Loading summary
Transcript13 lines
- [00:21]
A
Welcome friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of of our lives and those of our children. I'm your host, Richard Wolff. Before we begin today, I need to clarify something I mentioned at the beginning of last week's show. The recordings of my latest online course, Marxian Class Analysis with Professor Shahram Azar, will be available for purchase on our website on April 1. Lecture summaries and presentation materials are also included with these recordings. This whole package will be on sale throughout April to give you all the time you need to watch these lectures at your leisure and to sign up for a live online Q and a recap of the material that both Professor Azar and myself will be holding live within the first two weeks of May. For more information, visit our website at www.DemocracyAtWork.info classes on Wednesday, April 1st. Be sure to also sign up for our weekly newsletter by going to our website, democracyatwork.info and opting in to receive emails from us for exact details about this and all our other activities this coming spring. And finally, please remember to like, subscribe and share this video with others. For those of you who have not yet signed up for our Members Only Patreon. By doing so, you can gain access to Members Only content while also supporting our work. Go to patreon.com democracyatwork or you can find the link in the description below. Today's program features a discussion of a number of dimensions of what is happening to Europe. You know, the world is a smaller place than it's ever been, and Europe is in a crisis that will affect every other part of this world. And this is an important story. It's an ongoing story and I want to begin treating it as such. With today's program in the second half, we're going to interview Professor Teresa Gilarducci, who is one of the specialists and renowned experts across the United States in the pension disaster that we call the pension crisis affecting old people and therefore, of course, everybody else in the United States with warnings that this crisis will have ramifications we all will feel. So let me begin with Europe, okay? On March 22, the French people went and voted in the second round of their municipal elections. These are important because this is the government that villages, cities and towns elect for themselves across France, from Paris, the capital, on across all the rest of that country. But they also provide a very good idea of where the political landscape is and and it's only a year before the presidential elections that we'll see whether Mr. Macron the current president, survives that election in his job. Given the results on March 22, I would not bet on Mr. Macron. His mother wouldn't bet on Mr. Macron. He came in third out of three. That is, there's a unified left contesting in many villages, cities and towns, a right wing, the National Rally party, and then Mr. Macron's center. And as I say, the left did the best, the right wing less well, which is always a little confusing in the American press, because the American press treats France and many other European countries. I laugh as though there were two political the right wing, scary, far right, fascistic, and the center. And we're all kind of rooting for the center because the right wing is so awful. That's not true in most European countries. It's an American lens through which Europe is looked at. For example, the largest block of seats in the national assembly, that's the parliament of France, is held by the left and has been for the last couple of years. It's a coalition of the socialists, the communists, the Greens, the anti capitalists, and the leading one, France Unbowed, La France Insoumise, led by Jean Luc Melanchon, a leader who should be recognized as one of the great three or four leaders of France today, but whose name is literally unknown because the news simply pretends he's not there. They're the largest bloc in the Assembly. They're the real power Mr. Macron has to deal with all the time. He came in third. Nobody wants Mr. Macron. He's got considerably worse polling than Mr. Trump in the United States, and his is in trouble. So France is in a place where you don't want to be. If you're Mr. Macron, why is this important? Well, one of the reasons is both the left and the right in France don't want to be at war with Iran and will not permit politically that the French to line up behind Mr. Trump or Mr. Netanyahu in fighting with Iran. They're not going to do it. You're not going to see the French there. And France is the second or third most important economy in Europe. Okay, let me turn next to Germany. Germany is in deep trouble. It has gone over the last four years from being the dynamic, powerful engine of Europe, the most successful economy, the most rapidly growing economy, the most important of the European economies in world trade, and to being in some ways the worst performing at or near recession for the last couple of years, etc. Okay, here's a sign of where Europe is. The Germans were asked by Mr. Trump to, excuse me, help in clearing the Strait of Hormuz, that famous narrow piece of water that the Iranians have closed and thereby hobbled 20% of global oil shipments, 40% of global natural liquefied natural gas shipment, and problematizing the entire economies of eight or nine countries in that part of the world. He asked Germany's help. The Minister of Defense answered, sorry, we will not help you. We were never consulted on going to war in Iran. We were never informed that this was exactly what was going to happen. And you cannot ask us to take enormous political risks, financial costs for something you did not include us in the planning of or the decision of. In other words, using the indirection of diplomacy. Mr. Pistorius In Germany, the defense minister gave Mr. Trump the middle finger. Why might that be well below the surface of Germany? Well, let me tell you, the surface. The surface is we remain America's ally, we remain in NATO, we, we remain the good old Europe of the past, but below the surface, we are boiling mad. Our miracle, our economic miracle, in German Wirtschaftswunder, was based on selling our advanced engineering goods to China so it could build up its economy and having the best prices in