Capitalism Hits the Fan Film Screening and Q&A with Professor Richard Wolff | The New School

hello everyone and welcome I'm here tonight to introduce Professor Richard wolf and the video/dvd capitalism hits the fan professor wolf has taught economics he's been a professor of economics for many years at the University of Massachusetts he currently teaches economics at the new school here at the graduate program for international affairs he also teaches regulate at the Brecht forum and speaks constantly on the radio he's publishing things blogs conferences and newspapers you can follow up with all his news on his website you can also see him speak at the left forum which is a very large conference down here at Pratt in a couple of weeks that's March 19th there's information about that outside so tonight what we'll be doing is showing a shortened version of this DVD capitalism hits the fan and then Rick will talk for a few moments before opening up to any questions or ants and have answers for your questions so think about things that you'd like to ask him as you're watching the presentation so thank you for coming and enjoy this presentation as soon as I can play is the lighting okay for everyone it seems right [Music] this is the most severe economic crisis of capitalism in my lifetime which means as I look around the room in yours as well and it has to be understood and approached in that framework if it's going to be taken seriously and if people are going to have a reasonable shot at coming out on the other end of this process in something less than a devastated personal social situation so let me start by suggesting to you some things that this economic crisis is not it's not a financial crisis notwithstanding that that name is used all the time to call it a financial crisis limits it in ways that make no sense as you will see this crisis comes out of the entire economic system we have here in the United States it didn't start with banking it didn't stay in the realm of banking and it will not be limited at any time and in any significant way to the credit markets or the banking or insurance companies the second thing it isn't is temporary or fleeting or short that's a wishful thinking a little bit like imagining the crisis is limited to finance is wishful thinking let me illustrate that with two historical parallels to keep in mind first we had another great crisis back in the 1930s let's remember what that was like since the current one is rightfully being compared to that one that one blew exploded in 1929 for the next 10 years from 1929 to 1939 two presidents Hoover and Roosevelt tried a variety of monetary and fiscal policies many looking exactly like what you see today in Washington and they didn't work and for ten years we could not get out of that depression and what finally lifted us out was not some clever policy it was a major change in the society called World War two and in case you think these kinds of long lasting recessions and depressions that are immune to policy only happened long ago let me give you another example in 1989 Japan the second most important industrial country in the world then and now it encountered a downturn severe and here we are 18 years later and the Japanese have still not emerged from that depression even though they tried every monetary and fiscal policy in their repertoire which includes everything that mr. Paulson or mr. Bernanke have so far tried the third thing it isn't is quickly and easily fixable we've already seen that starting with the Bear Sterns events last summer we have seen the United States government try one policy after another lowering interest rates pumping more money into the economy every one of those policies failed and every one was introduced with great fanfare as the solution for this troubling problem each successive step was larger than the one before signaling the failure of the one before something much bigger something much more far-reaching is going to have to be done so let me begin by telling you what I understand to be the historical framework out of which this crisis comes and I think you need to see it historically to get a sense of how big it is how profound it is how serious this is to do this let's go back briefly to the period from 1820 to 1970 a hundred and fifty years that are astonishing in the world and in our country here's how and why it's astonishing over that period every decade from 1820 to 1970 every decade the American working people enjoyed a rising level of wages it's astonishing it's probably the only Society in the history of the world that can say that it made the United States remarkable it's also a time in which workers became more productive more machines were provided for each worker training was provided speed was the man that workers became more productive but they got something for their extra hard work and their greater productivity they got a rising standard of living Americans as a people began to internalize this remarkable historical experience therein lie the roots of the notion sometimes called American exceptionalism that there's something unique about America that there's something there in to the United States about a rising standard of living and so it becomes reasonable to measure your own worth as a person your own success in terms of the clothing you can buy and the house you can live in and the car you can drive the measure of yourself becomes this achievable remarkable quality of American life that's why this is the country in which advertising is born and becomes something that we can give the rest of the world perhaps a dubious gift but where the society of consumption par excellence the model for the rest of the world to this day okay let me turn then to the trauma that afflicts a population that has internalized and come to expect 150 years of rising standard of living in which workers every decade could enjoy more because their wages rose and their wages allowed them to buy more and they understood work more and more as that which allowed you then to go out and buy in the 1970s that history of the United States stopped real wages stopped rising in the 1970s and they have never resumed since this is a fundamental change in the United States which the majority of our people probably have not yet come to terms with so I'm going to look at it now by telling the story in two parts I'm going to first look at how working people coped with in the rising wages and then I'm going to look at how the business community cope with it because in their two responses the ingredients for the crisis we're now in will be laid there so let's start with the people what did the American working-class of people do now that their wages stopped rising first the American working people did more work you know if he wages you get per hour or fixed don't go up anymore one solution is more hours have more people in the house going out for more hours which is what the American working class did between the 1970s and today the average number of hours worked per year by an American rose by about 20% that's a lot we work 20% more hours on the job then we did 30 years ago by comparison for example if you look at France Germany and Italy over the same period of time the average number of hours worked by those folks dropped by 20% the hope of the American family was by sending everybody out many hours it would allow rising consumption the hope pleased unfounded why it turns out that if you're working a lot of hours you have to find other ways to solve the problems that used to be solved when you work if the woman goes out of the house to take a job she needs a set of clothes she needs for her own car especially in a country that doesn't do well with mass transportation it turns out that doing more work more hours has costs attached to it that undercut the whole point of it was was to bring in more money it turns out there are more costs so if it didn't solve the problem what was the second thing that the American working class did to cope with the end of the rising wages so that they could continue to consume well you all know the answer the answer is that the American working class proceeded starting in the 1970s to go on a borrowing binge that no other working class in any country at any time in the history of this race the human race ever did before we Americans started borrowing at first of course they borrowed in the way that the lender prefers they offered collateral so the basic way the Americans solved the problem was to borrow against the house to borrow a lot against the house keep in mind that the crisis exploded around something called a mortgage the subprime mortgage but the American working class could never have increased its consumption simply by borrowing against the house they basically didn't have enough wealth to borrow enough something had to be invented a way to lend to the American people massive amounts of money with no collateral at all and that way was found it's in your wallet it's called the credit card it is a mechanism to allow banks to lend to the working class with no collateral at all it's unsecured debt in economic terms your credit card but of course no lender will lend to you without collateral unless there's something in it for them to do that risky thing and the answer is the rate of interest what is the average rate of interest on a credit card today ready 18 percent per year that's why there are credit cards so the American working class was given loans hundreds of billions of dollars in unsecured credit in order to allow the rise in consumption and the American working class did they went for it stress exhausted this is a population that has reached the limits it cannot carry more debt and it can't do more work that's why this is not a temporary problem this is not a blip along the way we have reached the limits of the kind of capitalism this society has become let me turn now to the business community what they do well for the business community the last 30 years have been spectacular