Dr. Michael Hudson: Economic Lessons for 2020

all right good evening everyone we're here for economic lessons for 2020 a talk with dr. michael hudson economist scholar and president of the institute of this institute for the study of long-term economic trends and author of numerous books and publications including beyond the bubble killing the host J is for junk economics and forgive them their debts I would encourage you all to go to Michael Hudson comm to check out more of dr. Hudson's work and my name is Shelley Gupta Barnes and with the Kairos Center for religions rights and social justice at Union Theological Seminary and I think dr. Hudson this is our third conversation with you in the Kairos Center and in many ways we're returning to our to our roots I first came across her work in 2006-2007 when he wrote an article in Harper's Magazine predicting the 2008 crisis the article was called the New Road to Serfdom and you wrote most everyone involved in the real estate bubble so far has made at least a few dollars but that is about to change now this is before the economic crisis before the Great Recession the bubble will burst and when it does the people who thought they would be living the way of life of a landlord will soon find out that what they really signed up for is the hard servitude of debt serfdom again this was before the Great Recession and the article just kind of laid out very clearly what was gonna happen and why and you went on to describe exactly what we saw unfold in 2008 and 2009 and 10 years later more than 10 years later the effects of that crisis are still reverberating out through the US economy and throughout the world even though there's talk of of recovery I don't know if you all saw the the headline from the New York Times yesterday breaking news that the economy's when find the Fed is not gonna change interest rates so just going back to that article dr. Hudson this isn't magic what you were talking about in 2007 this it's it's economics but I wanted to start by asking you why is it that most economists were surprised by the by the Great Recession the financial crisis of 2008 well let's talk about the first of all the people who are not surprised Wall Street was not surprised bankers were not surprised and if any of you were reading newspapers in 2007-2008 or listening to TV you wouldn't have been surprised because already new words were being added to the English language one word was junk mortgage that hadn't been used before all of a sudden it was common usage even in the New York Times I certainly The Wall Street Journal another word was ninja no income no jobs no assets so 99% of the people were not really surprised at all if they followed all this it was the FBI was not surprised because already in 2004 it warned that the largest wave of financial fraud in American history was underway which is why a President Bush immediately removed them from the financial tax force and put them on the anti-terrorist tax force only one group of people were surprised and I know that we're all in favor of disadvantaged people and there are many people who are autistic and can't really relate to other people and they need a job there's a profession for them economics so the economists were surprised and the other people who weren't surprised were the bank lobbyists but they they pretended not to be surprised Alan Greenspan said he was surprised because he believed lie to people because it would be big it was wonderful for the business the banks that were the most crooked Citibank Wells Fargo countrywide the others they've all grown tremendously they were billed out they were subsidized they were rewarded so the banks that our Greenspan imagined would lose for their lying violated the most basic economic principle that every economics should begin with and the French knew this and the 19th century with Prudhomme property is theft the crime pays just at all I'm sure all of you know what many of you may have been victims of crimes at least but that doesn't play a role in the economics textbooks the economics textbooks say what if everybody behaves in a way that really helps the economy so much that you really need the banks and the rich people in the finance Sears to tell the economy where to go so obviously they were not going to come out and say well wait a minute they're creating the problem it's all most of the textbooks and most of the economic patter talk is a cover story for how the economy really really works Greenspan was told by other members of the Federal Reserve Board there's a lot of mortgage fraud he rejected it he wrote an article one of the few articles he actually wrote while a head of the Federal Reserve saying that there cannot be a real estate crisis because real estates basically local in nature well actually all the mortgage lending was being highly centralized in the five big banks that I've mentioned before now the other group that was of course the other bank lobbyists that are managed to get their lobbyists in in charge of the government many people say make a third of wrong criticism of the Federal Reserve they say well the Federal Reserve is owned by the commercial banks that's not the problem that's not the ownership because the banks don't really have a job the problems not that the bondholders and the banks can own the Federal Reserve it's that they own the government and the government appoints the head of the Federal Reserve they're the donor class Perkin gave Obama President Obama when he was elected a list of cabinet members he submitted them to Citibank for its approval because Robert Rubin the Treasury secretary under President was one of his big supporters and he submitted it to Ruben and Tim Geithner who made sure that they put the protectors of the fraudsters in charge of the banking system this didn't appear in the textbooks but as I said everybody in Wall Street know about it it I was I think the only person who actually printed a model economic model of it so when the Financial Times listed the eight people who went on record saying it's all going to crash in a year they presented a copy of the model that I'd it's repre deuced in my the bubble and beyond and killing the host so what was not acknowledged and what economists were blind to and they're still blind to is that fraud was great for the banks that was their business plan and my colleague at the University of Missouri at Kansas City bill Black has done a lot of work on the criminalization of criminogenic banking and if you go on the UMKC website or under bill black you'll see all of his expose he was the prosecutor of the savings and loan crisis in in the 1980s so most of most economists if they did see it they want to keep their jobs and if you want to keep your job you have to work either in academia where you have to tow the neoliberal line and say we need the rich people finances guiding the economy or they work for companies and they're not going to if they do criticize the financial sector they find that they're unable to get tenure that's been a lot of problems with our graduates at Kansas City so the I guess for common sense everybody knew that there was fraud some people thought they could get out in a hurry but a business cycle isn't really a cycle it takes a long time to build up but it goes down very quick and people were not able to get out in a hurry as you saw and they had to rely on the incoming Obama administration to make them very very rich instead of losing yeah thank you for for you know kind of explaining why you know that first of all those who should have known about this did and those who didn't know we're kind of willfully kind of ignoring ignoring this reality could you actually take us a step back many of the many of the trends that that led to 2002 the Great Recession had been maturing over a number of years could you just take a few minutes to help explain what precipitated that crisis well you know just explain the crisis for us and you know especially so we can set up the conversation about where we are today more than 10 years later the financial character