Welcome, friends, to another edition of Economic
Update, a weekly program devoted to the economic dimensions of our lives: jobs, incomes, debts,
our own, those of our children. Iâm your host, Richard Wolff. I wanted to devote todayâs program to exposing
and criticizing a number of myths, ideas about how the economy here in the United States
is working that deserve to be put aside. They are not real. They misrepresent what is going on and therefore
they produce decisions, individuals, corporates, governments that are not good for what we
need in this country at this time. I want to start with the employment story,
the question of employment. This has talked about a great deal these days,
because itâs one of the very few statistics that Mr. Trump and the Republicans can point
to that has at least some positivity to it. We have a low unemployment rateâthat is
the percentage of people looking for work, who donât find itâis relatively small. I donât want to take away from that. But to think that youâve understood how
the economy is doingâlet alone Mr. Trumpâs boast that itâs quote, unquote âgreatââto
look at one statistic is an act of economic incompetence. Itâs as if you went to a doctor and asked
for the doctor to assess your health, he took your temperature, told you it was okay, and
therefore, youâre healthy. You would know you need to go to another doctor. You look at many things in order to assess
the health of an economy. Just like you do with the health of a human
being. For example, one of the reasons unemployment
rate is low, is not that we donât have lots of people looking for work. Itâs actually worse. Itâs we have a lot of people, who have given
up looking for work, because in our statistical system in the United States, the government,
the Bureau of Labor Statistics, when it looks at working people, says, âYou can either
have a job, then youâre employed. You can have no job and be looking, then youâre
unemployed. Or you can give up looking, in which case
youâre not counted anymore.â What we have today is a much lower than we
used to have labor force participation rate. Thatâs the fancy term that counts what portion
of adults of working age are either working, looking for work, or not anymore looking. And that last one is the one thatâs gotten
quite big and that helps account for the low number of people unemployed, but looking,
who are the only ones that count. You need to know that to understand what the
numbers mean or donât mean. Hereâs another example. Yeah, we might have lower unemployment, but
suppose, it means at the same time that huge numbers of people went from good jobs, high
pay, good benefits job security to, instead, have jobs at low pay, no benefits, and no
security. Why do I bring that up? Because thatâs exactly whatâs happened
over the last decade. And that means the implication of our job
situation could be better captured in these words. What we have done is said to the American
people, âYouâre not going to have good jobs anymore. So you got a choice: you can have no job at
all or you can take a job with low pay, no benefits, and little security.â And guess what? Millions of Americans have seen the latter
option more attractive than even unemployment. But thatâs not a sign of economic health
and it sure doesnât mean the economy is great. Letâs look a little further. I decided to take a look at hourly payâthe
average pay per hour that most Americans, who are on a wage system, get. Back in 1973, is when I startedâthatâs
a long time ago, frankly almost half a centuryâthe average wage in this country was $4 dollars
and ¢3 cents an hour. Okay. So I did a little calculation that we economists
do. And I said, âLetâs take a look at what
you could get for $4 dollars and ¢3 cents an hour in 1973 and adjust it to 2018âthe
last year that we have numbers for.â And I adjusted. how much money would you need per hour in
2018 to be able to buy the same bundle of goods that you could buy for $4 dollars and
¢3 cents in 1973? And I came up with the answer. Youâd need today an averageâready?âof
$23 dollars and ¢68 cents an hour. That would be the average wage youâd need
for a worker to be able to buy, on average, as much today as he or she could in 1973. $23 dollars and ¢68 cents. Well, what is the average wage of the United
States in 2018? You needed $23.68 to be at the same place
you were 50 years ago. You know what the average is today? $22 dollars and ¢65 cents. Thatâs right. Average wage in America today in terms of
what it can buy is less than what it was 50 years ago. So if youâre feeling pinched, if youâre
feeling your economic situation is difficult, if youâve had to adjust your family, because
living on one personâs wage simply will not give you a decent lifestyle, so that your
wife or your elderly parents or your children have got to go to work now too. Youâre right. You are living what has happened. But itâs even worse, because over the last
50 years that the real wage of what you could buy with your income has gone nowhere. Actually, gone down a bit. Over that time, your productivityâthatâs
what your labor adds per hour to what your employer produces and sellsâthatâs gone
up somewhere in the neighborhood of 20% somewhere between 25% and 35% percent. So letâs be real clear. Productivity, your output, what your brains
and muscles add to your employerâs materials goods and services to sell, thatâs gone
steadily up. Productivity measures what you, the worker,
give to your employer by means of your work. Wages are what the employer gives you for
your work. So letâs review. What the employer has been giving you for
the last 50 years has gone nowhere. But what you give to the employer has zoomed