everything I've told you about the working class now we're going to go the good news with the introduction of computers American workers became more and more productive we had a 30 year period of rising labor productivity and now stay with me each year the worker produces more and what do you pay the worker each year the same that's what some all rising wages means the workers get paid the same the same they said they produce more and more and more but they get the same they said that is the gap between what the workers produce for their employer which the employer sells and what they have to pay the worker to do it the gap is getting bigger but the workers get us flat what they produce is more that bigger friends is called profits so the last 30 years of flat wages of rising productivity are the greatest profit boom in the history of American capitalism and quite possibly any capitalism profits boomed everywhere not just on Wall Street but right up and down Main Street - this is not a crisis of Wall Street this is not Wall Street doing something that Main Street is left our not at all this is a crisis of a system that is as busy on Wall Street as it is on Main Street every employer on Main Street participated in this dream this is an employer's fantasy come true I paid my workers the same and they work more and more for me they produce more and more for me and I don't have to give them more at all this can't be real pinch myself it was and produced in the business community a kind of wild euphoria nobody could quite understand it as the 70s became the eighties and the eighties became the 90s the profits were unbelievable they began paying themselves levels of wages and bonuses nobody ever heard of before large corporations paid their people tens in annual salaries with that money come from I just told you what else did they do they began to go through an orgy of something that's called mergers and acquisitions they bought each other companies had huge amounts of money bought other companies are you annoyed by a competitive buyer are you troubled by a foreigner who's stealing your market by all and you had the money to do it what else did they do interesting they put their money in a bank and the bank suddenly discovered why old amounts of money coming in some corporations deposited in the banks what you do with your profits while you're figuring it out what else to build with them you put them in the bank and the banks became repositories of enormous amounts of and then the corporations and the bank is about the same time discovered a remarkable thing that they could do with these profits they would lend them to the employees that is the way that the employees could raise their consumption when their wages didn't go up anymore was to borrow the money that they're frozen wages made possible to their employers to understand the American economy in the last 30 years Zen amounts to this employers no longer raise the wages of their workers instead they lent them the money that's why it's an employers fantasy come true instead of raising my workers wages I lend him the money which he has to pay me back with interest isn't that better than paying the wages this is this is Nirvana or as close as business gets to Nirvana and so the American business community directly or through the banks got into the business of lending you all know that corporation or some of you can remember it General Motors famous for producing automobiles over the last 30 years General Motors became a very different entity it created a subsidiary subsidiary called GMAC General Motors acceptance corporation it is a bank it lends money in beginning by lending money to people to buy cars because their wages pay for them that you discovered you could make more money off the interest of the loan than you could make profit from the car and so General Motors became a bank became much more interested in being a bank than being a car something we now notice the results off they don't make cars very well but they're a great Bank their only mistake was about ten years ago they branched out they were making so much money and instead of just lending to people to buy cars they became a general lender and went into the mortgage business wrong decision wrong time but General Motors has specialized in wrong decisions at the wrong time for 30 years banks got into it lending to everybody we all became used to the following phenomena I don't know about you but I must get two to three solicitations for credit cards a week in the mail none of which I request it's so profitable to push debt on the american people that everybody does it it is a society out of control it is a profit bonanza looking for more ways to make money and the financial sector on Wall Street responded to this situation it didn't create it it got its hands on the money and found new ways to learn new people new loans and I interest rate this is a craziness this is a wild out of control but we shouldn't be surprised if we create an anomalous situation of exploding profitability on the one side and a desperate exhausted population wanting and needing and measuring its own self in terms of rising consumption we have a lethal combination and so of course in the enthusiasm of business and the banks to lend the money and make more money time of so much money and hundred billion dollars here and a hundred million dollar executive package over there we're surprised that they ended up lending to mud people who couldn't pay it back oh come on the history of capitalism is punctuated by booms and busts what do you think that word comes from boom and bust is built into this system the only difference now is it comes at the end of this long historical period when it has reached its outer limits so of course in the rise of all this profit we had what we had the coal mr. Greenspan we had irrational exuberance and first it expressed itself in one kind of lunacy and then another this is the lunacy of the business community lunacy number one in the 1990s as these profits were building up suddenly our business community decided that the new Internet is going to revolutionize the universe it really isn't just an expanded Yellow Pages it's really a radically new thing and so they invested in companies funny companies with little veins using two or three initials companies that have been around three four years had never made any profit and who said in their annual statements we are expect to make any profit for ten years who cares their stocks were bid up to five hundred dollars a share and you all know what that was that was the boom of the late 1990s and in March and April of this of the year 2000 the stock market crashed so terrifying was the collapse of the stock market in early 2000 that our government reacted in terror by saying oh my god the company the economy's going fall apart we have to save it by getting people to spend some would lower interest rates which they get we know what will happen if you lower all the interest rates people who borrow like crazy and they did and what they spent their money on was housing so after the collapsing of the bubble of real stock market we had another bubble of real estate it went crazy everybody buying housing building housing everywhere cheap money to borrow build by building buy and now we have the collapse of the real estate bubble and there's nothing left to bubble we're gonna do there isn't anything stock market's big finish real estate is finished and so we sit a collapsed bubble the wealthy having produced an armada of new instruments that are now not worth very much so that our business community is a guest with staggering losses and so in its own peculiar way has come to replicate the exhaustion and anxiety of the working class for different reasons Evon knows but we have an economic landscape that is littered with corpses so the question we can pose is what might be done other than these attempts to stimulate that don't succeed these attempts to bailout that don't seem to succeed and now even these steps of government buying shares in AIG and the banks that doesn't seem to succeed I don't find it surprising and I hope you don't given that history in the whole context why these small hesitant halting steps do not add up to a solution and I'm not the only one who sees it many in Washington do as well and they have begun to put their faith in something else and it's an interesting story and I want to conclude by trying to explain why it won't work either this is the notion of regulation and this notion works as follows the argument is made that in the first 30 years after World War Two we lived in it maybe they come coming out of world out of the Great Depression the regime of Roosevelt that after all introduced all kinds of regulations and that's true regulations governing what banks could do regulation governing what boards of directors of corporations could do should do might do whole new institutions Social Security unemployment insurance we never had that before so there were lots of regulations that came out of the desperation of the Great Depression and those regulations were enforced from the 30s through the mid 70s so that was a period of a regulated American capitalism and so the argument goes that was a good time and what terrible thing happened was at the end of the 70s beginning with Reagan was an era of deregulation so the argument goes ok our problem is just that we deregulated under Reagan Bush Clinton and Bush and so now maybe with mr. Obama the era of deregulation or we put behind us and we will return to the reregulate 'add good old days brought back a part of this is understandable we didn't regulate out of the glass Great Depression but another part of it is blind let's see why those regulations were put into effect by Roosevelt and even some later even by Truman even by turn 80 even by Johnson those regulations did indeed limit constrain what boards of directors of capitalist corporations could do they did but here's what they also did they