and that's the problem finance and debt and savings don't really appear in the textbooks most people think of the economy is production and consumption and you think workers go and they produce goods for sale and other people buy them and that's sort of the real economy what GNP is supposed to be all about but there's another economy this production and consumption economy is wrapped in a financial sector you can think of it is a great parasite wrapped around the economy and the financial sectors product is debt and basically more money has been made since 1980 in buying stocks and bonds or real estate or assets or art than actually producing new things and that's the other problem we have now what made 2008 different and what makes the current depression different is that in the past when there was a crash banks would lose money as Lehman Brothers dead and they'd go broke and they'd wipe out some some people's savings would be wiped out by the fact that people couldn't pay and what do you do if somebody owes you money and they can't pay well usually you lose it and even if you foreclose if you've written a junk mortgage pretending that a property is worth a lot of much more than it is then you're still going to lose money but this crash didn't happen in 2008 there wasn't there was a temporary crash but then investors realized that the bad loans were all kept on the books the Federal Reserve went to the banks and said we know you've made bad loans we know that Sheila Bair wrote that our city bank was insolvent its entire capital was wiped out she wanted to take it over and make it a public bank but Geithner said none of your bankers are going to lose some money don't worry we'll make you rich we'll make the homeowners pay we will you can go and continue to our demand payment of your debts and foreclose and all the money you can take all of your assets that are bad and you can borrow from the Federal Reserve and the Federal Reserve has created four point six trillion dollars worth of quantity of credit for the bank's quantitative easing they call it this money could have been spent into the economy to make it grow it wasn't it could have been used to pay the bad debts and leave the ten million American families that were foreclosed on in their homes that wasn't done it was all given to the banks who were responsible for the crisis for writing the bad loans and was were not given to the bank's customers so they were the victims of these fraudulent mortgage loans so if you're looking at what the government policy is since 2008 the aim of government intervention has been to save the 1% from the 10% maybe from losing money on their stocks and bonds the wealthiest 10% of America own between 75 and 80 percent of all the stocks and bonds so when I'm a president Trump or others talk about look how good the economy's doing the stock market's going up the economy means the 10 percent for the Federal Reserve the economy's the 10 percent for the government and the lobbyists the the economy is the 10 percent the 90 percent are not part of the economy that's sort of collateral damage so if you have the government basically trying to make sure that the stockholders and barn door holders and real estate investors don't lose money then you have the explanation for what's happening now for President Obama and the staff he had that we've been in a depression since 2008 the depression isn't a problem for them the depression is a solution the depression is a part of the class war the depression is monopolizing all of the growth in GDP all the growth in wealth and the economy and stocks bonds and real estate just for the 10% that are basically the donut class and if you think of the government and the policy is how can they serve there's 10 percent then you have a key is to what's happening for instance if you look at people talk about the GDP going up but all of the growth in GDP since 2008 has accrued only 5% of the population one of our colleagues at the living Institute Pavlina Chernova has made a chart about that for ninety five percent of the economy that GDP is less for ninety five percent of Americans they have less disposable income after paying their monthly nut of debt service renter housing costs medical insurance other debt they electric bills they have less to spend on goods and services well that's right there's such a problem now that's why a few blocks from here in Times Square two days ago you had one of the big buildings uh foreclosed upon because there's so many empty stores in it I'm sure if you walk down Fifth Avenue or Madison Avenue maybe Broadway or h3 you're going to see all of the boarded up stores that's because people are not buying things they can't afford they don't have enough money left to buy enough to keep employment going and what they do buy is mainly made in Asia China and other countries because the corporations have sort of decided to join a race to the bottom let's move our production where labor is cheapest and government costs the cost of housing is cheapest and say they've gone to Asia so you're having internationally a race to the bottom but sort of leaving the United States is odd man out hmm that's why there really cannot be any industrial recovery in this country we're not in a business cycle we're not in a cycle that's going to recover there's no factor here that is going to fuel an economic recovery here things are going to continue more or less in the way they've been in Greece or in Latvia or in other countries that are submitted to austerity in this case the austerity is produced by the banks and by the government policy and so I mean my fear is that 10 years later we really haven't learned very much from from that crisis and and the situation that it's put us in as you said we're in this race to the bottom we're seeing you know negative interest rates just really curious things happening low unemployment rates but the cost of living are you know as far by far outpacing our incomes record wealth inequality as you've been saying and an even more even more debt recently saw the credit card delinquency is up higher than it's been in the past ten years so are we are we actually in a worse situation than then what led to the what led to the Great Recession well ten percent of the population is in a great situation in the crash the stock market was about eighty five hundred now in eighty eight thousand five hundred now it's about twenty eight thousand the upper 10% have tripled their wealth for all the rest of the country is much worse because not only are is their take-home pay less less but the debt overhead has grown very sharply leaving less and less for them you know to spend on the things that you need to live on so financial wealth has grown thanks to the Fed's quantitative easing but one result is that of the low rates is that while it's made a lot of it's fueled a huge stock market in bond market boom it's left many pension funds broke because pension funds invest in bonds basically and they are not able they're falling way way behind in the money whether you're a city like Chicago or a state like Illinois or a corporation the corporate and public pension funds are way behind so people are not going to be able to get their pensions you have the Democrats leading the fight in Congress to get rid of Social Security and medical care the intention of the Democrats is to cut your Social Security roughly in half so that you can afford the Trump tax cuts basically and so you can afford the military buildup if you balance the budget and increase the military build-up while you cut taxes then you have to slash Social Security and drastically increase the medical costs and anything and the wage withholding that you have so the the strategy of the government is to very sharply increase your cost of living while reducing your income the cost of medical care is going up the cost of Education as you know is going way up and Betsy DeVos yesterday resisted any kind of rollback of student loans so basically costs are going up incomes are going down and since this is a poverty center