Richard Wolff (0:20)

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. First of all, I want to thank you for sending in the comments, suggestions that you've been doing. They should go as they have to charlie.info438mail.com he will collect them, edit them, look at them, respond, send them to me. We work over every single one looking for program that we can adjust to, and we want to do that and thank you for doing it. Second, I want to remind you that we have prepared, that is we, the democracy at work that produces these programs each week. We've also prepared the book Understanding Capitalism, in which I try to go into the depth and detail that many of you ask for to expand on, to elaborate the arguments and the presentations in this program, if that might interest you. Think of the book Understanding Capitalism as a companion volume to this weekly program. We're going to be talking about the Trump attack on the Education Department. We're going to be talking about the big strike in Los Angeles county, the United States and China's trade war and where it's likely to go, the whole issue of long supply chains and the idea of reshoring manufacturing back to the US and if time allows us an interesting comment about workers with less education relative to workers with more. So let's jump right in. Trump recently cut $1 billion. That's a lot of money from the Department of Education in its program of giving grants for school mental health programs. This was a billion dollars to allow school districts across the United States to hire and put into place mental health counselors to help the schools cope with the psychological problems that every single poll we know of indicates on the rise over the recent years. He cut it. This is extraordinary. We know, for example, that the pandemic has had long lasting, upsetting effects on people's psychology, given how all of us had to cope, the cutting out of our social connections, the anxieties about being with others and all of that. We know that we have had a spate of school shootings that no other country comes close to matching and that those emerge in almost every case from serious mental issues. We notice that Mr. Trump is spending an enormous extra amount of money deporting immigrants, undocumented immigrants, many of whom have spent years working in the United States, being good citizens, paying their taxes and all the rest of it. And let me remind you as a teacher myself, if in our schools the following has begun to happen and it that police people wearing ice outfits go into a school or a community and yank people out of neighborhoods, families, communities that they've lived and worked in for many years. You can bet it agitates the young people losing their friends, losing their neighbors, losing you. Fill in the blank. Of course we need more psychological help for our students. You know what this shows? It shows something to cut 1 billion off of that budget and already the schools are announcing they're firing the mental health advisors, trained people who are helping students through these kinds of crises. It shows that when an empire begins to decline as ours is, the rich and the powerful at the top hold on to what they've accumulated, which means that the cost of the decline is offloaded off of the rich and the powerful, the corporations and the top 10%, and dumped on everybody else. Firing public school psychological mental health counselors is exactly that. Wow. You know what else it shows? It shows that when you have tried to convince white people, as happens so often in America, that somehow the government favors black people, it makes it easier to get white people to support cutting the programs that they need as badly and that they use as much as black and brown people ever did. Wow. The two big items, Mr. Trump's budget just announced for 25, 26 involve huge increases for the Defense Department and huge increases for deporting people. The money is going to do the very things that add to the mental health problems this cutback worsens. What are we doing in a society to function in this way? My next upscat. My next update is a shout out, a kind of recognition that something extraordinary happened. For the first time in the history of Los Angeles County, 55,000 people went on strike Monday night, April 28, the last Monday in April. It was a two day strike to support the union's charges against the county. This is crucial. These workers include, just to give you an idea, the public mental health workers. I just talked to you about public works jobs, social workers, parks department, recreation department, all the public services that the millions and millions of people in Los Angeles county need and use all the time. What's going on? It's that same offloading of the costs. And I thought it was poignant when the president of the SEIU union that represents these workers made the following comments. I'm going to read to you. This is a workforce talking about the people went on strike. This is a workforce that got LA county through emergency after emergency, the January wildfires, public health emergencies, mental health emergencies, social service emergencies and more. And to the workers who did all the extra that the emergencies always demand. What are you doing? Squeezing them, not paying them enough even to keep up with the inflation and the cost of living. You're not providing good services. You're exhausting your workforce. What a reward, what a recognition for all they've done. And when the union pushed back, they said, well, if we paid you higher wages, well, then we'd have to lay many of you off. That's called blackmail. You take no wages or we will take away your job. You know who's doing that? Politicians who carefully avoid the other option, which is to pay the decent wages. And if you've overtaxed average people, which you have, well, then go tax those who have it. The corporations and the rich. We all know who they are and we all know all the strategies that they successfully use to minimize. When they don't evade altogether their taxes. Do something about that. Politicians don't keep squeezing because in the end, they will push back and then we will be in a whole new place. I want to turn next in the first half of this show to the whole war between the United States and China. So far, it's just a trade war, although the word just misrepresents what's going