gave corporate boards of directors an immense and instantaneous incentive to defeat those regulations to evade them every chance they had to weaken them every chance they have and when the political conditions were possible to get rid of them and those boards of directors went to work having tried to prevent those regulations in the first place they went to work to evade weaken and destroy them the last 30 years were the success they were finally politically powerful enough that they could get rid of most of them in other words to pass regulations while leaving in place the boards of directors of private corporations is a bizarre policy that guarantees that you've left in place the absolute sworn enemy of the regulations but you've not just left in place people who want to undo the regulations let's remember what a Board of Directors is the board of directors of a corporation are the group of people usually numbering between 15 and 25 persons into whose hands flow the profits of enterprise so to regulate our kind of economic system is to impose and rules on a group of people with every incentive to undo them and all the resources needed to realize their incentives so of course the regulations become a dead letter it's as if you had mounted a military campaign but you decided not to defeat the enemy but to establish an awful lot of rules while allowing the enemy to have free supply lines from everywhere needed to undo you a general who did that would be sent to an insane asylum if we're going to deal with this problem we have finally to face and here's my conclusion that if we leave the structure of enterprise in our society unchanged we will not be addressing what is at the base of this whole story the conflictual relationship between the people who run the production enterprises of our society and the people who work in them that's why the wages didn't go up anymore when it was possible not to do that that's why debt was substituted for rising wages that's why jobs were moved and destroyed and that's why regulations are simply objects to be undone so what is a possible solution imagine the difference if a new system of regulations say passed by mr. Obama were to confront a different organization of production one in which not a Board of Directors responsible to shareholders ran the business but instead the people who worked in every business ran the business because they all have to live with the consequences then you have people on the inside of every business partnering with the government to make sure that the point the regulations was realized rather than a group of people who would function to undo and Swart the whole point and purpose of the regulations why don't we ask that question and I suggest we asked it because even though I'm aware it's a very question we are in varying times we say some really heavy problems in our society you don't have many choices what else might be said for reorganizing our production system so that the people who work at an enterprise become their own board of director many American workers more than you might think have already done what I'm describing over the last thirty years every year hundreds and in some years thousands of engineers in that little strip of land between San Francisco and San Jose call Silicon Valley have done the following interesting thing they quit their jobs working for big companies like Cisco or IBM or any of those and together with a few friends having walked away from those jobs they set up a little enterprise amongst themselves working out of one of their garages and here's how they ran their enterprise we're all equal here no one's a supervisor no one's telling what else to do we're gonna do this all as a group and from Monday this Thursday we're going to make software programs the way we always did but I'm Friday we're going to come to work and we're not gonna open the laptops we're not gonna make software on Friday we sit around all day and have meetings because we're our own board of directors we decide what to do with the profits Weaver we decide what to do with it to change our technology without more people working here what a move to another part of San Mateo Community or whatever we are our own our own Board of Directors this has been going on for years these people voted with their feet and their lives to leave one kind of organization production and establish another if we don't take basic steps of this sort to deal with the crisis that has built over this length of time in the depths and breadth of our economy if we keep tinkering at the edges with our monetary system because we need to call this a financial crisis rather than a crisis of capitalism which is what it is we will all be very sorry so it depends on us whether we will have the strength and the daring to look at these problems in new ways and face the possibility of having to make radical changes thank you very much for your attention great thank you everyone for watching this and now brick will get up and talk for a few moments and then we'll take your questions let me thank you first for coming and say a few words about about that might interest you in case you were planning to do something like this yourself I have never been in a film before in my life I have had nothing to do with video DVDs or anything else I was approached by a group of professionals who make these kinds of films group is called the media Education Foundation they have a website WWE talked they make all kinds of films on all kinds of topics they approached me and said that this crisis demand that a film would I do it and you saw one result it's a DVD that has two versions of this film on it one that you just saw is short about 35 minutes and another one is 55 minutes long it has more bells and whistles I didn't realize it until just tonight but this one doesn't have the eerie music that the 50 the 55 minute one is punctuated by very well-crafted scary music to get you to get you into the mood it has been a very interesting learning experience for me I've been a professor all my life and therefore like folks in this business I write articles and I've written quite a few books it's very humbling to produce a film like this and to discover a footnote for you might be interested the lecture you saw is actually a filming of a live lecture was given by me at Smith College in Northampton Massachusetts to a regular evening session that people were invited to but it was done in November of 2008 so if you find much of this film relevant then I get at least 6 points for having predicted pretty well because most of what's in there is as valid today as it was way back then the the experience I want to mention to you is that it's pretty clear to me a little depressing I'm a little it's clear to me that I've reached more people with this DVD in a year and a half then with that ten books and fifty or hundred articles I've written in the previous 30 years tells you something about the world that tells you something about our culture and it's something everybody ought to think about what that means in terms of the way we live and interact with one another it's also led as Jen mentioned in our introduction which was very sweet of her it's led me to have a remarkable experience people who talk like me have been able to function in American Universities perfectly well I've been a taught at Yale I taught here at the City University of New York at University of Massachusetts but we normally have a harder time getting out to the rest of the community that isn't in the colleges of the universities however once this film got out and thanks of course to the underlying crisis that's changing America much more than I think most folks understand I have done more public speaking have been on more radio and television programs in the last 18 months than in the entirety of my life before that and I did a lot of public speaking I've been active all my life and been involved in political things and so on so for me it's been a transformation of my my existence I now do at least one radio or television program every week and there are weeks in which I do three or four and I don't just mean PBS or public radio I'm talking about commercial stations give you an example my last week my last the radio program was with a commercial am station in Salt Lake City Utah where the person who interviewed me for an hour during rush hour which if you know how radio works is the best time to be so when everybody's listening you know in their car or something on the way between I think five and six their time out there in Utah the interviewer introduces himself to me as a Republican and a Mormon I am as you may have guessed neither and for the rest of the hour he and I agreed on virtually everything and I said exactly to him what you heard said that that that didn't happen to me before in my lifetime even the 1960s when I was very young and I was beginning to get active I never had experiences like the ones that I'm having now and I mentioned also in case you're interested that I once appeared last year on the Glenn Beck program and he and I agreed on everything as well we spent 10 minutes before 10 million Americans bashing Yale University for being an elite university it does not pay taxes to the local community in which it is located which is a an obscenity that all private schools participate in but with institutions as rich as that it I don't know if you know Yale is a third or fourth richest university in the world and New Haven is among the ten poorest cities in the United States so you have a situation in which a poverty-stricken City New Haven where I live for thirty years I mean I know it well because I went to Yale that's why I went to New Haven and I thought it yeah it's a very poor City made all the poorer because the richest landowner and the richest employer and the richest citizen of the community doesn't pay taxes it is Robin Hood in the reverse when someone there's a fire drill at Yale because as a danger might be a fire the fire