this is ought to be a boom for you that's right we're we're seeing our numbers growing as well in terms of the Poor People's Campaign and you know and the work we're doing across the country I wanted to turn that and spend some time on this question of debt and crisis this is something that you've written and studied about not just in our current economic era but for from antiquity to today and if anyone hasn't read and forgiven them for debt and forgive them their debts I really encourage you to get the long sense of the history that that we've lost actually and in our economic in our disciplines of economics and our understanding of Jubilee and and what what that did you know has done over human history but you know there is some kind of curious agreement between mainstream economists and orthodox Marxist economists today that that household debt really doesn't matter in terms of crisis formation on the one hand mainstream economists just see a debt to one person as a credit to another right and so because they can't see class it's all a wash and so and so who's in debt and who owns that debt doesn't matter orthodox Marxist economists like michael roberts and others argue that the kind of that the idea of debt servicing crowds out effective demand or that that idea is a theoretical error and and they label that under consumption and they claim that only the falling rate of profit it's this emphasis on the falling rate of profit as limiting capital investment is what triggers crisis that's the main lever what are both sides of this missing when it comes to understanding of the dynamics of debt and how it relates to crisis formation you've actually said two things talk about the get to the cells first it seems very simple you can say we owe the debt to ourselves so it all balanced but who's that we the we or us guys the 99% who are they ourselves they ourselves are the bondholders than 1% we don't know the money we don't know the money to each other we are the money to the banks and 1% so that we the question is who is the way and who is the ourselves what the statement really means is that the 99% Oh more and more debt to the 1% and that is what leaves much less available for spending as I just said I can't imagine why you would think that other Marxists don't realize this the Marxists of all the groups were the first to focus on finance capitalism Rudolf hilf reading wrote FINA finance capital around World War 1 Lenin wrote imperialism all about finance a Hyman Minsky who is the founding father along of mmt was a Marxist he told me that when he has studied at the University of Chicago our mutual friend oh dear I'm blocking out Maynard Krieger was his mentor and most of us at UMKC and the early mmm taters were all Marxist certainly the Marxist television and Internet reviewers people like Laura Flanders are focused on Finance and in France Eric Vasant from the fourth international focuses on it so the Marxists have taken the lead in analyzing finance but not all Marxists so here's the difference between who's the we and who are they many people who call themselves Marxists only read Volume one of capital and that's where Marx talked about the distinguishing feature of finance capital of industrial capitalism being wage labor employers hire workers to produce goods and services and they sell what will labor produces at a markup and surplus-value so the question is how do workers ever afford to buy what they produce what Marx explained that under-consumption can never cause a problem because as the capitalists are making more money by employing workers to make more Goods they build more factories and they have to build more machinery and because of technology machinery is more and more efficient so every new factory every new machine they buy is more productive than the last generation and that means that no producers come online undersell their competitors and so the old factories have to invest in new machinery too and there is a very large increase in purchases of machinery now the problem is that Marx will discuss this in volume 2 and volume 3 of capital and my guess is that 90% of people who call themselves Marxists have never read volumes two or three and I think I've known all their leading Marxists in the world in the last 60 or 70 years what mark I want to say something about what Marx did say Marx really it was the last classical economist and his ideas followed from the ideas of Adam Smith and John Stuart Mill and Ricardo and what all the economists before and we're saying is there's a lot of exploitation in the economy and if we're going to have an efficient economy we can't have exploitation the biggest exploiters were the landlords because they collected rents as John Stuart Mill said in their sleep they just read eteri because their ancestors conquered England they get to collect all this rent the whole fight in of classical political economy was to either nationalize the land or tax away the rent or at least get rid of the landlords that's why they called John Stuart Mill a Ricardian socialist there were many kinds of socialism the other kind of predatory exploitation was of course banks and usury and marks naturally wrote Volume one about what he was writing about finance capitalism but then he wrote volumes two and three to say let's look at what the good side of industrial capitalism is going to be we're already seeing it it's fight for its historical destiny and its destiny is to get rid of landlords so people are not going to have to pay land rent anymore it's going to be to get rid of private banking and yuzuriha spanking and instead of making predatory loans to governments or the people the banks will become part of the industrial process and when Marx wrote this that was actually occurring in Germany Austria and Central Europe so Marx at the time he died in the 1870s he thought that industrial capitalism was on the way to getting rid of feudalism to getting rid of the legacy of feudalism getting rid of the landlord's getting rid of the banks as it happens that hasn't worked worked out we've had just the opposite in Volume three of capital he goes into he discusses finance and he says you know I've been talking in volume one about industrial capitalism and production and consumption finances external to the economy finance doesn't have anything to do with profits it is a debt grows by compound interest it's purely mathematical he points out the compound interest growth is much faster than an economy grows so the finance is going to cause crashes and they are Marx was about the first to come out with a theory of the business cycle based on Finance being external to capitalism and at the end of Volume three and he also wrote his theories of surplus value and three volumes about this he thought that well industrial capitalism is going to act in its own self-interest and it's going to get rid of places like Citibank and Wells Fargo and these guy and is going to become much more productive but that isn't how it worked out now the question is how do you get a Marxist to read Volume three last year and Harvey and I went to the second global meeting of Marxism at Peking University in China and David as you know teaches at Kuni graduate school over here he gave our the final plenary speech that was pretty much just like his leading in speech saying you guys have to read volume three of capital now China has a financial problem you you have to realize that you're the big problem threatening the Chinese economy is the same problem that's threatening the American economy and that's debt growing so high that it's going to just leave the economy in austerity and depression I gave a similar speech on that that has just been published by the Chinese Academy of Social Science and I'd given one of the plenary speeches three years earlier the first school well I don't think we got a very good reception there and one of my fellow professors at Peking University told me that I have to understand that the Chinese language that Marxism is the Chinese word for politics in China and David Harvey called China