on. The tariffs the United States put against China, and I want to remind everyone the initiation of those tariffs comes from the United States, not China. China responds after the United States raises the tariffs, and China very carefully, always responds with a raising of their tariffs less than what the United States did first, just to make it crystal clear to the world who's causing this. And of course, you all know that, because the United States under Mr. Trump has levied a tariff against everybody in the whole world, with very few exceptions. China has done none of that, hasn't put tariffs on anybody else, only retaliates to the United States because the United States initiates against them. Think about that. Well, what does the United States hope to accomplish? Well, the leaders of our country, from President Trump on down, state one fact over and over. China sells more in the United States a lot more than the United States sells in China, although China is an important customer of U.S. exports. But the idea is we can win the trade war because China needs us to buy its stuff more than we need China to buy ours. Now, that's true. They do, in fact, sell more. But let me explain to you why the Chinese are acting very tough, responding, not backing down, none of it. What is it they know that perhaps you don't? So let me guess and tell you, China has been for at least a decade carefully cultivating economic political relationships with its allies. It has made allies, the Belt and Road Initiative, all the Chinese investments in Asia, Africa, Latin America, the BRICS alliance, Brazil, Russia, India, China, South Africa, and the 15 countries that they have brought in, including giant countries like Indonesia. China has a robust community encompassing more than half the people on this planet. That's why they're tough. They can shift and produce for those allies what the United States no longer buys. And they're doing that as I speak to you. And why does that make them strong relative to the United States? Because the United States, trying to cope with the economic costs of of its declining empire, is turning on its allies and driving them away. A few weeks ago, there were elections in Canada and Australia. Two parties way behind in the polls in the last few weeks roared ahead and won both elections. Canada and Australia are allies of the United States. The parties that won had one basic idea that brought them from behind to win. Anti Trump, anti tariffs. The whole world is shifting. China wins the trade war, likely because of that, and the United States loses it, likely because of how it's managing to not have an alliance when it needs one. And the Chinese have simply done that more. When you hear about China having rare earths that America wants, that's a small part of the story. The big one is the whole global economic change that has worked in the advantage of China and the disadvantage of the United States. Stay with us. We will be right back. 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 want to talk to you today about something that's been in the news for many months now. You've heard it countless times. Sometimes it's presented as the world now has long supply chains or supply lines. And the idea is very simple, that we now live in a world, we are told, in which goods and services have to travel a very long distance from wherever they're produced to wherever they're purchased and consumed. And that when they do that, they cross boundaries, go through different countries, sometimes more than once, on their complicated travel from production and assembly to final sale and consumption. The second idea, often wrapped up in the first one, is that the United States suffers from a decline of its manufacturing. We're not a country as we once were. We are told of factories. We're a country of offices and stores, but not much factory work is still done here. We're high tech and factories are less high tech. And even when we have factories, they don't have many people in them. They are automated and so forth and so on. And we are told by people who tell this story that we have to accept, you know, we, the community, the costs of long supply chains, they can get interrupted, they can get fouled up in various ways. And so sometimes we don't have what we want on the shelves, in the stores when we want it, or sometimes a ship gets stuck in the Suez Canal, or sometimes fill in the blank. And we're likewise told that with the loss of manufacturing, we've kind of hollowed out the American economy. The middle class got lost because the middle class was workers who were in unions who got good wages and therefore had a standard of living and that they could call middle. And that with the departure of manufacturing, that middle lost its jobs. And from being a high skilled, well paid machine operator and then becoming a greeter at Walmart, your standard of living drops like a stone. We've all heard this story, and those stories have their grains of truth. But now I want to talk with you about the all important. Why? Why did this happen? Why are there long supply chains when they didn't used to be? Why is manufacturing happening elsewhere and not in the United States, which also didn't used to be? Because that part of this story is crucial in if we're ever going to undo this trouble. And by undo this trouble, I mean exactly what the last eight or nine presidents of the United States have said when they were running for office, and often when they were in office for those who won, namely that they were committed to bringing back manufacturing, to reshoring it, taking it from the other shore. It went to bringing it back. So it repositions itself inside the United States. And in that way, President Trump is no different from Obama or Clinton. Or Bush or Biden. They all said it. Meanwhile, I have to tell you, in case you're wondering, that the role of manufacturing in the United States has shrunk like a straight line down across every one of those presidents, Republican, Democrat alike. So something very powerful is going on. Because even when it's recognized that there are problems about it, even when people say they're against letting that continue, and let's assume that all the presidents meant it when they said they wanted to do this and were aiming and committed to do it, so what prevented any of them from doing it? And in case you're