department comes with all their red trucks Yale doesn't pay for that the poor people of New Haven one of the ten poorest cities in the country pay extra taxes to deliver the free service of fire police public education and so on to Yale and Glenn Beck called me onto his program because he wanted an expert on that and that's what we did so things you know I'm not wanting to defend or say anything positive whatsoever about blending back on the other hand that is the reality of what what what is going on so it has been a remarkable experience and I'll leave it to you obviously to judge whether or not the film makes the case it wants to make and gives an interpretation I can tell you from everything I know that the strongest part of that film seems to be in terms of what people respond to the explanation for how we got into this mess a feeling of the historical forces that came together to produce it and I've concluded from that that our media for all kinds of reasons have been stunningly unsuccessful in explaining to the American people what in the world is going on and what is happening to them and has created therefore an immense anguish anxiety and hunger to understand and I benefit because this film but that tries to give a manageable explanation that people can relate to it touches your own life one way or another and that it's a sobering reality that if people on the Left of American politics were able to formulate present their own analysis of what this is about and you might be very surprised at the response as I do my speaking television and radio around the country I am NOT attacked I am NOT vilified I am NOT treated and as recently as three or four years ago when I would go on radio and television I would have usually the following experience the interviewer whoever he or she was would invite me on probably to stroke their own sense of being open-minded and fair-minded have one of those on the program you know and I was one of and the interviewer would would be polite and all that but would make sure to let his or her audience know that they weren't with me what is different about the last year and a half is I don't have that anymore the interviewers are with me they throw me questions that we call in the business as I'm learning the lingo softballs they ask me questions that give me a chance to say my thing they are not anxious to show that they disagree me with me they're anxious to show that they're with me including my Republican Mormon interviewer in Salt Lake City so I am finding a much different experience than I have had before the upset and the concern and the American people is at least in my experience going around the country which I do a lot these days is very encouraging a much less dire than the media would have you suggest what's going on in the country is not just tea bag parties a whole lot of other things are happening and they're happening perhaps below the radar that many of you work with but they're happening and I think that it might be useful for me to let you know that nothing else make you feel a little better or a little less upset before just opening it up and not be glad to answer obviously any questions about this I thought a few words might be useful to you in terms of what has happened since the film was made and over the last six or seven months capitalism is a complicated economic system and one of the things that it has is a complicated network that ties together events in one area to events in other areas it's even a little scary that you can have a problem in one area of capitalism but it doesn't show up there it shows up somewhere else it's a little bit like what a doctor may explain to you that if you have a pain in your elbow it doesn't necessarily mean the problem is in your elbow it could be in your shoulder it could be your nerves it could be a vitamin deficiency who knows what it might but you have to understand this system that will explain to you why first this system as symptoms use me and then another symptom show up economies like that too and what connects the different parts of the economy of our kind economy is this thing called the market and the market is this bizarre relationship which if you've ever thought about it or certainly if you've ever studied it it's been presented to you as one of the greatest inventions of the human race or right up there with sliced bread it can work very nicely but it works always in two directions the good news is it can sometimes make things happen in another area that are good because they follow up from something good that happens somewhere else but what can they can also do is they can spread the bad news what's happening in our economy today is that markets are spreading the bad news when a group of people can't pay back their mortgages the end result is to collapse the government of Iceland that's what happened when countries collapse in their economies around the world these days and governments rush in to keep the economy going because the private corporations have stopped functioning but the government's that try to step in they have to get the money to do that and where are they going to get the money they dare not tax their people that'd be a revolution so they borrow the money so people around the world who have money to lend are in a great position because every government on earth is desperate to borrow to keep itself going so these lenders then looking at this situation say oh good I can now lend money to the safest government and I can go to the the unsafe ones the shaky ones the poorer ones the smaller ones and I can say you have to give me a lot of interest or else I'm not gonna give it to you why do I should I lend to you I can lend to the United States Canada why should I lend say to oh I don't know Greece why should I lend to Greece Greece is a poor country we is a country with lots of problems by the way not problems all that different from many other countries there's a little bit of a hype but they have problems so the Greeks I don't know if you follow this but Greek workers and Greek unions and Greek families have been in the streets the last three or four weeks and they will be in the streets tomorrow and the next day in a massive movement to say we're not gonna have our wages go down our taxes go up and our social programs provided by the government fall apart because the capitalists around the world lent to people they shouldn't have took risks they didn't understand or didn't report we don't want that and the world press struggles trying to blame the Greeks for what for doing what everybody else does so here here we have an explosion in Greece and by the way the next country in case you're interested since people always ask me as an economist as if I could predict the future what's happening if you ever by the way encounter an economist who predicts the future get away from that person as fast as you can because that's toxic and then you know there's no difference between an economist who makes a prediction and the lady in the amusement park who reads your palm and tells you who your next love life partner will be you're smart enough to know that the lady in the amusement park that's what it is it's an amusement when an economist talks to you it's also an amusement don't ever mistake that it's something else so I can't predict anything either having said that since it's always asked is there another country that is about to blow up because it can't handle its problems even though it doesn't have a profile like Greece and the answer might surprise you its Great Britain whose condition is is is worse when the Great Depression hit in 1929 the average level of debt of an American family was about one third of its annual income that is the average family owned a quantity of money roughly a third of its annual income and you know if you're going through hard times having a debt makes it harder in 2007 when the current crisis hit the average level of debt of an American family was a hundred and thirty percent of its annual income we have no idea what that means we have no idea what that will mean in terms of the length or the depth of this downturn we have no past experience with anything like this it is just one of the many variables which if you take it seriously mean that the art of prediction is fake we have no way of knowing but if you think that's scary in Britain today the average level of debt of an a British family is not thirty percent of its annual income and not even 130 percent it's a hundred and seventy percent of their annual income the British working class in record time outstripped the American to become even more indebted than before the British government is borrowing quantities of money that no one has ever seen before printing quantities of money that no one has ever seen before and around the world everybody who owns British pounds every government every bank is thinking to itself time to leave I don't know if some of you saw it but usually when a financial story like this begins to develop which it did about three months ago usually about a three months lag and then it shows up in the New York time so today's New York Times had a story about this but it's three months late if you want to keep current you have to read other newspapers the best I mean that seriously there you have to read the Financial Times the best paper you can get The Wall Street Journal is becoming an outlet for mr. Murdoch it's a different story and the New York Times is what you should read the crisis is as bad today as it ever was you've been hearing since March of last year of a recovery here's what that means we did get to the bottom of the stock market on the 9th of March 2009 we have had an uptick in the stock market risen about 40 percent from that time 45 percent and our banks have gotten healthier they still have terrible troubles but healthier the reason this happened is that the United States government poured an unprecedented amount of money into the banks of the United States into the financial