Welcome, friends, to another edition of Economic
Update, a weekly program devoted to the economic dimensions of our lives: jobs, debts,
incomes — our own and those of our children. I'm your host, Richard Wolff.
I want to begin today with a theme for the program as a whole. And the theme
might be called either “the problems of capitalism normally” or “the problems of
capitalism when it's in a period of decline.” I'll try to move back and forth between them
because I want to focus on capitalism's problems, because those are what confront us here and now.
So it's appropriate that I begin with the Amazon corporation, a supposedly success story of
current days of capitalism. And I want to focus on some of the things you may not have heard about or
know about this particular corporation. So I won't be talking about the fact that its CEO — or now,
I should say, former CEO — Jeff Bezos, is now the second-richest person on the planet, after Elon
Musk from Tesla outdid him over the last couple of weeks. But that'll bounce up and down somewhere
between $180 and $200 billion — way more money than, for example, would take care of the entire
rental arrears of 20 million Americans who are facing eviction. I'll put all that aside.
I want to go back to the year 2015. Amazon, at that point, started what was called the “flex
program” for drivers. It needed to get people to come and work at Amazon, to deliver the packages
that it is famous for. And they promised these workers to pay them $18 to $25 an hour, plus — and
this is the important part — 100 percent of tips that were to be provided for delivery of packages,
as many people do. However, it turns out that for several years after 2015 Amazon actually took
the tips and used it to pay the basic rate, so that the workers never got the tips
that were left by you and me for them.
The United States government prosecuted Amazon.
Amazon got caught. And let's always remember that what you catch, if you're the government going
after corporations, is a small part of what's going on. Anyway, they had to pay, and agreed
to pay, $61 million (that was the portion of what they had done that got caught) to compensate
the workers for the tip money taken from them.
You're a multi-billion-dollar corporation, and
here's the lesson: The enormous wealth of Jeffrey Bezos, and of people like him, the enormous
wealth of these corporations, is based on endless examples of this kind of either illegal or
quasi-legal nickel-and-diming — that's what this is about. And this system reproduces
that behavior over and over again.
On January 25th of the year 2021 hundreds
of workers at an Amazon warehouse in Chicago were presented with a choice: You can
sign up for a 10½-hour graveyard shift or you lose your job. Management informed the
workers that their warehouse, known as DCH1, would be shut down. And they were offered a
shift called the “megacycle” at a new Chicago warehouse. This had been a warehouse area that
had been hit by protests and strikes. Yeah, that's how you get treated if you dare to protest
stealing tips and other stunning behavior.
No wonder that in Canada there's now a website
called “Not Amazon,” which allows you to get things delivered from local vendors without
going through the controls and fees that Amazon charges. And that is developing here in the
United States as well. Profits for the few at the expense of the many. No wonder there
are unionizing drives. And the one in Bessemer, Alabama, is in full gear as we are talking now,
and is a worksite for almost 6,000 workers. In the history of Alabama this is a very important
moment in terms of unionization. But if ever a corporation, by its behavior just now, explains
why you need a union, well, Amazon is it.
My next update deals with New York State,
but what it deals with is a problem that exists across the United States. But we have
some solid statistics in New York State, so I want to make that as an example. In New
York State there are 1.2 million families — so we're talking a minimum of five to 10 million
people in those families — who are now facing what are called “rent arrears.” What that means
is they haven't paid their rent — some of them for a month or two; some of them for 10 months.
Many of these families are with children.
So now let's look a little
deeper into these numbers. Twelve and a half percent of New Yorkers are
collecting unemployment insurance — one in eight workers. And there's a big overlap between those
who can't get a regular salary, who are having to live on unemployment, and those who therefore
cannot cover their rent. You'll understand that even more when I tell you that in 2018 — so that's
a good two years before the pandemic hit — already then, 22 percent of New Yorkers, more than one in
five, paid more than half their income in rent. That's considered to be deep trouble. You
can't live in our society if you're paying more than half of your income simply for
your living situation. But that was true for almost one in four New Yorkers before the
unemployment hit, before the pandemic hit.
Before the pandemic — one more statistic for you;
actually two — before the pandemic, families with children made up 70 percent of the population
of shelters in New York State. That's right, families with children were the typical
shelter occupants, already before the pandemic and the unemployment hit. That’s
children, whom you really cannot blame one millimeter for what's happening to them.