a neo neoliberal economy with Chinese characteristics so I thought of calling it a neoliberal economy with Chinese internal contradictions but at any rate we're all focusing all of us are Marxists our background is Marxist we may not call ourselves Marxists because that's not considered a nice word over here as it is in China but we all come out of that tradition and it was very funny back in the 1960s we used to joke that American capitalism was the only Marxist capitalism in the world because the major economists on Wall Street all came out of the Marxist tradition I was at Chase Manhattan my friend shut Aegon's was at laissez faire Andre Sheeran was at Drexel Burnham there are a bunch of others I won't name but we all used to get together once a month to discuss what was happening on Wall Street and I remember I think I mentioned this before one evening we're all discussing oh wait a minute what did Mark say in volume three and then we left you know if they know that uh here we were the Marxist economy I think economists for the big organizations and we're all following mark so I find it bizarre that unfortunate that many Marxists that so many have not read Marx and I must say I know this was the fact is a little kid because I when I'd go over to the house of my father's our friends I'd go they'd be talking and I'd look at the bookcase and the books that I recognized where the Charles Care addition of the three volumes of capital and I'd always open them and I'd noticed volumes two and three had never been opened they were for show and I think that that must be the economists that you've had but Marx basically explained that industrial capitalism wouldn't have a crisis coming from industrial under-consumption but it would have a crisis from the financial wrapping around the economy and when I I went to school sixty years ago Marxists were the only people talking about this and even today there they own only people talking about it which is why my academic affiliation is in China in Kansas City and a few other places not in the neoliberal mainstream so I wanted to ask one more question around around debt in particular that you know we're seeing the Washington Post recently reported that American corporate debt has surpassed ten trillion dollars which is roughly the equivalent of forty seven percent of the entire economy do you think that this could trigger trigger the next crisis and how would this debt bubble be different from the housing bubble a little bit going back to this question around the the real economy and the financial 10 trillion may seem a lot but it really is only twice the cost of the Afghan war I mean they get right down to it nonetheless Wall Street is increasingly worried about the corporate junk bonds with interest rates down to about 1% there have been a lot of speculators and corporate raiders that borrow very inexpensively to buy to buy companies and take them over and so you have an enormous amount of corporate debt that's being added by people borrowing from banks to buy companies and also companies themselves have been borrowing at maybe 1% to buy their stock that's yielding 8 or 9 percent and after President Trump's tax cuts for instance almost all of the money from the tax cuts were spent on tax buybacks they weren't spent the way that Marx described industrial capitalists is spending their money on building new factories and hiring more labor people are not making money by hiring labor anymore they're making money by buying stocks and bonds and having the government artificially support their prices until finally they say it's all over sell out there will be a huge crash the pension funds will all crash and they're going to leave they call the weak holders the pension funds and the non 10% holding the bag is at work so the if the economy is shrinking then obviously the flow of profits the output is going to be shrinking unless companies can simply sell less goods but for much more and so the Trump administration has followed the Democrats and getting rid of the anti-monopoly legislation and prosecution they're essentially promoting just rising prices for everything so the question is how long can companies get by producing less charging more when the customers are poor and poor and you're not selling to China anymore or Russia or even Europe because they can't trust American suppliers or they don't want to buy more Boeing's and Trump has wanted them to buy at least a military industrial goods but are they're pushing back on that so obviously there there are a lot of corporations that are going to go the way of Toys R Us Sears Roebuck you see the retail so it stores are the first that are going bankrupt then you're going to have the heavily leveraged buildings where either the building goes bankrupt or you borrow from the Saudi Arabians like Trump's family have done so the housing bubble was very largely fraud and the answer your question but the corporate bubble is just a plain greed and Finance lives in the short term they they don't they all know that the debts can't be paid everybody I talked to on Wall Street knows that there's going to be a crash but they think they can sell out first because someone from the government and the Fed will call them and say we're going to raise interest rates suddenly bail out and they're all going to bail out and leave the non insiders holding the bag or at least they think that they can do that this isn't talked about in the press because bad economic news doesn't attract advertisers to the newspapers and newspapers their clients for the advertisers not really the readers so the newspapers are going to say yes the economy is growing everything's doing fine and politically the media worried that if they say well we're in an economy that's shrinking and living standards are going to fall then Wall Street's they feeding off the money then people are going to turn socialist well obviously you're not going to have the government economists creating a body of socialist by telling him how the economy really works and what's in store for them all so that that's the problem cognitive dissonance so I remember in in 2009 I was a graduates graduate student at Columbia University and asking when my professor is one of my economics professors you know he was explaining how how consumption in this economy consumption had to be brought back up to its to its levels to keep growing the economy it just seemed like we were recreating some of the same patterns that had led to led to the ridge to the problem in the first place and so I mean it seems to me also that there's an opera there's a need not just an opportunity a need for new economic thinking new economic new a new political economy for for today do you see any signs of that just in terms of a new political economic theory to actually take in the conditions for today and and not just explain them but help to anticipate what should be you know what what we should be looking out for and and the direction we should be whatever you're doing and that usually sounds good but in this case it doesn't there's a perfectly good economic analysis it's the 19th century analysis at Adam Smith John Stuart Mill Ricardo Marx is the last classical economist and he really tied it all together after him Thorstein Veblen Simon Patten there are a number of other people so you already have what's been stripped away from economics is the concept of unearned income in the form of economic rent in all of nineteenth-century Smith Mill Ricardo Marx Alfred Marshall they were all talking about economic rent as unearned income and that's what an economy should avoid and yet today the economy is all about unearned income so what you need to do is reverse the dumbing down of economics that neoliberal economics is you need to restore the concept of unearned income and exploitation we used to joke why is it that Marxists were the people who the leading banks and investment banks all hired well it's because we know the economy was all about exploitation if you go to business school you think it's all fair you don't get it that's