companies of the United States not just the banks basically guaranteeing to the financial sector that the Full Faith and Credit of the United States would be available limitlessly please remember that the American government still has on the books a virtual absolute guarantee for the debts of most of these large institutions it owns shares in them it guarantees their debts it provides them with limitless credit at ridiculously low interest rates verging on zero it is the support we do not have a private banking system we haven't had one for a year and a half our banks are on life support of the United States government those banks took unspeakable risks they knew that and because they took incredible risks of lending to each other and to other entities who couldn't possibly pay it back which they knew they invented a wholly new gimmick it's an insurance policy for loans that's all it is it's a it's a way you go to a particular company I'll mention it in a minute which one they were you go to a particular company and you say I lent money to this thing they owe me a hundred million dollars I'm worried because I've done my research they may never pay me so I want to buy a policy that covers me well you will give me the money they default on if they don't pay it's an insurance policy for bonds or for credit it could have it should have been called an insurance policy it wasn't why wasn't it the answer is very simple in its what I talked about in the film every one of the 50 states in the United States over the years has developed an insurance Commission insurance is a regulated industry in the United States why because insurance companies have been as crooked as the day is long for most of the history of that industry and periodically people blew up about it by the way what's the basic problem of an insurance company you must have noticed that in your life you you send them money your hope is that you never need to be get any money back which is their hope to think they then take your money and invest it and make money with it the more of your money they take the better off they are and so the day may come which happened over and over again that you actually needed to be covered from what you've been sending on premiums for and you went there and you said pay me and they looked at you and said have a nice day we don't have the money anymore whereupon insurance had to be regulated because people were swindled so we have insurances so had they called the insurance policy for debts these big banks that lent irresponsibly then they would have fallen under the insurance regulations of this country so they weren't called insurance policies they were called something you may have seen in the newspapers a credit default swap doesn't even sound like an insurance policy it's a credit that's all it is not a credit default swap is an insurance policy on a debt and companies got into that because nobody really thought everything would fall apart because in the period from 1975 to two years ago the American economy was just wonderful and growing and Pross and there was no end to it and so company sold these policies because it was like free money they would get a payment every month and they'd never have to pay the largest insurance company in the world led the way called a i:g so when everything collapsed in 2007 all of the banks that had lent money irresponsibly the people who couldn't pay it back trotted over to AIG here in New York and said pay me when AIG said sorry you don't have that kind of money have a nice day at that point all of the financial structure of the United States was in in play all over the country pension funds churches corporations had these bonds that they had bought to hold their little bit of money which were now not worth anything and they couldn't collect on the insurance so the United States government came in took over the AIG company there was no time to work out a plan it was collapse time so the AIG corporation as an independent largest insurance coming in the world disappeared I mean it still exists but it is completely owned by the United of it ships are owned by the United States which has pumped somewhere between 150 and 200 billion billion dollars into it and all that money is doing in AIG is being sent over to the people who bought the insurance policies and one of the largest the scandal of scandals one of the largest companies to cash in on AIG policies when I aji couldn't pay them the government paid them was goldman sachs which had sold all kinds of people around the world on the great idea of investing in these bonds while the company was simultaneously buying the insurance policies betting that these bonds would never get paid back but that doesn't matter because you're all paying for that but keeping Goldman floated so of course Goldman stock has gone back up and we've had a recovery of the financial sector and a recovery of the stock market they're very close together but over the last nine months the unemployment rate of the United States has gone up every single month there is no recovery in the rate of unemployment none the rate of home foreclosures of the last nine month up every single month the chaos in a whole host of countries around the world you just read little about Greece or little about it is growing worse and worse even today's New York Times story on the financial section explains that in Britain which is the story today it is getting worse and worse and worse and no one quite knows the the British Pound which was two dollars to US dollars to get a pound a few months ago is now less than a dollar fifty which is a sign of the British situation it may well be the end for Britain it may be the the end of the British position you know they were a great global power like other countries sometimes are and then the decline began and it started in the 9th and end of the 19th century and it traveled across the 20th century and as we enter the 21st century no one knows the thing that kept Britain alive in the last 30 years was the fact that we had a financial boom London is one of the great financial centres of the world maybe the greatest so with finance booming London could take off and could carry Britain with the financial sector going down when the market turns bad the badness spreads not to put too fine a point on it they really isn't anything in Britain Italy all think a minute it's a small unfertile cold wet offshore island from Europe we just are used to the and so we think like that particularly the United States a former colony but there's nothing there if they can't run financial hustle they're gonna be exporters of bangers and mash and if you've ever eaten that you can see there's no future there so there is no recovery and you have all the consequences of that you have a mass of Americans who keep reading about a recovery and who obviously looking around their house and their job understand they're being left out now being good Americans a good number of them will blame themselves we we're good at that it's my fault I didn't get the right job I didn't get the right education I didn't do well enough in school I didn't do this I didn't do that but a growing number of Americans are not gonna die themselves they're gonna look for somebody else to blame we have the first african-american president that's it that's an easy one a whole bunch of people are gonna get angry at him we have politicians who deserve folks anger for sure doing much so we have a time of tremendous dichotomy between rich and poor the statistics are stunning in the 1970s the United States was the least unequal distribution of wealth and income of the advanced industrial countries today we are the most what you saw on the graph up there is a story in which the rich got richer and everybody else had a hard time they only got by by borrowing but that's over you can't borrow anymore and so you are now having postponed that day new mall the confrontation it's with us now this is an extremely serious crisis it is far from over but the political whirlwind being set in motion now is as extreme as any I've ever seen in my lifetime in this country and I don't think most Americans have yet begun to to understand what they're in for across the board every institution in this country is in trouble every institution is cutting back even Wall Street firms and hedge funds who are in terrible trouble this is a crisis across the board there are demonstrations across the United States tomorrow around education very interesting led by stimulated by and organized largely by what is happening in the state of California for those of you that don't pay attention pay attention it's our largest state and it's the state which is arguably as terribly impacted by this crisis as any they are laying off thousands and thousands of teachers and social workers and prison guards and everything else and everywhere across the state of California there's now rumbling they're mobilizing they're havin demos everybody had some they're gonna have more of them because there's a fight that's emerging and I'll stop with that which is who's gonna pay all the costs of groping our way out of this catastrophe the corporations have figured out long ago the steps they need to take to hold themselves harmless to minimize the damage done to them the banks have been stunningly successful in coming through this disastrous period improving but for most other institutions it's not that way every University I know of is in trouble public and private now some of them you know you don't sympathize with them but Yale loses half its endowment that's a that's a lot for an institution like that and American institutions of higher learning which I mentioned only because we're in one are are an extreme problem we basically changed our model of higher education we used to have a community of tenured professor in a certain relationship with students we don't have that anymore the overwhelming majority of our faculty are now adjuncts they get paid nothing and the