up by a third. Thatâs why thereâs a gap between rich
and poor in the United States. Working people, their incomes have gone nowhere. But the employer classâa small minority
in this countryâhas made out like the bandits that capitalism makes them be. I want to look now at the minimum wage. You know that sad situation in which a capitalist
system pays people at the bottom so little that after generations of struggle we passed,
in the depths of the depression, a law mandating a minimum wage at the federal level. Itâs a law that says, âYou canât pay
people less than a certain amount.â Itâs just indecent. Itâs like forbidding capitalists to employ
children or forbidding capitalists to impose themselves sexually on their workers etc. The minimum wage. Well, letâs look at it. Itâs a kind of measure of decency in a system. The current minimum wage is $7 dollars and
¢25 cents an hour. Thatâs what itâs been since 2009. It hasnât been raised. Again, in over a decade it hasnât been raised. Over that time, prices went up every year:
1%, 2%, 3%ânot a terrible inflation. But you added up over 10 years a lot. The prices have gone up, but the minimum wage
hasnât gone up with them, which means in terms of what the minimum wage can buy, the
last 10 years have seen a steady year-by-year decline in what the minimum wage will do for
the peopleâthe millions, who depend on it. What kind of a society does that? The society during which the rich got richer,
and the minimum wage was allowed to go down. You know, when the minimum wage was the highest
in terms of what it could afford a person earning it? 1968. I did a calculation. Using todayâs prices, what would the minimum
wage have been, after I have been in 1968, if it could buy what $7 dollars and ¢25 cents
can buy today, because thatâs what the minimum wage is? It would have had to be $12 an hour, which
it wasnât. Wow. We have really shafted the people at the bottom. And thatâs an achievement of the capitalist
system, even with a minimum wage when you can see how the establishmentâhaving been
forced by struggle to create a minimum wageâundermines, eviscerates it in the years afterwards, taking
back what they once had been forced to give. Itâs so bad that a number of states, almost
half the states in the Union, have higher minimum wages in their states than the federal,
because the people in those states have at least understood what an abomination it is
to treat people that way. In Washington state, on the West Coast, the
minimum wage at the state level is nowâready?â$14 dollars an hour, nearly double the federal
minimum. In Washington, D.C., in California itâs
$13 dollars or more. Yeah, the states have done what the federal
government hasnât done. And letâs be clear, the Republicans have
been working to keep that minimum wage down and the Democratsâwell, the best you can
say for them isâthey havenât been strong enough to do anything other than watch the
process unfold. Okay. Let me turn next to the market. This wonderful institution, we are told, our
leaders keep saying, âLet the market decide. The market will get to the official or the
efficient outcome.â Really? Letâs take a look at what the markets have
done. The market economy we live in today has a
number of ways of measuring its extraordinary product. Iâm going to give you two. The 2,000 odd billionaires in the world today
together have more wealth than the bottom half of the population of this planetâthree
and a half billion people. Thatâs right. 2,000 of the richest have more together than
the bottom three and a half billion. Thatâs a level of inequality that any system
should be deeply ashamed of. Here, in the United States, we even have a
better statistic. The three richest people have more wealth
than the bottom half of the American people. Oh my goodness! If you think inequality is a problemâand
that probably takes in most of you that are awake. Well, then itâs that capitalist market that
weâre supposed to celebrate that produce that. Iâm going to come back in the second half
of todayâs show with more about the market. But weâve come to the end of the first half. And I want to remind you, please, of a number
of things that we here, at Democracy at Work and at Economic Update, take seriously as
something to talk to you about. We recently published a new book âUnderstanding
Socialismâ. You can get a copy at lulu.com. And we urge you to take a look at it as a
way of getting answers to many of the questions that many of you sent to us. If you havenât checked out our gift shop,
itâs all union-made goods. We ship internationally. Itâs easy to see whatâs on offer. Just go to democracyatwork.info and then click
on âStoreâ. Again we want to thank our Patreon community
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requires just a click. Stay with us. Weâll be right back Welcome back, friends, to the second half
of todayâs Economic Update. In the first half, we were just concluding
with a criticism and an exposure of marketsâof what markets do and donât doâthat make
you want to understand, I hope, with me, that this is a very flawed institution; does not
deserve the nearly religious kind of endorsement of it that our leaders are eager to provide
over and over again. Itâs time to have a balanced look at the
market to evaluate it like every other institution rather than bow down before it as if we werenât
aware of its flaws. So let me continue. Many of you aware of a problemâand thatâs
what it isâcalled gentrification. Itâs what happens city after city, neighborhood
after neighborhood as people with money decide they want to live somewhere. And so they move into that area, buying up