the world for high tech machinery, because we had very cheap energy with which to make all that machinery, cheap oil and gas, which we imported from Russia. With the Russian invasion of Ukraine in 2022, we basically lost both of those crucial pillars of our economic success. When the military war against Russia proved to be way short of anything that could win, we were all told, led by the Americans, to wage economic war. Russia could be defeated economically by no longer buying its oil and gas. Remember the joke about Russia? It's a gas station pretending to be a country. It did depend on oil and gas to a large degree, and Europe was its major customer. So it was a scary thing if the Europeans shut it down, which they did. What was not understood was that Russia would pivot and sell the oil and gas to India and China, which solved its problem. Europe was left with what? Well, irony of ironies, or maybe not. They ended up solving their energy problem by buying liquefied natural gas, mostly from the United States or from the client country called Qatar in the Gulf. And that gas cost way more than the oil from Russia did. So suddenly, Germany didn't have good prices because it had to raise the prices of its output to cover the enormous increase in cost of its energy. So below the surface of Germany, they are upset about this. They want to gain access to Russia's oil and gas again, and they want to reopen dealings with China, but that's not going to happen because of the enmity between the United States, Russia and China. They're not happy being part of NATO and the European alliance. And. And guess what? Together with France and Germany and France are the basis of it. They're looking to end it all. What do I mean? To rechart a new path for Europe. And as if what I've just gone through with you weren't enough, let me point out that no one is going to keep their money in Europe after the Europeans seize the Russian assets as part of that war. Because anyone who wonders whether they might be in trouble with Europeans or Americans in the future better get their money out of Europe because it'll be taken. Europe can't hold other people's money. That's another source of income for them. They're not going to have. Their leading theoretician, an Italian diplomat named Draghi said Europe is in danger of disappearing from the world economy as the two big powers, the United States on one hand, China, Russia on the other, pour billions into research, outmaneuvering the United States, but particularly outmaneuvering Europe. The United States still has the resources to be a technically advanced country. China obviously does. Russia does, Europe doesn't. And yet they signed with Trump a promise to invest 7,800 billion dollars in the next few years in the United States. They needed more, and they agreed to invest it in the United States, which needs it less. They've become a tributary of the United States. No wonder they want a break. Let me make a prediction, which I don't do much if Europe doesn't break and build its own economy. Remember, if you put all of Europe together, it's bigger than the United States, richer than the United States. If it doesn't devote its resources to rebuilding its position, it will fade out of the global picture and become a quaint tourist attraction, but not a serious player in the world economy. And won't that be extraordinary? The colonial master of the world ends up being pushed out of the picture by the United States, once a colony, and China, once a semicolony. But so it is in the world. Unless you take enormous steps to deal with it, Europe isn't looking like it's doing it, and its fate is therefore very dark. I hope you found this program interesting. Stay with us for the interview with Teresa Ghilladucci. I think you'll find it very interesting. Enlightening. Thank you. Before we jump into the second half of today's show, I wanted to thank you for your very generous response to our fundraising efforts this year and in particular in the last couple of months. And in part responding to that, we are extending the availability of our limited edition, linen covered hardcover version of Understanding Capitalism, the book I wrote and that we have been making available now for quite a while. If you are interested, I will be signing copies of that hardcover and they will be available to you as they have been over the last few weeks. Just simply send an email to us@infodemocracyatwork.info and put in the subject line limited edition. We will send you all the information you need to order and receive your copy signed copy of Understanding Capitalism in its hardback. And thank you again for your kind attention to the fundraising dimension of what we do. Welcome back, friends, to the second half of today's Economic update. I am very glad, I'm proud to bring back to our microphones and to our camera Professor Teresa Ghilarducci. I've known her for a long time. We were colleagues together at the New School University in New York City. And I have followed her work for quite a while. She is really one of the great experts the United States has in the whole question of pensions and what happens to people after a lifetime of work. So first, a formal introduction. She's a labor economist. That's one of the recognized subfields in economics. She spent her career working to ensure retirement security for all American workers. She joins the New School for Social Research as a professor in 2008 after 25 years of teaching at the University of Notre Dame. Her work examines how changes in the labor market and the decline of traditional pension systems have affected American ability to retire with dignity. She is a frequent witness before the US Congress and a sought after commentator in national and online media on retirement security, Social Security, pensions and labor economics. And that's why we brought her back again here. Her most recent work is a book called Work Retire the Uncertainty of Retirement in the New Economy, published by the University of Chicago Press last year, 2025. She is also the co author, with Hamilton James, of Rescuing Retirement, a widely discussed proposal to create guaranteed retirement accounts for all American workers. So first of all, Teresa, since we know each other, welcome and thank you for giving us your time.
