Welcome friends to another edition of
economic update a weekly program devoted
to the economic dimensions of our lives
jobs incomes debts the interest rates we
pay those our children are facing and
those coming down the road in an economy
that is changing and changing fast
I'm your host Richard Wolff I've been a
professor of economics all my adult life
and that I hope has prepared me to offer
you these interpretations and analyses
of what's going on in the economy around
us
my eyes were caught recently by an
article in New York Magazine that in
turn was based on a research paper
produced by the National Bureau of
Economic Research both the National
Bureau paper and the New York magazine
article were published in January 2018
and they asked and they try to answer
the following question did the Democrats
and the Democratic Party let unions die
I want to deal with the question in
terms of focusing on one word let that
implies that the Democratic Party was a
passive kind of observer maybe it should
have intervened but in effect it let
something happen the implication being
it could have and it would have happened
anyway and they just let it happen it
might be comforting to people in the
Democratic Party to look at the world
that way and to read our history that
way but I think it's a mistake I don't
think the Democratic Party let the labor
unions die I think the Democratic Party
was a major instrument for extinguishing
that movement in the United States and
let me explain all of this starts in the
great crash of an
1930s we had before that pretty much a
Republican dominated economic and
political system Republican Party was in
power when the Great Depression hit in
1929 Herbert Hoover and all the rest and
out of the Great Depression came a
complete realignment of politics in the
United States and at the very pinnacle
of that realignment was the Democratic
Party why because the Democratic Party
led at the time by Franklin Roosevelt
made a deal with the trade unions in
order to deal with the Great Depression
basically the deal went like this
we the Democratic Party will stand up
and do things for working people in
exchange we want you in the working
classes of America to support the
Democratic Party and the deal worked it
worked very well let's go through it the
Democratic Party got the enthusiastic
support of the overwhelming majority of
working people they voted mr. Roosevelt
into office for successive presidential
terms no person in American history had
ever served four terms no politician had
ever been as popular as Franklin
Roosevelt the Democratic Party and
Franklin Roosevelt rolled into office
and stayed into office across the entire
Great Depression and across the entire
world war two that followed and what did
the working people get well when you
think about it quite a bit they got the
Social Security system for the first
time in American history when you reach
age 65 your working life behind you most
of it
you could have a decent comfortable
retirement the government made a
commitment to make sure you got that as
an honor to the work of your lifetime
we got unemployment insurance if you
lose your job through no fault of your
own
the government will arrange to provide
you with a check each week to see you
through your hard times a minimum wage
was passed so that any working American
would earn enough for a decent minimum
standard of living and finally a public
works program in which unemployed people
millions of them got the jobs that would
allow them to continue paying their
mortgages to keep their homes to keep
their dignity their sense of self and to
be productive members of the community
the working people got a lot and the
Democratic Party got a lot and they
ruled the roost but of course somebody
had to pay for all of these things and
who was that corporations and the rich
had to pay a big chunk of it Roosevelt
told them you must pay because you're
the only ones who have the money to do
this and the country won't hold together
it'll blow apart it'll have a revolution
it will dissolve if we don't take care
of the tens of millions suffering
through the Great Depression asking only
that they get a job and enough of the
corporations in the rich saw the wisdom
of what mr. Roosevelt did so he got the
taxes and he got the loans he needed to
make that deal with the working people
but when the war was over the
corporations and the rich decided they
had had enough of this arrangement they
didn't like it they didn't want to keep
being taxed and have their money
withdrawn to help average people and so
they saw their vehicle as the Republican
Party but they also saw that in order to
win
being Republicans wouldn't do it they
had to destroy the coalition that made
the Democratic Party powerful and what
was that it was a labor movement
together with the left wing of American
politics socialists communists and all
kinds of other is that felt themselves
part of that Democratic thing called the
New Deal coalition so the Republicans
who didn't like it went to work to
destroy that coalition they started with
the Communists whom they painted as the
evil agents of a foreign power when they
were finished destroying them they went
after another part of the coalition the
Socialists and destroyed them and when
they were done they went after the
third-biggest leg of the coalition the
labor movement and demonized them often
using the same words and language that
they had used against the Communists and
the Socialists what did the Democratic
Party do confronted with this head-on
assault on the coalition that had
brought them to power the basic answer
to that question is instead of
confronting and stopping and reversing
the assault they joined it first they
joined to get rid of the Communists then
they joined to get rid of the Socialists
and in the end they didn't have the
strength to prevent the assault on the
labor movement which they kind of have
endorsed anyway so they weren't passive
they were part of the very reaction
against the success of the Democratic