wondering, I don't think Mr. Trump's measures are going to be any more successful than were those of his predecessors. And why not? Because of the reason all of this happens. And that's what I want to take you through right now. Starting in the 1970s, there was something happened that had happened a little bit earlier, but really took off in the 1970s and ever since, and that was an exodus of businesses from the United States and above all, manufacturing businesses. They left. Why did they leave? Because it was profitable for the capitalists who own and operate these businesses to move them. The jet engine, which came into its own in the 1970s, made it possible to move around the globe and a matter of hours. And that made production outside the United States much more easy to organize, to supervise, to keep track of. Likewise, the Internet becomes part of our lives in the 70s and into the 80s, which means that the communication minute by minute with a factory in China or India or Brazil is almost equally easy to keeping an eye on it if it's across the street in New Jersey or Illinois or St. Louis, Missouri. Given the jet engine, given the Internet, American employers said the following to themselves, and sometimes out loud, so economists like me could see what they were thinking. They said, we have been fighting with the American working class for a century. The American working class has put up quite a struggle. Lots of strikes, lots of unions. Our factories are the most unionized part of the American economy. And those workers have won wages that are the envy of the rest of the world. All of that was true. Imagine the profits we could make. These capitalists said to themselves, if we could move production out of the United States to places where the wages are much, much lower. Wow. We could shut down the factory in Cincinnati or, or Pittsburgh or Detroit or Chicago or Gary, Indiana, and move it to China. Yes, that's expensive. But if we can pay 10 cents on the dollar, 10% of the wages, that's what it was in China back then, relative to the United States, the amount of profit, we can as well rebuild the factory, build the factory, better, automate it a bit further. Latest machines and dirt cheap workers. And the Chinese are saying, come, come, we'll let you set up here, we'll give you a break on your taxes a little bit. We'll encourage you. Wow. Now it's an offer you can't refuse. Still, many companies were afraid. It's shot in the dark, you know, to go to another country, another language, another customs, and then it's Communist Party power as well. All that scared Americans. So it was only the most courageous companies that took one factory, shut it down and moved it to China or India or Brazil or any of the others. But after two or three years of huge profits, they made. All the companies that didn't go, that were hesitant, realized they would be competed out of existence. Those companies that had gone to China were so profitable that they could produce it there, ship it all the way back many thousands of miles on the ocean and still offer the output at a better price than their American competitor who didn't have to ship it anywhere. Wow. So everybody went, all the other American, every major American company that could do it, did do it, and manufacturing moved. But I want people to understand, no mystery about it, nothing weird or strange. The Chinese could never have made that happen. They had no weight of power, no lever, nothing to make American corporations do that. The American corporations went because they wanted to, they went because it was profitable to, and they got the profits they hoped for, which meant all the rest had to go to stay competitive. And suddenly the trickle became a rush, became a flood in which the American manufacturing disappeared. Now let me make sure we all understand what that meant. The consumer goods and increasingly capital goods, machines and so on, are made in China. Then they are brought all the way back. Now let me be clear. That costs energy. The ship needs energy to make that long voyage. And they pollute the oceans when they make the long voyage and dump all the soot that comes out of their smokestacks into the water of the Pacific and Atlantic oceans is not good for the planet. What happened? It's not good for the oceans, it's not good for the fishing industry. It's not good for our health and the quality of the air and the water we depend on. If the people as a whole had made the decision, we would never have done it. Especially now that we know what the devastation was to all the people who lost their good factory jobs, to all the families that didn't have that kind of income anymore to all the communities that didn't have those workers. In the 1970s, Detroit had 2 million people. Today it has 700,000 people. That's what happened to America. But why did it happen? Because it was profitable. For whom? The 3% of our people who are employers in this country. Yeah. They made out well. The 10% who own 80% of the shares in our stock market. Yeah, they did well. But you and me, uh. And can the long supply line that pollutes the ocean and wastes all that energy, is that a mystery? Not at all. That's the result of what was profitable. The companies stretched out their supply lines. Instead of having a supply line that goes from Pittsburgh to Chicago or from St. Louis to New York, easily managed on truck or train, we have an enormous global movement doing a lot of harm. We wouldn't have done it. They, the corporate elite, they did it. But now when it gets interrupted, they want us to help pay for it. And the nonsense they say, as if this is all the fault of the Chinese. They just sat there, collected the good news that American corporations, for their own profit reasons, were making the move. Last point. China didn't empty out its manufacturing. China is where all the manufacturing went. So guess what? They don't depend on long supply lines, just as the US didn't 50 years ago. And so the difficulties of long supply lines and the difficulties that we experience are not experienced in China. They organize their economy differently. And we would learn a lot if instead of waging trade wars, we sat down and taught them what they can learn from America and vice versa, we'd be a much better way to go. Thank you for your attention, and as always, I look forward to speaking with you again next week.