administration becomes the boss of a core of underpaid precarious workers with no guarantees and no security same thing is happening in Europe but the Europeans have a clever sense of language so since there the word proletariat in Europe which has a deep socialist and communist tradition is widespread they had to come up with a word to cope with the new generation of people with no job security and in Europe it's called the precariat instead of the proletariat but we have that here too Kelly girls manpower temp workers all of that and all of the adjuncts and all the people who are temp workers are an insecure workers without being called that that's that's what's happening here and with the proposals now to cut Medicare to raise taxes to cut social programs I mean you you are facing as the Greek people are the question of whether you will you and I mean you and me tolerate not only the system that produces this crisis but now proposes to sort its way out of the crisis basically by shifting the costs of the adjustment on those who had the least to do with producing the disaster in the first place that's a remarkable outcome if they can get away with it and the struggle in Greece is a struggle every other European country is concerned about and we should be to the struggle there is whether or not the financial community that runs Europe can impose these costs on the Greek people or whether the Greek people will say no every other worker in Europe is watching every trade union in France Italy Germany Spain is watching every single one and they will make the determination whether they see the outcome and only the least of the ironies is that the government caught in the middle the government of Greece is the government that is a socialist party government run by a member of a family that has been the leading family of socialism in Greece for generations Papandreou those of you ever followed Greek policy know that the father and the grandfather and the current prime minister a Papandreou just to show you how complicated the world is set in my classes at the University of Massachusetts on several occasions I'm just hoping he understood what I was trying to teach so any questions comments I'd be glad to try as best I can sir yes in many ways the proverbial $64,000 question first integrate let me integrate briefly China into the story you saw in the film in the 1970s when this story began when the wages stopped rising all Americans whether they did more work the way we described or they took out debt all Americans somewhere understood the world had changed and they became very interested in finding cheap places to buy things they knew they were under attack and starting in the 1970s the American working class shifted its purchasing programs its plans they may not have been conscious of it but they all did it and peers basically what they did the entire structure of stores catering to the American working class of course I have to bracket this here in America we of course have no classes and therefore we have no working class so I of course mean the middle class we are a population that has no problem saying that everybody is in the middle class except for you know Ivana Trump or somebody else we are all the milk that the working class of people people go to work every morning 9:00 to 5:00 and live like that so they had the change they had to find a place to to get cheap stuff if you had understood that in the 1970s that there was this sea change which most people didn't but if you had if you were lucky to see what was really unfolding and you were a country or a company you would have said okay my future is I've got to produce everything that the American working class wants to buy a coaster a car a hair blow you know hairdryer TV whatever I got to produce it cheap the cheaper I produce it the better my chance of getting into the American economy and the American economy in 1970 is the just economy in the world that working class is the richest working class in the world buys a disproportionate amount of stuff compared to anybody else in the world it's the market the country that figured this out and went to work to produce those goods for the American people was the People's Republic of China they transform their society what's going on in China the last 20 years is stunning something like three or four hundred million people are moving off of agriculture in the countryside into the cities that process took centuries in Europe to accomplish for the same number of people it's happening in decades in China in in Europe we write books about the dislocation to people's minds and cultures and religions of that kind of move from the agricultural way of life to the urban industrial the Chinese have managed it in 20 years it is an unthinkable thing they developed an industry where there was none they develop an infrastructure to handle transportation at where there was none they did everything to produce the mass stuff for the American people which is why you're all wearing it right now the problem of the Chinese was no way to distribute it in the United States they don't have any stores they don't have any networks that have in the wholesale we did nothing what the Chinese needed was not just to produce the cheap stuff they had to find a partner inside the United States free of any taint of being communist who could handle everything they produced as fast as they produced it and they found somebody a small obscure silly family born in Bentonville Arkansas having a little dippy dippy department store in that part of the world I've never been to Benton Bentonville Arkansas I assume most of you have not either I'm assuming it is a small rural place in Arkansas which is already a terrifying concept but any case yeah that's what that is but Walmart which is what I'm talking about obviously is now the largest single private employer in the United States it's the largest retail outlet in the world there's no chain Walmart could not have happened without China and vice versa this was a marriage made in commercial heaven the Chinese found their distributor and the distributor found the way to become not just a department store in Arkansas but the world's largest retail outlet handling Chinese goods which is what they did and what the Chinese thereby did was give themselves 20 years 25 years 30 years a window during which if they played their cards right placated the United States gave Walmart everything that wanted which they did they could handle the flood of people off the countryside which they couldn't have stopped anyway but instead of having a revolution as these people come with the city and can't survive they had jobs for them jobs predicated on selling the output to the United States so this is a symbiotic interdependent relationship the Chinese not only produced for the American market and remember hard work hard work to produce an incredible amount of stuff which they don't get the consume in China they produce for export very serious they don't get to enjoy this stuff they get rid of it but here's the worst of it the problem is if Americans buy all this stuff we send all the dollars over there to pay for it what are the Chinese gonna do with all the dollars their economic that they can't buy stuff in the United States they don't want to but they couldn't they couldn't handle it anyway no point in buying all their equipment they think there are the people who run it on the project that so they accumulated dollars what are they going to do with the dollars and they came up they came up with a brilliant solution they lent the dollars back to the United States to enable the United States government and its people to buy the Chinese junk and it's important for you to understand it because you know what this is this is a replay in Reverse of a game the United States played at the end of World War two called the Marshall Plan at the end of World War two of the United States had a big problem we had just kind of a Great Depression followed by a war was that we would fall back into the depression it was only the war that got us out so the end of the war what do we got all those soldiers taken off their uniform they don't need it anymore and they don't need a gun anymore they don't need bullets from any planes because the war is over oh my goodness these are these now demobilized soldiers together with all the people who zhing their jobs and the munitions factories they're going to be on it what did they do to keep working that was the great anxiety 1945-46 in America one of the solutions they were settled by the way the solutions are really interesting for those of us in the United States because we were in such a mess then we did things that you couldn't dream up today you have something called the GI Bill of Rights you know what it did in 1945 the United States government said that every returning soldier we will pay for you to go to college all the costs end of story and they did it today that would be considered to be an irresponsible act of fiscal poor judgment but we had to do that you know why we didn't want those soldiers looking for there was no work with one of them in school the second thing we did is we said okay we've just finished a war Europe is completely smashed they want to be built good we'll sell them discuss the tractors to the machines to rebuild and that'll give us work in America make that stuff the European said great we want to rebuild all problems of the United States will lend you money we'll lend you the money so that you can buy our goods and that's exactly what the Chinese did they lend us the money so we could buy their goods and so here we are in 2010 and what have we got the Chinese have industrialized their country in two or three decades stunning world has never seen that before hundreds of millions of people brought into an industrial base but they're completely dependent on exports completely number two they've accumulated so many dollars that even though they've lent them to us they are now