not the kind of person you want really to to be for a bank no I must say most of I wrote was only for internal bank usage David explained the Rockefeller explained to me that if they wouldn't publish my stuff unless it happened to meet their public relations desires but not to write what I think the bank wanted me to write but to write really what I found and that's what we're all doing and we knew it was all about exploitation but none of us were teaching at universities I did teach at The New School for Social Research but it's Marxists or so anti-marxist so vulgar so dumb as economists that I just got out of there and went happily back to Wall Street where we could really talked about Marxism so I wanna raise another new that's that's coming back around as if you know with with some new ideas is the lot of references to the New Deal of the 1930s and you know I wanted to ask is that you know they were also facing a time of great economic disruptions compelling new political formations and relationships between the state between finance between labor is how much of that era given that was also heavily industrialized era how much of that era should we still turn to and what lessons can we draw from that and how much is should we kind of caution ourselves and looking back at that time that was not really an ideal I was around in that era my father was sent to jail for trying to organizing the Teamsters Union as a Trotskyist in Minnesota Minneapolis was the head of the teams the Teamsters revolt with the general strike in the 30s and Roosevelt said look the Democratic Party is based in the cities we had we need the Mafia we need to put the Mafia in charge the labor unions and we need to put the Communist Party in charge because they promised not to go to strike on strike in World War two if we get rid of the trustiest so everybody I know was drafted in instead of being drafted into the army they were drafted into jail for fighting against the Stalinism and against the Mafia in the labor union and basically against the crooks in the Democratic Party Tobin was the head of labour who was basically put in the Mafia into the Teamsters and the Attorney General later wrote an autobiography or a mitad it was all a frame-up and that it was done so I don't really know if that create an admirer of what Roosevelt he he did save capitalism but he saved it for the capitalists I think what we want to do is save capitalism for the Socialists I mean the whole idea is to have capitalism save itself by evolving into socialism not falling back into feudalism and so the problems really political and we've in the textbooks you'll read sort of nutters like a Frederick Hayek rating raving about a centralized economy we have a centralized economy we have centralized planning it's not done in Wall Street its centralized in Washington its centralized in Wall Street so the question is how do you get the centralized planning out of Wall Street and get it into the hands of the general government this is what China has been able to do very successfully by keeping the banks in the control of the government so far so they've avoided this the key is to realize the need to isolate the financial sector and financial wealth and above all to get rid there can't be any recovery without writing down the debts and the good thing about writing down the debts is you wipe out savings at the time at the same time you really want to wipe out the enormous quadrupling of savings of the 10% that's occurred since 2006 2008 if you leave these savings in place then they're going to essentially buy control of governments by control of the media is you've seen the Washington Post by control of the TV media and the general media so you've got to essentially pick up the fight that the 19th century I was trying to do of getting the absentee landlords getting rid of the banks and getting rid of the parasites that that leads me to ask you for your advice actually dr. Hudson as you know the Cairo Center is one of the conveners of the Poor People's Campaign a national call for moral revival this is a national campaign that's grounded in organizing in more than 40 states across the country and as you as you made reference to our numbers are in fact growing not not only because you know this is a this is a timely campaign but because of the conditions that you've been laying out and the growing poverty and dispossession and economic precarity that people are living in and the lack of responses from any you know and accountability from any you know governmental or any other form of authority and so you know we're connected to these communities all over the country and we're fighting around an agenda that is based on systemic racism ending systemic racism ending poverty ending militarism and the war economy and ending climate disasters emerging out of out of the relationship of all of these you know and it I see that you're indicating that we should really take up some questions around debt and I wonder if you actually have you know some some advice for us in terms of what you know what what should we look out for what should we prepare for what should we you know think about organizing around is in this in this period well your big problem is the people don't vote in their own self-interest how do you get people to vote in their self-interest and your other problem is that you're the target of a takeover by the Democratic Party would like to take you over and the politicians I worked with David Graeber with Occupy Wall Street for a long time and he spent a lot of his time trying to fight off the move on and the other Democratic yet that George Soros groups that were trying to take over their movement the problem is how do you avoid with your constituency how do you avoid identity politics if I you know I I watch the news and there's there's only the Democrats are talking about kind of hyphenated American there is from sexual - nations to ethnic - nations there's only one kind of identity that they don't talk about that's wage earners and consumers that's the identity that you have in common of people of debtors of people who you're all being exploited by you're part of an exploitive system of a financial system a real-estate system of tax system and the problem is that this both parties have the same donors and I mean they've decided I guess about a few months ago I mean we know who the candidates going to be and when the next election both parties have chosen the same candidate Donald Trump the the Democrats problem is how do we how do we get a candidate so bad that he's guaranteed to lose the Donald Trump so that week was fun doing all of our wonderful policies he's cutting the taxes on us he's doing everything and we get to blame them and say it's not us it's the Republicans I mean who can they get this really bad Amy Klobuchar or Buddha gag you know they're just we we've got to see what's going to happen when nobody gets 50% on the first ballot and they don't let Bernie get it where they going to bring the internet is full of a Hillary thinking that she can run again and who can they get that's as close to Hillary as possible well I guess that's Mayor Bloomberg is sort of the dark horse so that's that's what you're faced with that in America if this were a european-style parliamentary system you could start your own party and immediately you'd have something called let's call it the social democrat party and the democrat party here would fall to the same proportion that the social democrats in germany have 8% immediately the democratic party would shrink into absolutely nothing but the way that American politics is set up you have to be one party or another that's why AOC has to run as a Democrat because that's how they set up it's an either/or thing and how do you take over a Democratic Party when the lawsuit in 2016 by other supporters that Bernie was wait a minute the Democratic Party doesn't have to nominate who the voters vote for the the vote that's merely a cosmetic vote the Democratic Party or the ten or twelve people who run the party of the officials and