And then think about the consequences of doing this to all those children. And I'm going to give
you my last statistic. In 2016, a survey showed that 85 percent of children living in shelters
didn't get proficiency in math and reading. That's the damage done to their educations from being
shelter occupants, which so many of them are.
New York State is one of the richest states
in the United States, which is one of the richest countries in the world. And we are
treating our people, especially our children, in a way that illustrates that capitalism is
at least as efficient in producing poverty, and reproducing it, as it is in producing wealth
— and reproducing, thereby, a level of inequality that calls the entire system into question.
If only we were serious as a society about doing something for this kind of inequality. Condemning
this generation — as we have, as a nation, for so many previous generations — to these
levels of discrimination and inequality. The children, who made none of these
decisions, losing their education, living in the worst conditions, suffering all of
the large and small indignities that go with it.
We are reproducing horrific
inequality. And if that continues, then I make you a prediction, which I rarely
do: We're going to have as angry and upset a population four years from now as we've
had over the last four, probably worse. And in that way we'll have been prepared for
the next Trump — to blame it all on whoever they can come up with. I'm sure QAnon will have
an answer for why all this trouble is happening. But the bitterness, the anger, and the resentment
— well, that's building because you're not dealing with this. I make an appeal to the new Biden
administration: Deal with the fundamental systemic reproduction of inequality, or
else it will come back to haunt you.
My next update (and I will begin this before
our mid-program break and then come back to it) has to do with a way of raising money.
Again, I'm going to be using New York State because it's a wonderful example,
but parallel things apply to other states. New York State has a thing in its
tax code called a “stock-transfer tax.” Think of this as a sales tax if you buy and
sell stocks. You know, how we all pay a tax if we go to the hairdresser, or we buy a shirt, or we
pick up an appliance. There's a sales tax when you buy goods and services like that.
And so back in 1905, a long time ago, it occurred to fair-minded people that there ought
to be a sales tax when you buy shares of stock. Okay, so the idea was let's do that. Very
low — pennies, few pennies — one, two, three, four, five cents per share
when you buy it. It's a sales tax. And it was thought to be fair because this
is a big, rich playground, the stock market, for an awful lot of people who certainly
can afford it. That if it's reasonable to tax the expenditure of people who buy food
for their family, well then it's reasonable to tax people who buy shares and have enough
money even to think about doing that.
And then finally there was the idea that
there's too much speculation anyway. We should be taxing people who are buying and selling
10 times a day, you know. Taxing that kind of speculative activity is a reasonable thing. You
know, it’s the same kind of logic that says let's tax cigarettes, or let's tax alcohol, because
we'd like to kind of push back against overuse of those things. Well, if you want to push back
against speculation, then taxing the speculator, making them pay a little, is perfectly logical.
And the tax was collected here in New York State until 1981, when the then-mayor of New York
came up with a wonderful idea to get support from rich people. He said, we'll collect the tax
(because he didn't have the courage to cancel it), but we’ll rebate it. So actually, to this
day, New York State collects a very small stock-transfer tax, but then gives it back to the
people who buy. It’s as if you paid a sales tax, and then at the end of the year you got all
that money back. That's what we do; we don't tax stocks. It's an amazing thing, and I’ll come back
and talk about what it means after our break.
We've come to the end of the first part of
today's show. Before we get to the second half, I want to remind you, our new book, The
Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, is
available at democracyatwork.info/books. And I want to thank, as always, our Patreon
community for their ongoing and invaluable support. If you haven't already done so, please
go to patreon.com/economicupdate to learn more about how you can get involved. Please stay with
us; we'll be right back to continue this story.
Welcome back, friends, to the second half of
today's Economic Update. We were discussing before the break the stock-transfer tax — a sales
tax, if you like, on buying shares of stock in the stock market that's been on the books in New York
State since 1905, when it struck people to be a fair way to make that part of the economy pay its
fair share of the cost of running the government. Then in 1981, to pander to the wealthy, — who play
the stock market, since most of the rest of us don't — they rebated it. That's what they called
it. They continued to raise it, to tax people, because they didn't have the courage to
say, well, no tax. And what they have been doing — and they do to this day — is they
rebate it. They give people back the money officially charged as a tax
on buying shares of stock.