Party they didn't let unions die they
destroyed the coalition's that had built
the unions up they destroyed the
coalition that the unions together with
the left in American politics had used
to come to power the Democrats were not
passive they were active that only makes
the tragedy of the
weakness today all the worse the next
update I want to deal with has to do
well it's hard to put it the best way to
say it is the irrelevance of the
government we live in a capitalist
system in which we pay an enormous
amount of attention to what the
government does but I'm afraid it's
because we overestimate how important
the government is let me try to explain
very concretely in 2016 the last year of
the presidency of Barack Obama how many
jobs were created in the United States
2.34 million by the way two plus million
jobs were created mostly those jobs go
to the new people entering the labor
force the population of the United
States is growing we have over 300
million people so we add millions every
year to the labor force so when I say to
you we created as a society 2.34 million
jobs it means we barely kept up with the
growth in population what about the
first year of Donald Trump's
administration how many jobs were
created 2.17
okay so two point three four million
jobs created the last year of Obama 2.1
7 million jobs created first year of
Trump why is this interesting
first mr. Trump's boasts as usual turned
out not to be accurate he isn't the
greatest job-creating president in the
history of the world
he couldn't even match mr. Obama's in
his last year so so much for that but
that's not the really interesting thing
notice how close they are
Obama under Obama we created a hundred
and seventy thousand more jobs not for
those people of course very important
but out of two and a half or almost two
and a half million it's kind of small
potatoes what's going on here is that
what the president does doesn't matter
the number of jobs created in this
country depends on the viability
and functioning of the capitalist system
as an economy and the role of the
government is not that important we
spend way too much time talking about
what the government does or doesn't do
and way too little talking about how
this system works finally if the number
of jobs created under Obama and Trump
are very close yet we know that the
unemployment rate dropped drastically
across the year 2017 the first year of
Trump then we can kind of see that it
had nothing to do with mr. Trump what it
had to do with the recent unemployment
went down was because large numbers of
unemployed people left the labor force
looking for work anymore and so they're
not counted as unemployed the decline in
the number of unemployed is more about
discouraged workers who don't even look
anymore than it is about job creation
because as you can see fewer jobs were
created under Trump when the
unemployment rate went down then under
Obama when it didn't
next item three international banks were
fined early in February a total of 47
million dollars for manipulating
contracts for futures that's a kind of
security gamble in the stock market I
know this is old stories that banks of
being fined is something I keep coming
back to now for years in the United
States but I wanted to read to you and
draw a lesson from this latest one three
big international banks together 47
million dollars well I have to say again
47 million dollars for three huge
international banks is as if I found you
guilty of a major crime and insisted
that the punishment was if you would
give me 82 cents you would reach into
your pocket
the change at me and laughs that's what
ought to be done here but in our mass
media we don't do that listen to the
statement of United States Department of
Justice assistant attorney general
Cronin in commenting on the misdeeds of
these three banks that got this mild
slap on the wrist I'm quoting their
behavior reflects a disturbing and
reckless trend of individuals and
companies seeking to put illicit gains
and profits above honest and law-abiding
conduct oh goodness
sounds like my teacher from civics class
long ago honest and law-abiding conduct
this fine if that's the crime that they
sought illicit gains and profits the
fine is an outrage and it is simply the
latest string in the illegal or
unethical behavior of big banks but what
strikes me as it always has is we have
yet another in the long string of
criminal or unethical behavior that the
leading officials in the government
themselves call illicit gains and
profits and reckless and disturbing but
no one seems to imagine that one
responds to private banks doing this is
to substitute government banks banks
that are accountable to the people we
elect accountable even to us no one
seems to go that direction even though
many bangs in most other capitalist
countries are public as long as though
we've never seen it it's not as though
we don't know that in North Dakota we
have a bank that's public run by that
state that's been there for a hundred
years and has a clear track record of
making fewer mistakes and paying better
dividends to the people of North Dakota
than these big
do anywhere else in the world and why
does no one say wait a minute if these
banks are always engaged in illicit
activity maybe what they need is some
sunshine some light to come in maybe
they need the banks to be run as
cooperatives so all the people in the
bank know what's going on and all the
people in the bank have power so that
they can catch and identify and deal
with criminal and/or unethical behavior
here would be some solutions that solve
this problem instead we give them small
fines we slap them on the risk and then
we ask act all shocked and surprised
when one after another of these
officials year in and year out is caught
for every kind of crooked behavior that
private enterprise has ever displayed
anywhere. before I go on let me remind
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and you can see this
program as a television program. when mr.