they get to decide who the president is so these 10 officials who are again part of the Clinton Rubin group are going to decide the president not the voters at all so it's really the political system is so tied in a knot that I don't see anything happening right now I'm writing a sequel to forgiving their debts which is about debt in classical antiquity the collapse of antiquity and we're in a situation very much like Rome was in from about 63 BC to 44 BC when Caesar was assassinated you had the Senate was Roman Senate was as bad as the American Congress and Senate absolutely refusing to do any debt relief refusing for any hosing relief any land relief they were absolutely resisted progress and the voting system was sort of like the ideal of the Citizens United case the votes of the rich people the few people who were the richest 10% were given a voting power that was larger than all the the other four classes below them and so there was no way Rome was never a democracy and there was no way that the citizenry at large could get representation to write laws in its own favor and so the only way out was armed force and kattiline put together an army and tried to fight and caesar was supporting him a lot but he was killed in 63 and then all of his supporters were illegally in jail by cicero who later Caesar made sure it was exiled and then Caesar bided his time he learned from catalinus mistakes finally he came in brought his army into Rome in 49 and tried to be a sort of middle a mediator in the middle but he by trying to get both sides of being a middle of the rotor if an economy is polarizing there's no such thing as a middle if you if you're in the middle a centrist then you're standing aside while the economy continues to polarize and so the Senate simply killed him and Cicero who was the lobbyist for the the creditors called generators that's usury takers what a wonderful word Fenner ATAR and he said he wished he was there to share the pleasure of plunging the knives into him and so that brought in finally there was no more chance of political change at all and you had the Empire and I don't see how America is very much different from that I don't see any way in I know that Bernie Sanders and his supporters hope that somehow they can do something in the Democratic Party and I'm waiting to see what will happen next spring or summer when he comes in with most of the votes and they end up nominating Hillary again so I don't know well we will continue to to seek your advice because you still remain one of the most incisive and insightful economist kind of you know showing us what what's coming and drawing lessons from antiquity and and you know broad swaths of history to bring to today and and that's really been that's been a it's been it's been something that's really informed inform the work of the Cairo Center and and the campaign and we look forward to more conversations with you as as things as things kind of evolve and and we'll see where we go but we do have some time now for questions from the audience we have a great group gathered here tonight and so I don't know do we okay so let's see if I can get some hands then I will or Leon are you here okay we don't have the mic okay great so maybe we could maybe we can ask three questions here three questions then you'll have a chance to respond and then we'll I hope we'll have time to hear maybe three more is that is that what put it done okay so could we get three questions okay so I saw you right here with the Bernie hat over here with the white something sure it's a one two three hold back and so where and there's just the most use of our time yep great thank you this was a okay three questions regarding uh Bernie vs Warren I'm certainly in favor of Bernie I warned would make a great Secretary of the Treasury that really is where her imaginative and technical expertise lies in regulating the financial sector you need somebody who knows how financial crime works and what to do but I don't think she has any where the breadth of policy beyond that that Bernie has and he certainly has very good people around him including my colleague stephanie kelton as one of his monetary and financial advisers so Bernie for president Warren for the cabinet regarding public banking now and brown I'm on she just put me on the board of directors of her group I'm all in favor of public banking just imagine what would have happened if Sheila Bair would have had her way in 2008 and she could have fought against Obama and Geithner and that crooks around Obama and closed down Citigroup like she wrote her autobiography city imagine if you had Citibank acting in the public interest instead of its own interest it would actually imagine a bank that would actually lend money to factories to employ people and produce instead of takeover loans to factories that outside outsource the labor and downsize and do everything so of course public banking would make a different kind of loan then commercial banking would do which is why in the 19th century almost everybody expected banking to emerge into a court at least a quasi public banking is you had in the German Reichsbank and the Central European banks so now Ellen focuses on public banking because she doesn't think there's much chance of really having a debt write down practically at least not in her lifetime and she's probably right about that but I certainly think it's a good idea it's a good idea both of us are closely associated with democracy collaborative in Washington gar alperovitz is organization so we're both working on that a regarding unemployment statistics it's even you're right the unemployment does not count people not in the labor force who have given up but the even worse feature about unemployment is people who are taking jobs low wage jobs for instance I was coming have a Droon I had to take an uber car from a TV interview the other day and the uber driver was a PhD from another country driving the car and he said well he'd turned 53 years old it worked for an insurance company as an economist but he was fired because they said you know we're firing everybody over 53 because yeah we want to keep our healthcare costs down and if we keep you here our medical it's going to raise the cost of your salary you won't get any of the money but we have to pay the health insurance more money so he spent seven months looking for a job he said and finally ended up driving an uber car so part of the problem is low wage labor the D unionization is another problem but also there's a race to the bottom in labor I know a lot of the for instance suppose you're I guess whoever there must be a lot of economists PhDs or driving your uber cab these days cuz I'm not sure what else they can do what do you do if you're a PhD and you're just graduated universities are trying to hire you as a part-timer you'll for 2,000 or 3,000 dollars a year you'll teach just one course you don't get medical care you don't get any pension or anything they're all outsourcing and downsizing and so the higher the education you get really the lower the salary seems to be and you know if you were a plumber you would have been able to make a better living so there's a lot of underemployment or people at low-wage labor and in the companies that are financialized and taken over by raiders they find that is there's going to be an attrition of the labor force as people leave and if they don't replace them then they're just going to tell the existing workforce work even harder work even harder product and that's called raising productivity because you have this other people have to work harder produce the same out output but there are fewer and fewer laborers producing this output they're squeezed and the the idea is it's okay to burn them out burn them out as much as you can by the age of say 50 or 53 because then you want to fire them anyway because of the medical care costs that's why they're fighting Bernie so much they want to they want to use the medical care is a way of keeping labor in quiet because if you're dependent on your job for your medical insurance or