- [19:59]
B
Yeah, thank you.
- [20:01]
A
All right. Let's start with one of the big ones. There's not a lot of talk about a pension crisis. What exactly is this crisis? Who gets pensions? Who doesn't get them? What's the story? Because, you know, it affects every everyone listening to this program, watching this program who is an American for sure, and many outside the country who are connected. What happens to us when we reach the retirement part of our lives?
- [20:33]
B
Well, we're in a pension crisis because we're at the end of our rope of a failed 40 year experience with a system that did not expand Social Security over for advance funded worker pensions. We had a 40 year experience that was very American, which is a kind of a do it yourself experience of saving for retirement and shifting all the risks, that there wouldn't be enough money, that it wouldn't earn enough, that people wouldn't know how to or wouldn't have the possibility of drawing it down like Social Security or people who got fired and pushed out of the labor market a lot sooner than they would. Our system did not expect or acknowledge that any of those things would happen. So we're at the end of a 40 year experience with a voluntary, commercial, individual based saving system. And so what that means is that this generation of people who have just retired, all baby boomers, are now past typical retirement age, will be worse off than their parents and their grandparents. And that means that the generation below them, the sandwich generation, the Gen Xers and the Zers, who are the grandchildren, are going to be worse off because we did not, we had a failed system for 40 years. Meaning that the pension crisis is rolling downhill into the younger generations. It means that middle class workers, almost half of middle class workers will go into retirement or are in retirement, downwardly mobile, into poverty or near poverty, meaning that their living standards, the middle class living standards that they earned while they were working, it will be eroded and at the same time they're living longer so that the little money that they have and they expected to have much more, will have to last a lot longer. Now let me give you some numbers. During this period of 401k story experiment the last 40 years, workers were told, as soon as you start working, save 15 to 20% of your savings of your, of your pay. Your employer should pitch in about 10%, you pitch in another 10% and on top of that will be a Social Security supplement that by the way is eroding because we've raised the retirement age, you know, from 65 to 67, all the way up to 70. So go ahead and save, I mean, how ludicrous it sounds, 20% of your pay for your whole life. And at the end of that you'll have 8 to 10% of your, of your annual salary. That means somebody who is earning $100,000 today should have, if they've done everything correctly, they should have 800,000 to a million dollars in their retirement account now at 62, at 65, you know what the average salary, the average amount is? The average is about 200,000, the median and is zero. Most people approaching retirement have nothing in their retirement accounts. And if you add all the people who have it, it doesn't reach anything near that 800,000 to a million. So that's a concrete way to say what the gap between what you're supposed to have and what you have. And it means a humanitarian crisis of people not having enough, having to live on about $1,500 a month because they'll only have Social Security. It also means a political crisis because when you have a whole population who vote, who are devil immobile, you have all sorts of possibilities for political disruption.
- [24:32]
A
All right, so that's the crisis we're in.
- [24:36]
B
Yeah.
- [24:37]
A
Tell me. There's a bewildering set of propositions that come across my desk. I'm a professor of economics, so maybe a bit more than other people, but I'm sure the average person hears from a bank or a commercial hustler of one kind or another about solutions that are out there. Tell us something about a. Is this recognized as a crisis really? And what about these quote unquote, solutions?