And now I want to talk with you about
the justification, and what it means, of this craziness of collecting, and then not
keeping, your money. And let me underscore, we're talking about billions of dollars a year.
It would transform the state of New York's financial situation even if you collected
only a penny, or two, or five per share, which is a trivial amount of money when you think
about what's done. And to give you a sense of it, imagine if we had imposed it over the last couple
of months with the craziness in the GameStop scandal. You know, the crazy shooting up of prices
of that company, and then the crazy drop. Well, millions and millions and millions
of shares were bought and sold by speculators trying to make a killing off
the price going up, or the price going down. But those are all transactions. And had they
had to pay a sales tax, even a small one, the revenue take for the state of New
York would have gone a long way to offset the rest of that horrible speculation and made a
silver lining, if you like, in terms of providing the people of New York with some benefit. And
of course, if you didn't have a stock-transfer tax in New York, you could have it nationally.
And let me start with that. One of the arguments made by corporations in the stock field, on Wall
Street, is, you can't do that. If you did that, we would move the transfer of stock, the buying
and selling, out of New York State. We'd go across to New Jersey, or somewhere else. Well first of
all, that's not so easy. That involves expenses that have to be undertaken to do such a move,
technologically and so on. Not so easy. And it would require legislation, etc. So it's a bit of
a fake, number one. Number two, it's a risky fake. Because how do you know that New Jersey, once
you've spent the money and moved it over there, won't do the same thing? Especially when New
York State is showing them what's going on here, which we would do. Or then let me generalize
it. Maybe a progressive legislator — AOC, for example, from New York — could make this a
national issue, that there should be a sales tax, a national one, on this.
After all, in our society, we don't tax property in the form of stocks and
bonds. I've talked about this on our program before. We tax income that comes from them,
like we tax the income that comes from a home that we rent out to people. We have to pay an
income tax on the rent, but we also have to pay a property tax on the value of the house. But
it doesn't work like that with stocks. You pay an income tax on the dividends you get, but nobody
makes you pay a property tax on the value of your stocks and bonds. That's why it's so strange.
If you sell your hundred-thousand-dollar house, and you buy a hundred thousand dollars’ worth of
stock, you have to pay property tax in your town, for the house. But once you've sold it for the
stock, you don't pay property tax to anybody. This is a benefit that rich people, who have enough
money to have a significant amount of stocks, have been benefiting from for decades. It’s
long overdue to give them, for example, a stock-transfer tax from which they've also
been exempted. It's the outrageous indignity.
And then there's the last argument: You can't do
that because companies or stock markets will leave the United States. I love this argument. They'll
leave the United States. Will they? They might. But the notion that we are powerless to prevent
that, or to punish it if some would like to do it, is wrong. Of course we can. Imagine a stock market
that left the United States, with a president and a government that said, uh, excuse me,
you're staying and you're paying the tax. But if you wish to avoid the tax that you should
have been paying for a century anyway, by running away, fine. We will then not do business with
you. You will not be able to come to our country to make the kind of money you need to make,
to make any stock market in the world work.
We will do it by jawboning from the president.
We will do it by organizing boycotts. You are not going to punish the future in the way you have
evaded taxes in the past. That system is over. Imagine a president, or a political party, or
a movement, making a commitment to do that, saying that the people have the power to make
taxes paid by those who should never have been exempted from them. And the stock game players
on Wall Street are a prime, appropriate target. They have ripped off the rest of this
society for long enough. There is no reason to enable or allow them to do it.
And nothing exemplifies this better than the craziness of New York State having, in effect,
a stock-transfer tax, a sales tax on shares, in the law since 1905 that is rebated since
1981 so that the richest amongst us don't have to pay. Extraordinary. But
it is the kind of extraordinary bias built into the tax structure of this society.
And you can tell, by who benefits from this odd tax structure, who has the power to shape
that structure so it works that way.
