this system, and that's the problem, and that's what's not being faced. And that will undermine and continue to undermine the cozy monopoly of that cannot survive this period of economic decline. This is Richard Wolff for Economic Update. Hoping you found this interesting, and looking forward to speaking with you again next week.