the largest creditor of the United States our government owes the People's Republic of China somewhere in the neighborhood the public and private debt over a trillion and a half dollars by the way just a footnote for you to think about at about 4% interest that means that we as a people you are paying taxes to Washington sixty billion dollars a year of which is delivered as an interest payment to help the People's Republic of China modernize the Red Army so on behalf of the People's Republic of China I wish to tell you thank you thank you so very much if that strikes you as bizarre that's just one index we owe them big time we need them big time you know why we need them because the entire structure of our economy now depends on cheap goods for Americans purchased at Walmart imagine what employers would face by the working class here if we said no no no no more Chinese goods oh good instead of a shirt from nine dollars that you can get it in a Walmart you're gonna spend 40 at another store because it's made in you good old USA ah our industries depend on low wages that can only survive in a regime of cheap products and China is the number-one producer of cheap products in the world nobody else gets close so yes we now have a situation in which we depend on the Chinese they have been crucial to the whole story we've told here to get the richness of it the United States government is fighting three wars Iraq Afghanistan and Pakistan that we know of who knows but at least three those wars are not paid for by taxes because they're they're already unpopular they would become it would be impossible to continue so the money has to be borrowed who will be borrowing it from the People's Republic of China the People's Republic of China is opposed to the American presence in all of those countries it finances that presence that it opposes contradictions when a when an economy is caught up in these kinds of contradictions one of the lessons is don't imagine that this is under control the notion that this is all being worked out and that mr. Bernanke or somebody else has got this under control that may flatter these folks and it may pander to the PR firms they hire it is not the case here's the last point about China here's what we know over the last year and a half the world has not been buying Chinese goods the way it did before there has been a major cutback which would have to be the case every economy is in trouble we can't buy this Chinese stuff including our own during the last year and a half the Chinese report constant production growth in production more output every serious economic researcher that I know cannot resolve this issue how are they doing this how are they continuing to employ all those people prevent riots in the street keep everybody working produce more stuff when they're an export dependent economy and the export markets have dried up there are two contending answers one that they have not only achieved all the other things they've achieved but they have in a time that nobody could ever dream of a year and a half shifted from an export dependent economy to a domestic economy there is they they have their own people buying all this output for me I think that's crazy I don't think that's possible I don't think no society could do that they can't do that that that takes generations it certainly takes decades you can't do that in months second option they are making the greatest gamble imaginable they're keeping everybody working they're literally holding stockpiling warehousing unspeakable quantities of output in the hope that the world economy will correct itself soon enough and far enough that they can unload all that stuff and they don't have many more months to wait because if it doesn't happen they can't keep doing this in which case the kind of economic downturn we've had we'll look like a picnic nobody knows there are enough anomalies in the statistics reported by the Chinese government to fuel the suspicions of many of us that this is an extraordinary exercise the biggest gamble any country we know of has ever taken to try to get through this but you know their reasoning might be if we don't do this disaster is assured so we'll do this cross our fingers and perform whatever the Chinese equivalent is of a Hail Mary pass and hope that something happens other folks questions comments Yemen yeah the question was that she says that she's been thinking for quite some time now that the global banking system is going to collapse well the answer is kind of yes and no in that torture kind of answer that you have to give to questions like that it can't collapse in the sense that that's not a bear of politically bearable situation banking think of banking like the oil in your car it lubricates everything it's much more important than that little liquid that you see in a can because it spreads all through your car and makes all the moving parts do their thing without burning and destroying one another and banking has to exist the firm's have to be able to borrow money they have to be able to handle the fact that the money coming in to them has a different schedule and the money they have to pay out and the banks carry that through etcetera etc so a collapse of the banking system is technically impossible or to say the same thing another way if the banking system were actually to collapse then that would be the least of your problems because everything else would have collapsed with it so having said that I don't think that kind of collapse is in the offing that because that's not a lot a bearable outcome barring total mayhem what has happened however is that whole sections of banking activity have either transformed themselves completely or dropped out of existence because it's too dangerous you know I don't have the time to go into it with you but there have been all kinds of transactions that used to take the time of thousands of people on Wall Street every day well-paid people to manage muck they're gone there are no such instruments anymore auction rate securities for those of you pay attention that doesn't exist billions of dollars were transacted every day up until a few months ago and no dollars are done now let me give you another example one of the staples of the American banking system was lending money to local folks in every town and village when it came time to buy a house you know when you get yet old enough and you get married and you want to have a family you wanna have a little house of your own you don't want to live with your parents or with a roommate you know that point in life so you go to a bank you don't have the money you go to a local bank and you borrow from the local bank so that you can do that that ended that's gone we don't have that in the United States anymore and the reason basically is that the the banks have no money or do not have any confidence in your ability to pay and have been badly burned recently so they're not gonna do it so what happens at that point panic in Washington why because that's a central part of our economy we're going to have an unspeakable collapse of housing Prabhas if we don't have people buying homes I'll give you an example there are 55 million households in the United States that have a mortgage right now that's the number out of that seven to seven and a half million are delinquent we call that they're not they're not paying the can't pay hey there's no historical president this is unbelievable this number 15 percent roughly one in seven of our house of our mortgage hath campaign okay so banks who lent them the money are not getting paid this is a catastrophe for these banks they did they're not getting their money back so what the bank does is it seizes your house that's the collateral you're not paying on the house the bank gets the house the problem is the bank doesn't want the house because what's gonna do with the house it's a bank so I'm not real estate dealer moreover it takes months to go through the paperwork of a foreclosure and this sees the house and to deal with it during those months the thing you're holding is losing value because there's no market for housing in America so the bank is watching its loss get larger looking at that which every bank in America is looking at every day right now and been doing that for a year they're not gonna lend quickly to anybody so when you read in the newspaper that Bank lending of course they're not lending they're not going to land they you can give them all the money in the world which we've been doing they're not gonna lend the money that would reproduce the very disaster that got them into this situation they're not gonna do that well the government is freaked because if there's no one buying mortgages but assuming no one buying houses because they can't get mortgages and that's how most houses are sold we're gonna have a fall off the cliff of the house why is that important well first of all if the price of housing is going down no one's gonna build any more houses so all the industries furniture would paint plastic appliances all the other industries are gonna collapse because there's no market in the housing sector to buy their stuff number one number two the only property that most Americans have is the house if the prices of houses go down you're traumatizing the working class they're losing the one piece of wealth they have and their God knows what they're gonna do they're gonna stop buying things because they're going to be aware because the newspaper have it every day that the value of the one thing they own is disappearing on them it's not a bearable thing so how we gonna handle this we said to the banks you notice this for the last seven months Obama has said it you should be out there lending I wanna I'm angry at you you're not lending this is a complete waste of time they're not gonna lend and they haven't so what did the government do here's what the government did it said to the banks around the United States lend out on the mortgage because here's what we're gonna let you