homes, paying high rentals so that it becomes impossible for the people who used to live
there, who have less money to stay there. No matter that they grew up there. No matter that their children are going to
schools there. No matter that their churches, their friends,
and their neighborhoodsânone of it matters. Why? Because the market is the institution that
determines the neighborhood. And if the rich want it, they get it. And the middle and the poor get thrown out. It is something you can see across this country
in city after city. It is a sign that we produce not diverse neighborhoodsâbut
the opposite; not shared different kinds of people and lives to enrich one anotherâbut
the opposite. Over and over again, interesting neighborhoods
that wealthy people want to live in, they all come in, they drive out the little businesses,
they drive out many of the interesting people, and they end up wondering why they paid so
much for a neighborhood that is so dead and so anemic. Itâs the market that gentrifies. If we didnât allocate housing according
to how much money you have, we wouldnât have the problem of gentrification. It is one of those things markets do that
ought to make us very critical. And the market is a basic institution thatâs
good for rich people. You know what the market does when there isnât
enough to go around? Letâs for example imagine a park, a bunch
of parents with their children and the local ice cream vendor runs out of ice cream, doesnât
have enough. Thereâs 25 children, but thereâs only
six ice creams left. You know what begins to happen in a market
economy? The parents who have some money go to the
vendor and say, âYou know, I know the ice cream cost $3 dollars. Iâll give you a $5.â Other parents not wanting to be outdone offer
$7. Then some other parents offer $9. As this goes on, the parents, who canât
afford $9 dollars for an ice-cream, drop out. And when the process is doneâbecause thatâs
how markets workâwhatever is scarce in an economy goes to the people with the most money. And I ask you, whatever your religion, your
spirituality, âIs it ethical? Is it moral? Do you really want to live in a system that
takes whatever is scarce and gives it to the people with the most money?â Rural America is dying. You know why? Because thereâs enough money there, the
market says, âItâs not worth it for a bank to locate a branch in a rural area. Itâs not worth it for a supermarket to go
into an area that isnât rich enough.â So they canât get their banking done. They canât get supermarket prices. They have to pay more at the quote, unquote
âconvenience storeâ etc., etc. Markets work that way. Rural America is a victim of a market economy. And then letâs talk about the things that
we want that markets donât produce. Let me start with the simplest one. Did the market produce the United States? No. A government did that. A government called Britain, which came hereâthere
were other governments too, but the British are the ones, who wonâand they killed large
numbers of Native Americans. And they took their land. And they did all this other thing long before
there was any market here. So donât think of United States as a product
of the market as some, who defend markets, would like you to believe. Itâs precisely not. And, you know, the middle class that Americans
used to be proud ofâa vast part of the working class earning enough money to live in a home,
to have a car, to go on vacation, to send their kids to school, you know, the good old
daysâwas that created by the market? No. That middle class was created in the depths
of the Depression, when a revolt from belowâthe CIO, the socialist, and communist partiesâcreated
the mass movement that pressured Franklin Roosevelt to do the things that created a
middle class, to give people federal jobsâmillions of themâto create Social Security, to pass
the first minimum wage, and to create unemployment insurance. These things created the middle class. The market economy resisted it. Capitalists resisted it. It was overwhelming them that got us this. The market was the problem, not the solution. And then let me give you some other examples. You know why American businesses closed in
the United States and moved to China in huge numbers? Thatâs the market, friends. Nobody forced them. Nobody held a gun to their heads. No. American corporations wanted to make more
profits, which is what they do in a market economy. And they could make more profits by going
to China, because the workers were lower wages there, and because thatâs a growing economy
and they wanted to sell their goods there. General Motors sells more cars in China than
it does here. Thatâs why itâs there. The jobs disappeared here, thatâs the product
of a market economy. Think about it. And you know what the Chinese did? They said, âLook. Weâll give you access to our lower wage
workers. Weâll give you access to our growing market,
but in exchange we want to share the technology that you have. We have something you want. You have something we want.â The fact that Mr. Trump now wants to call
that âintellectual property theftâ is a game thatâs like paying a bill and then
having paid a bill for something you got, claiming that the money was stolen from you. It deserves the same amount of credence and
respect. And hereâs the double irony. What is Mr. Trump doing, now that the market
has moved production and jobs to China. Heâs imposing a non-market event. Heâs imposing government taxes and tariffs
to try to offset the effects of the market. In his obtuse way, he recognizes that the
market is bad news. You know, thatâs happened before in American