My next update is another example of where
arguments are used that simply don't hold water. And it's very important, and it's being debated in
Washington right now. This has to do with raising the minimum wage. Yeah, we have to come back to
that topic again because it's hot in this country again. The current federal minimum wage is $7.25
an hour — among the very lowest in the world. And by that I mean the industrial societies
that are comparable to the United States. No European country pays that little as a minimum
wage, whether it's legally enforced or just customary. It's extraordinary. I'll give you
one example of a country that in other ways is economically like ours: the United Kingdom. The
minimum wage of the United Kingdom right now, as I'm speaking to you, is $11.95 an hour, not
$7.25 an hour. You get it? It's not even close in terms of what we are doing.
Okay. We should be raising it as prices go up. Because if you don't, and you give workers the
same minimum wage as the prices go up, they can't afford what they were able to buy last year
this year. And they'll be able to afford even less next year. Well, the last time we raised the
minimum wage to the big $7.25 an hour was in 2009, folks. That's 12 years ago. Every one of
those years, prices went up in America for everything you have to buy. But the minimum
wage didn't. That's hurting the poorest amongst us every year. The Democratic Party proposes to
raise it. The Republican Party opposes it.
And here comes the argument which,
sadly, the Democratic Party doesn't know how to refute. Here's the argument;
ready? If you raise the minimum wage, there'll be some employers, typically small
businesses, who will go out of business or, fire workers, because they can't afford to pay the
extra bucks — for example, moving the minimum wage to $15 an hour, which is what's on the
agenda now from the Biden administration, thanks to the pressure of unions and
social movements over the last few years.
Now let's look at this analysis, because it is
stone-cold wrong. Do we want a society in which there are small businesses that are successful?
I happen to believe that the answer is yes. I like shopping with little businesses, where I
can get to know the people. I believe in that, I like that, I want that. And I
think most Americans do as well. Side by side, I want workers to be paid a
wage that allows them to have a decent life, for themselves, for their children. And that
includes having an automobile in our culture, which builds on that; having an education
for those children; and so on.
Guess what — I want a decent minimum wage, and I
want small business. So you know how you get that? You don't get it by saying, well, it's either-or.
Either we're going to help the low-wage workers by raising the minimum, or we're going to salvage
small businesses. That's like running up to someone and saying, I'm giving you a choice:
I'm either going to shoot you or stab you. Your response isn't to agonize over which
of them to choose; your response is to say, I don't accept that as a choice I'm to make.
And that's the answer to the minimum wage. We can have small businesses that are viable,
and we can enable them to pay a decent minimum wage, because a decent society
would do both those things.
Now, how would we do it? Here's your
answer. Number one. And by the way, I'm just borrowing from other countries that have
done a much better job, like those other ones that pay a higher minimum wage. Here's the first:
Require that all levels of government — federal, state, and local — give a minimum percentage of
their orders to small businesses. That we do not allow the patronage of large businesses, who have
the money to (let's be polite) persuade, or (if you're not polite) bribe politicians as to where
they do their buying. Let's make small businesses get a bit of that. And let's give them a
tax break. And let's give them subsidies.
And you know why we should do that to small
businesses? Two reasons: One, so they can pay minimum wage. It's a way of
saying to the small business, here, you're going to have to pay workers
decently, but we're going to offset the cost to you from that by giving you this tax break,
this subsidy, this set of orders for your output.
And you know why, the second reason is to do
that? Because we already do that as a society for big business. So we're just saying, hey,
big business, you're not going to steal all that for yourself. We're going to maintain
something we really want: small businesses. And you're going to help pay for it.
And just to give you an example, I picked one out of the hat. There are
millions of them. Here's the statistic which I thought would be appropriate because
here we are, right after the Super Bowl. Okay. In the economics of today's major
sport franchise, 64 billionaires are owners of major sports franchises. Twenty-eight
sports teams are owned by billionaires who got $9 billion in public subsidies for the stadiums they
use. That's right — you and I, our taxes, help pay for those stadiums. That's a subsidy. That's why
they can pay higher wages; because we subsidize.
We don't do that for small businesses half
as much as we could. And if we did it better, they could pay minimum wages and we'd have
both an appropriately paid working class and the kind of small businesses we want.
Don't be fooled. Those are not either-or’s. And it's only big business that pays
politicians to pretend that that's the issue.
Thank you for being with me today. I hope you have
been interested and informed by these analyses, which is why we produce them. This is
Richard Wolff for Democracy at Work, hoping to talk with you again next week.