do as fast as you give three hundred thousand dollars to mr. and mrs. Smith to buy a house in Tarrytown New York just to pick a place as fast as you do that we the government will buy that mortgage from you so the bank says okay here mister mrs. Smith he has four hundred thousand dollars to buy the house then the bank within minutes takes the piece of paper the debt that the Smith family has to pay back the four hundred thousand say over 15 years it takes that piece of paper and it sells it to the government which commits in advance to buy them all over the last two years ninety-seven percent of all mortgages in the United States have been sold to the government the United States government is now the banker of the housing industry that's how it works were the United States government not to do that you would see the collapse of those of you looking for an apartment in New York would find it be one-third the price it is now in three weeks so to prevent the collapse of all of that of the real estate empires and all the financing wrapped up with it the government stepped in it's by the way a corrective for those of you think the government only helps the banks this is a system you can't just help one part of it it's a system of interconnections you have to help multiple parts of it and in this way the government stepped in helping the banks by buying these mortgages as fast as they write them but also making it possible for people to get a mortgage who otherwise could not get one but it's another sign that we are holding this economic system together now with you know spit and pieces of paper and hoping somehow like the Chinese that this will kind of pass that this will get through these hard times and that's what it all is it's all cross your fingers and hope very irrational well there have been folks not to scare you but there have been folks who've looked at this kind of economic system for a long time and concluded to make it simple that human communities can do better than this economic system but that's a scary thing to talk about because it has been pejoratively labeled as socialism and all the rest of it and you can see the scare factor the scare value of the word socialism by the way it's thrown around by mr. Glenn Beck and Sarah Palin and others who find anything that is troubling for them socialism but it seems to work it gets people upset but as long as we as a nation are unprepared to question the system we live with its results yeah you did a very good job yeah good good question why in the 1970s did the wages stop going up five minutes okay we're running a little bit out of time but I can answer this one there are basically four things that happen in the 1970s and I mentioned four not because it's only four there were many others but I never I don't want you to think there's some key thing that happens the way the world shifts and changes is usually as a result of a confluence of many different things I'm gonna give you four first the 1970s was the time of the implantation of a radical new technology the computer it displaced millions and millions of people just think with me for a minute instead of having 40 people in the supermarket every three months to measure how many boxes of rice krispies and went off the shelf how many cans of soda you now have this little scanning system as you check out your stuff in the supermarket a computer scanner lets somebody 50 miles away looking at a computer terminal know exactly how many boxes of rice krispies are left how many cans of soda need to be ordered etc so we suddenly in a very short time the 70s brought the computer into the core of our production processes everywhere and it radically reduced the need for workers so in the language of economics the demand for workers went down the second thing that happened in the 1970s was the following when we came out of World War two every competitor of the United States economically was destroyed Germany Japan Britain Spain France Italy you name it they were all destroyed we were completely alone we could produce the way the world couldn't we could set any price we wanted because there was no competitor who could under compete us from 45 to 70 s we lived a charmed existence a special time in American history of profitability wealth no competition by the 1970s that period was over the Germans and the Japanese leading the way but other countries too had figured out that if they were ever going to have a place in the Sun again they would have to out-compete the United States they'd have to produce what the United States produced better or cheaper or both and that's what they went to work to do and they did that's why you drive a Toyota they went to work to produce the key commodities cars televisions and all the rest so that we don't have it and American corporations were unprepared and stung and to compete with them they decided if you can beat them join them an American began in the 1970s the massive movement of jobs out of the United States the places where they were cheaper cheaper workers less rules less environmental protected less cost to doing business and if you move jobs out of the United States at the same time that you implant a technology that replaces people with machines you've now got two reasons whether demand for labor goes down because you're hiring foreigners instead of Americans and fewer Americans because of the computer but we're not done those two reasons two more one for a whole host of other reasons something was happening to women in the United States the 1970s is the women's liberation movement very important it was a social movement and it said to millions of women don't be anymore just a housewife a mother a homemaker you can you ought to you should have a job out there too in the paid labor force outside the household and millions and millions of women of course they had been with women doing that before particularly poorer women african-american women and so on but millions and millions of women who had conceived of life in the house now wanted to have a job outside so you had them moving into the workforce by the millions at the same time that the number of jobs were reduced and finally because of the United States has role in the world because of the profitability and prosperity here a number of third-world parts of the world experience very severe economic decline and they did what always happens they lost people who came here looking for work because the situation in their own countries were terrible and those people arrived the women and the immigrants looking for work the computer and the outsourcing or the export of jobs limiting the number of jobs under those circumstances that employer could do what had never been possible before to say to the American working class I'm gonna make you work harder but I'm not gonna have to pay you anymore you're lucky to have a job at all up until then one of the key reasons why we had 150 years of rising wages is that this country always had a labor shortage we had a labor shortage for a number of reasons one we killed off all the local people when we arrived here as Europeans well it's a problem you shoot him and you kill them you can tire them they they don't work well when they're dead and then we didn't have enough we were very successful very rich country good soil good climate a lot of good thing we were able to grow quickly we're always running out of workers and even if we had some workers they were always running away from a crummy job because they could get free land why was it free because we got rid of the Indians so a worker who you didn't pay enough to I'll see you later Harry I get my land in Kansas or Montana or someplace else so what had to happen was we had to always deal with the labor shortage which is why those of you that are Americans can't go back more than two or three generations and you weren't waves of immigrants it's been going on since the Civil War even earlier if you think about it we always had to bring people here a continuous labor shortage for all these reasons is why the wages went up it wasn't the goodness of our employer it was a condition that made it necessary and that set of conditions changed in the 1970s and the trauma that still afflicts the American working class like all traumas that happen to you is worse if you don't organize it if you don't think and talk about it it's like suffering some kind of abuse when you're a child you need help to be able to talk about it as a way out of it we still haven't had a national conversation about what it means that the wages stopped going up in the 1970s after 150 years so we're a nation that's living through it but can't discuss it and that's one of the reasons fantasy explanations begin to develop it's the Arabs it's the Muslims it's the black people it's the immigrants you can see people are now what happened here if they don't blame themselves it's a very dangerous situation anyway thank you very much for your attention and hope to see you again [Applause]

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Views: 1,970,512

Keywords: The New School, New School University, New School, Capitalism, America, United States, Economy, Finace, Financial Crisis, Globalization, China, Markets, Workers, Debt, Mortgages, Wages, Employment, Unemployment, Banks, Loans, Wall Street, Richard Wolff, Film, Screening

Id: 0HTkEBIoxBA

Length: 104min 18sec (6258 seconds)

Published: Wed Mar 10 2010

Reddit Comments

[u/criticalnegation]

just saw this guy speak the other night for his new book democracy at work: a cure for capitalism. i'd recommend going to see him if you get a chance. his tour dates are posted on his website along with his economic analysis podcasts.

if you like his style, i'd also recommend gar alperovitz. he's an american historian pushing also pushing for grassroots revolution via workplace democracy.

[u/killertofuuuuu]

this is amazing. It explains how the world got into the current financial crisis in a very simple way that everyone can understand!