that of your spouse you're not going to complain about your job you're not going to go on strike and lose a paycheck and all of a sudden having your credit card rates go up so again they're using debt medical care medical care and the rising cost of living that you're having the squeeze you're all having that's their solution to the problem that's what's making them rich so think for well not so much about poverty think about who's getting how are all these people getting richer and richer and richer how was all this wealth being created at the top of the pyramid where is it coming from that's that's what economists hate to say and you know Adam Smith called his book The Wealth of Nations he didn't mean financial wealth but obviously we're now in financial capitalism not industrial capitalism so you're right other statistics are not very helpful we're in finance capitalism something and completely different which is this debt this step just before neo feudalism so what's going back I just want to add also just in terms of the employment numbers that the incarcerated population isn't included and those either and as we know that there's been a growth you know so what do you do with people who there are no jobs for and can't afford housing or basic needs the incarceration population grows as well it's another way to kind of hide the high the crisis behind poultry measurements and definitions yeah John Williams has Chado statistics as I'm sure you know they do a better job so could we get another round of questions right here and then you up front and then in the back by the pillar one two three the question of social security up front Thanks recognizing that realism Serfdom neo serfdom the Germans used to call it billet the political system so what what you know what okay regarding uh what you said about Chile I I wish you're all familiar with Chile that was the model for the George Bush administration and especially for the Obama administration the the I think I've said this at a meeting here before the genius of the Chicago boys who designed Chile was you can't have a free market unless you're willing to kill everybody who disagrees with you you have to kill every Labour leader every land reformer every protest if you don't tell them there's going to be a protest and there are the that is the should be that is probably the leading premise of free enterprise economics I can't figure out why they don't put this in the textbook because that's the first thing they do in practice they had a Chicago boy of one of the Chicago boys who designed it was a professor harberger at Chicago and he tried to get a job at Harvard at his head of the Harvard Institute of International Development and I'm proud of this too I was associated with a Peabody Museum there the students are repelled by saying this is the guy who sat in his hotel room fingering who was going to be assassinated to create the free market Shirley had a very great tactic for wiping out really all of the mentions George Bush said that he took the Chili's plan as a pension plan as the ideal for what America should have he called it people's capitalism and the idea was you give workers a share stock in the company they work for sounds good on and you have many fraudsters supporting that as sort of workers capitalism what the Chileans did was saying okay we have this Factory and we'll give the workers stock in it but we're also going to have another corporation and we have a whole group of corporations and it'll be a financial corporation that lends money to the factory that other workers work for and so they were called the group hose in Spanish and so the corporation's would lend money to the the factory and the workers would take much less part of their wages would be set aside instead of giving them money for wages you'd give them stock in the company and then all of a sudden the creditor would foreclose the company corporation would go bankrupt wiping out all the stockholders this immediately became the model for how US companies should work you had the Chicago Tribune bought out by Sam Zell a real estate guy who had the Tribune people but all of the workers reporters and typesetters put their salary in the Trivium stock he had organized a financial show foreclosed wiped out all the workers so you want to really be aware of people's capitalism that if it's wrapped in a financial shell which is what other the the Spanish did in Europe Panero who designed the plan who I think is still still there and there's there has to be a revolution against them and that's what you're having in Shoei right now there really is no solution except revolution I I guess truth in London advertising I must say my father was are committed to jail for advocating the overthrow of the government by forests and violence the Smith act but it was a frame-up but I just had to acknowledge a little bit of prejudice there when it comes to solve things so yes that the intention of the people run the American government both parties are to wipe out the pension funds in a way much like happened in Chile or in to cut back Social Security regarding the what is the second system of the the political system what to do I don't think there is a solution under the American as a political system there's there's a difference between a problem in a quandary a problem can be solved if we're in Europe you'd start your own party you'd get all the votes and you'd throw out the other people though you're in a quandary there's no way out you can't start your own party because the Democrat Party or the 12 richest people you know the wall street thugs who run the whole party and they don't care what the voters vote for so a charade they've already picked they want Donald Trump for the second term is the ideal Democrat so they're the ideal Club you know Cocteau grant or whatever you call the stage of Finance capitalism that we're in today so you talked about the answer is class consciousness well class consciousness was easy a hundred years ago they are the classier and where you were wage earners and the problem were the people who employed you and we're trying to pay you as little as possible and calling in the thugs to beat you up if you went on strike and calling in the FBI to I'll deport you or to frame you up or to shoot you or Malcolm X or Martin Luther King so the problem is I don't see any way out except violence I'm not advocating that but I don't see I don't see any other way out otherwise you're gonna starve quietly in the dark what to go and he realizes that in the state each state in America has its own voting laws and in order to get on the ballot in the presidential election you have to have tens of thousands of voters many more than the Republic's and Democrat and if you have one bad signature the entire page is all thrown out so you can be sure that the dirty tricksters come in and put in false signatures false addresses or somebody misspells can't read the number so it's almost impossible for a third party to succeed in America the way that they've set up the game so the only way to do is to make sure that the Democratic Party loses almost it completely emptied out so Wall Street will walk away and then you take it over that'll be 50 years and mostly you will be dead and the population will be about half what it is no I wanted to also offer because the opening was was made you know on to how the Poor People's Campaign is also thinking about this question of consciousness and you know some of the Cairo Center had been thinking about the Poor People's Campaign for at least a decade you know for many years kind of come out so it comes out of the history that's connected to the 1968 campaign and had been thinking about it organizing with poor communities in the form of homeless organizing welfare rights organizing for many years before this new this revival of the campaign in 2018 and you know one of the we've remained so far non and and also non partisan we recognize that the political system is both compromised and doesn't offer the solutions that we eat that we actually need and so one of