history. In the war, World War II, it was decided in
Washington, we canât let the market allocate the goods that are now scarce, because we
were producing to win the war. Railway cars, gasoline, you name it, was being
used to support the war effort, which meant much less of that could go to produce consumer
goods: our milk, our sugar, our meat, our gasoline. There wasnât enough, because it was being
used for the war. So we couldnât let a market to handle that. But you know what would have happened if we
had? The rich people in America would have bought
all those things, because they could bid up the price. So he would have had a war, in which poor
people died on the front and rich people are the only ones who can keep up their consumption
at home. And the government of the United States recognized,
that would destroy the unity you need for war. So they got rid of the market and they substituted
a ration system. Every American got a little ticket from the
government. And to buy milk, or sugar, or gasoline, or
meat you needed a ration ticket. Having money wouldnât get it for you. And you know how the government gave out the
ration tickets? According to peopleâs needs. If you had a big family, you got a lot of
tickets for milk. A rich person couldnât buy the milk for
the cat at the expense of milk for children. Gee. A market would have taken care of the cat. But a non-market intervention was necessary
for the human beings. Donât venerate markets. They donât deserve it. And for a really good book, if youâre interested
in pursuing this, on whatâs wrong with markets, the best one I know of is by Harvey Cox. Itâs called âThe Market as Godâ published
by Harvard University Press in 2016. The last myth to explode is the one about
the corporation. The corporation is this institution of efficiency
that has made the country great. Not at all. There is a professor, over in England, French
by origin, a woman, she teaches at the Leeds University School of Business. Her name is Virginie, thatâs Virginia in
French, PĂŠrotin. Iâll spell it for youâP-Ă-R-O-T-I-NâVirginie
PĂŠrotin. Sheâs one of the few people whoâve spent
much of her adult life comparing and studying capitalist corporationsâyou know, the ones
with the board of directors, twelve or fifteen people at the top will make all the decisions
what to produce, what technology to use, where to carry out production, and what to do with
the profitsâversus worker co-ops, democratically run by the workersâone worker, one voteâmaking
those decisions. Sheâs compared them. And guess what her research shows? Youâll have to guess, because you probably
donât know, because this kind of researchâeven when it comes out of an established, well-reputed
business schoolâhas a peculiar way of not showing up on the radar. Her research shows that worker co-ops are
more efficient, grow faster, and are more successful as businesses than corporations. We donât have corporations because theyâre
efficient, we have corporations because theyâve used their profit to make sure we donât
know the kinds of research that professor PĂŠrotin has produced and that we donât
act accordingly. A rational society would long ago have created
a sector of the economy that is worker co-ops, so that all of us as citizens would be able
to see how they work, would be able to look for and have jobs in a democratically run
business, so we could decide where we would prefer to work, where we would prefer to buy
the goods and services we need. And on that basis, we could then have a debate
and a decision what kind of economy we want. Do we want a 50/50 mix of corporations and
worker co-ops? A 90/10 mix, one way or the other? We would then have a rational way to discuss
it and to debate it. I had intended, if time allowed, to read you
the list of American corporations that have moved production over to China, one way or
another. But the list is too long. It numbers in theâready?âthousands of
American corporations. They decided, following the principles of
the market driven by profit, to move. They didnât care about the disaster for
American homes, cities, towns, jobs. They were doing what a market capitalism has
them doâmaximizing profits. And that was what was good for the corporation,
not good for this country, not good for most people, not as good a way of organizing work
as democratic worker co-ops could be and would be. You know in Emilia-Romagna part of Italy,
they have an economy thatâs 40% worker co-ops. Itâs been like that for decades and they
fight to keep it. Guess why? Yeah, there are all over the world examples
of successful worker co-ops. Thatâs what professor PĂŠrotin studied when
she came up with why they are preferable to corporations. Corporations are with us, because they want
to be, because they make money. And itâs at our expense. I hope you found this interesting, a discussion
of economic myths that need to be exploded. And I look forward to speaking with you again
next week.
He needs more exposure. Everyone needs to hear what he has to say. Neoliberalism and capitalism in general gets white washed and never questioned in the US. This guy is the best economist I've seen making arguments against capitalism.
Here is a link to his online lectures on Marxian economics:
https://www.youtube.com/playlist?list=PLPJpiw1WYdTNMCC0ypXHZ-kW7yCz4T0Zg
I HIGHLY recommend listening to at least the first series. As he says, if you never critique a system, then you allow it indulge its worst tendencies. He is the most concise critic that Iâve ever heard.
Democracy at Work and all of Dr.Wolffâs talks are incredibly informative. An absolute recommend.
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