Trump
came to office the same month November
2016
he immediately brought lobbyists who had
been working for private enterprises
into the government he got caught doing
that which directly violated what he had
promised in his campaign so he announced
a new rule making it illegal for five
years there was a ban on lobbyists it
was a big see how strict I am I'm not
doing what I promised I wouldn't do I'm
really a hard-nosed anti lobbyist guy
there was a provision in the little
thing he did there that you could waive
the requirement of no lobbyist in the
previous years and no lobbyists
afterwards your government after your
government service and of course the
waiver has been used over and over again
ever since
no draining of the swamp if anything an
expansion of the swamp but one of them
caught my eye and I need to tell tell
you excuse me about it this has to do
with Miz Kaley and I hope i pronouncing
her name correctly too cos she has
become an advisor to the Secretary of
Agriculture with respect to this is key
Dietary Guidelines for Americans in
other words she's now working in the
government to provide guidelines for
what we teach our children and ourselves
is good for us to eat and what
undrinkable is not okay
guidelines are issued every five years
she's gonna be working on that because
she's an expert now let me tell you
about where she comes from to give you
an idea of what kind of expertise she
will be contributing here we go Kaley
toukas was director of food policy for
the Corn Refiners Association a trade
group for corn syrup manufacturers for
two years before leaving for the Trump
administration in July
2017 that's what she did
the Corn Refiners Association makes corn
syrup which is a sweetener
it's a sweetener that has been shown to
have all kinds of health effects that
are not good and to be nutritionally
dangerous if not useless prior to that
she lobbied for the snack food
Association and the National grocers
Association
prior to her lobbying days she spent a
year as a research analyst on tax policy
at the American Legislative Exchange
Council what is that Alec it's called a
group of corporations and conservative
lawmakers that work together to craft
business friendly model legislation she
also spent the year before that at the
Charles Koch institution institute named
after its billionaire founder and CEO
and part owner of the global fossil
fuels and materials conglomerate cork
industries the Corn Refiners Association
where she worked just before going into
the government consists of the four
biggest corn syrup producers in the
United States Archer Daniels Midland
Cargill ingredien and Tate & Lyle
she then lobbied the USDA the Department
of Agriculture as well as the House
Senate an environmental protection
agency trying to get dietary guidelines
that were interesting to and supportive
of her corporate clients that's not
keeping lobbyists at a distance that's
keeping lobbyists closer to you than
your undershirt next item Trump has been
dialing back regulations across the
board and in particularly working to
dilute dodd-frank together with the
Republican majorities in both the House
and Senate the dodd-frank law was
supposed to regulate banks
so it came as no surprise with the
reduction of these regulations to
discover that banks are now lending
loans deemed as risky as what they were
just before 2008 it leads me as an
economist to question is is it the
situation that the bankers learned
nothing from the 2008 crash and now that
the regulations are being withdrawn by
Trump they can go and do it all again or
are they in fact quite smart they did
learn something what they learned is
that even if they fail they'll be bailed
out at taxpayer expense
so then why not I don't know how to
answer that question I leave it to you
because either way the message when you
think about it is pretty much the same
finally we live in a society of
unprecedented inequality of income and
wealth you know 35 years ago the United
States was one of the least unequal of
the major capitalist countries today we
are the most unequal I don't blame mr.
Trump this has all been happening for 30
or 40 years but here we sit as one of
the most unequal societies in the world
and we have tried as a nation over the
years a whole host of things to try to
undo that inequality to reverse it to
modify it the war on poverty and I could
go through the list of policies we've
had they haven't worked in equality is
worse not better the efforts we made the
laws we changed the tax situation we
changed the special skills we taught the
special job opportunities we created it
didn't work and I want to offer an
explanation why and what to do about it
I think the efforts
well intentioned as many of them were
undertaken by both Republicans Democrats
and others didn't take account of the
key issue which is the system we live in
and by that I mean capitalism because it
has a name and I want to be very clear
about what I mean in a capitalist system
enterprises and most of them are
corporations as you know or you should
know most of our economy is run by
corporations in a corporation a handful
of institutions and people own the bulk
of the shares and they use those shares
that they own to elect one share one
vote the board of directors of the
company the people who run the big
corporations General Motors General
Electric General everything else and now
come something that should surprise no
one if a tiny group of people major
shareholders in most companies 20 30 40
that's it
board of directors and most companies 12
to 20 individuals that's it
they may have thousands of employees
tens of thousands of employees but the
number of people at the top is always
the same very very small minority of
those engaged in any corporation in
every corporation here's the thing that
should surprise no one if you allow a
small number of people to be in that
position of power you cannot be
surprised if they take the profits that
the envy Enterprise earns the
corporation earns profits that all the
workers they're helped to produce you
cannot be surprised if they at the top
who dispose of them all
give disproportionate amounts of them to
themselves
of course they decide to distribute
dividends to shareholders they are the
major shareholders of course they decide
to give huge salaries to the top
managers who sit on the board of
directors because those are the people
they work with those are the people
themselves
who make the decisions and they enrich
themselves you can't really be surprised
that for the mass of people that are not
part of the running of the company they
don't get the big bucks
they never did the way you overcome
inequality the way you make less
inequality is by changing this system if
the distribution of the profits
everybody helped produce were
distributed democratically by everybody
they would never give a handful of
people the bulk of what they all helped
to produce they would distribute it much
less unequally and let me say the same
thing the other way if you don't deal
with that institutional arrangement if
you don't deal with that structure of
the enterprise all your efforts and an
equalizing of our inequality will come
to the sad end that we just saw they
won't work it's a sobering lesson but it
tells you where the solution lies we've
come to the end of the first half of
this program I want to thank you for
being with us and I remind you stay with
us I think you'll find the second half
of today's program very interesting