- [25:11]
B
Yeah, so the people who know it best are the people who are in the business. Some of them are predators, financial predators. Others are professional, let's call them financial counselors. There's a part of them that know they make their bread and butter on the top 10%. So those solutions that you're getting across your, your desk are only for the top 10, 5% at the most. A lot of financial advisors don't want to talk to most people. They want to talk to the top 10% who have a million bucks. So their solutions is for a tiny part of the population, just like the 401ks have really helped a tiny part of the population. The people who had a job for most of their lives, who were never unemployed, who always made kind of maximum earnings and who got, who never lost their job, you know, before the age of 65 and who got, who got salary escalation throughout their whole career. That becomes a very small group. And that's who the private sector, the commercial advisors are really serving. So when they say, here's a solution to your requirement retirement crisis, they're probably not talking to you because you're not, you know, it's not the typical person. So the kind of solutions that you're hearing that really would make an. An impact are from political leaders and activists. The activists who are paying attention to this really only show up in the labor movement or with the aarp, the American association for Retired Persons, but they call themselves AARP because increasingly they're advocating for older people who are also stuck in the workplace. And the issues that are, that are the solutions that are coming from the advocates from aarp, from the labor movement, are universal pensions. Now, the labor movement has a different point of view, which is if everybody had had a union, they would have bargained for a workplace retirement account. That retirement account would be probably better run, more efficient, and it would pay out a defined benefit for life. However, we can't go back in time and we can't even go forward in time and get everybody into a union contract. But they're on the right point. Having a consistent plan at work, saving for retirement, having the employer contribute would have been the best outcome. And for union workers who aren't in the 10%, like janitors, laborers, plumbers, the people you see on the street who might be unionized, they have pretty much a good system. They have Social Security and they have some job security and they have retirement accounts. So we have to listen to the advocates for people who don't have union contracts. And that is what I've been advocating for, as you said, for 40 years. And what now the AARP is advocating. And oddly, President Trump, in the moment of talking to people who are left behind in a State of the Union address, advocated for a couple of weeks ago, before he got preoccupied, which is everybody should have a retirement account, and it should be a retirement account that you have from the beginning, that you work, and it should supplement Social Security. The sentence he had in the State of the Union address was a small sentence, but actually he's on the right track. We need universal pensions. So to answer your question, Rick, the solution to retirement crisis is to have a supplement to Social Security paid for by employers, by workers, and by the correct kind of federal subsidy, government subsidy. And we need an expanded Social Security system with more revenue going into it and expanded benefits for people in the bottom half of the income distribution.
- [29:05]
A
Yeah, I know. Just a word of my own. Somebody once said, I think it was George Bernard Shaw, but I'm not sure that you can tell a great deal about any society by looking at how it treats the people who've given a lifetime of work, whether that work is raising children or that work is in the factory or the office or the store, how you treat them Ought not to be left up to some cockamamie nickel and dime. Money in, money out. Stop. This is a fund. It's like a crisis in the family. You help everybody out. You don't ask how many nickels it's going to cost. That comes later.
- [29:49]
B
The way I like to quote myself rather than Bernard Shaw, which is that a civilized society provides a dignity for workers, and part of a dignified life for a worker is security in old age. We're having a conference at the New School a couple of weeks. Is what is the worth of an old person's life? Well, it's the worth of what a worker's life is, because an old person is just an aged worker. And we're all going to be there. And if there's a case for solidarity, you just said, or for social insurance, that's the case. We're all going to get old. We all share the risk that we'll live too long, that our money will run out, that the finance markets will crash right when we turn 65. That happened in 2008. You see a generation of people who lost everything in 2008, and they've never caught up. It was the subject. If you want to know what this crisis is going to be like, go watch the movie that won the best picture in 2000. It was called no Man Land. And it was about older people going in their trailers, you know, from parking lot to parking lot, from Walmart to the Amazon warehouse. And many of those people, because I helped the author of that book that became the Best Picture Motion Picture, write the book. Many of those people are in their trailers in the parking lot, going to the Amazon warehouse at 65, 70, because they lost everything in the financial crisis of 2008. So you are right. None of us can bear the risk of a financial crisis, a longevity crisis, being fired crisis before you're 65. This is a shared risk. And a civilized society spreads that risk across the society. I mean, what is a society if you're not sharing your risk and helping each other out? That's what universal pension does, and that's what Social Security does.
- [31:54]
A
Therese, I wish we had more time. We don't. But before I let you go, can you, in literally 10 seconds, paint a word picture of what is going to happen to America if we don't do anything, if we just pretend like we do on so many other issues, that somehow we don't have to act?
- [32:16]
B
We'll have a humanitarian crisis. We'll have people aging alone in a crisis, and it could be your mother and father. You also could have a political economy crisis when you realize that you have nothing to live for because you won't be taken care of the last 20 years of your life. It's a humanitarian and a political economy crisis.
- [32:38]
A
Theresa, you've been wonderfully eloquent on a subject that deserves it and needs it, so thank you very, very much. I hope my audience has learned as much as I have. And as always, I look forward to speaking with you again next week.