the goals in fact you know as we were thinking about it was how do you create a new poll right that that breaks through this this dichotomy of left and right and get people to talk about as urban Barbara says not left and right but right and wrong and this question of morality tends to then activate you know bring people so it's not consciousness in the form necessarily of class consciousness but the thing is people are waking up every day to new crises and multiple crises right so there's organizing happening around low wages in the form of the 5 or 15 and raise up and these other kind of low-wage organization low-wage worker organizations there was organizing happening around homelessness the national you know that homeless launched in multiple cities a few months ago and so that you know you have homeless encampments that are now organized themselves into unions and they are they are you know building power you have water struggles breaking out everywhere and running around water shutoffs and so these are also kind of compelling communities to find each other right and so it's not a form of class constant class consciousness because the the you know the other side a little bit more diffused but you know as as good marxist and you know the appreciation dialectics the the strength is also a weakness because they're everywhere the base that can rise up against it is also everywhere and as they're finding each other in these crises that are breaking out every day that consciousness is arising the question is how to organize it right and so that's the question the campaign is facing and and other in other forms I think vocabulary is very important in consciousness because that the question is if you can get a different vocabulary that's what my book James for junk economics it's all about its vocabulary I think we should introduce the con the word kleptocrats don't call them industrial capitalists or finance capitalists call them clip regrets because it because that's what they are and whether they're politicians as part of the kleptocracy or part or the actual Wall Street financier yeah I think you make it clear they're not industrial capitalists and what we have in America is not capitalism is anyone in the 19th century expected it to be you can talk about neo feudalism you can talk about Neil debt P&H neo serfdom if you use don't accept their vocabulary because they have public relations focus groups organize the vocabulary to confuse you into using euphemisms and almost all of the economic vocabulary is euphemisms and just call it what it is they want to make you essentially into serfs who have to do drive drive uber or the gig economy or anything we can do what I'm not sure how neo it is fascism sort of an old word and they'll say well we're not we're fascism with a friendly face so we are we're actually at the end of our time did you want to offer any kind of final closing no ok should we take one ok we'll take one more round of questions all right so we have someone over here the person in the back by the screen and then and then right here great and then in the back by the screen yep maybe he could step forward you'll tell me what I'm saying he was asking what if stashes and would look like what if what would fascism look like okay and then yes okay so the three questions there was a question yes this question was the girl what did she say she was asking about what kind of investment strategy or policy would look like under what under a public banking system basically that would be different than what we can okay okay I guess these will be the last three questions then regarding China I've just published something it should be on my website for the Academy of Social Science in China on D dollarization there are it's obvious that the United States is trying to split from China there is a fight over who can monopolize high technology especially information technology and China has done something that Americans really hate they don't have American spyware on their phones and this infuriates the Americans they're insisting that Europeans only buy phones and computers with Americans spyware built into what otherwise we don't know what Angela Merkel is saying so this has led China Russia and other countries to realize that the United States now that the United States is not a free trader anymore now that it is not the world's most efficient technology producer all it can do is protest and be a protectionist and so they are moving as fast as they can to integrate themselves China Russia Europe certainly Germany other countries are now joining in the other world and I must say that I'm not a very efficient obviously or I wouldn't be right here right now I'm not an efficient revolutionist Donald Trump is a genius I was accomplished much more than I could ever do he's uniting the whole world to break away from the American financial system to D dollar eyes he's driving China Europe Russia together I think he deserves the peace price for that because nobody else has been able to do that so they're going their own way regarding fascism Trotsky gave a good example in the 1930 he said fascism is the failure of the socialist parties to provide an alternative and that was at a time when Stalin told the Communist Party to support Hitler and not to fight Hitler and of course you had 1 million Germans under arms at the time Italy took power they quit the Communist Party and disgust and I'd like to go over earlier Stalin had told the Chinese Communist Party to support Chiang kai-shek who ended up assassinating the entire leadership millions of Chinese Communists in 1912 the shanghai massacre in the late 1920s so again if socialists cannot provide an alternative then you're going to have fascism which is really it's the ideal University of Chicago free enterprise economy it's a freedom to just grab everything that you can in any way that you can the free market is basically a market it decriminalizes every kind of financial appropriation so it's fascism is what it's basically what happens when you dismantle government and you privatize fascism is privatization basically especially privatization of the financial sector basic utilities and it's a breaking up of labor unions and it's it's a hostility towards other countries that do not join your system regarding what people accounting would do or public insurance company public banking wouldn't make loans for corporate takeovers it would make it wouldn't make loans to like community banks will make loans to borrowers who will buy an apartment a rental building kick out all the tenants and turned it into condominiums and make a profit they wouldn't make loans for anti-social purposes or for corporate raiding or for corporate buybacks or for essentially finance capitalism purposes they make loans to people who could act with the idea that you make loans to people who can pay not who can't pay and you get to foreclose on their property regarding people's health insurance that's an awful idea health insurance should be public it's the job this is a human right in Germany and in Europe and every civilized country public health is public you shouldn't have to pay because you can't afford to if you had to pay for the health insurance you'd be even poor and quite frankly you can't afford it the government should afford it and it should afford it and it should be a public guaranteed just like education should be public and in character let's um let's well thank dr. Hudson again for being here tonight and thanks to all of you for joining us in this conversation please check out his website Michael - Hudson comm and the Kairos Center and the people's forum keep coming here we have some great events in December thanks everybody

Channel: The People's Forum NYC

Views: 139,402

Rating: 4.8398943 out of 5

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Id: nluLNA30e8k

Length: 85min 22sec (5122 seconds)

Published: Fri Jan 10 2020

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[u/Vital_Cobra]

Wow that autism quip towards the start. Did they cancel him after this speech?