Welcome friends to another edition of economic update a weekly program devoted
to the economic dimensions of our lives jobs incomes debts ours our children's
and what's coming down the road in an economy increasingly unstable
I'm your host Richard Wolff I've been a Professor of Economics all my adult life
and I hope that that has prepared me, well, to offer you these economic updates
about what's happening in the economy, around us. Let me begin with a topic that
gets a lot of attention these days but where there is some new research to
report it has to do with discrimination in the workplace, discrimination of men
against women, discrimination of white people, against people of color, and so on.
If you thought that problem was behind us you're mistaken
obviously in recent weeks and months we've had more and more information
about that particularly gender-based discrimination. The Pew organization, P-
E-W, which does wonderful research and polling, has just completed a new report
and it came out just shortly after a very famous situation developed at the
google corporation in which one of their employees james d'amour was effectively
fired because he publicly opposed steps being taken inside the google
corporation to deal with gender discrimination against women. Pew decided
to ask thousands of men and women about their own personal experiences have you
seen or experienced discrimination that you could clearly identify as such and
the results were extraordinary and clear men much much much less frequently
experienced or noticed discrimination women i'm talking about gender
discrimination here much much more they complained about it they described it
they detailed it it is a reality it has been a reality for a long time and the
section harassment and sexual assaults are only
the xposed extreme forms of what is a kind of generalized problem of
discrimination I don't have much to add to what is being said publicly and I
don't want to waste your time so let me only offer one other way of thinking
about that if you organize the workplace vertically by that I mean some people at
the top have an enormous amount of power and the vast majority of people
underneath them have little or no power and what I mean by power is those at the
top have the power to hire and to fire and to promote whereas the vast majority
live with the results they are either hired or not fired or not promoted or
not what this means is those at the top have extraordinary control over
everybody else whose income whose job whose future whose career depends on it
that's a very unhealthy arrangement why because whatever peculiarities exists in
the minds and hearts of the few at the top will now shape the entire work
experience will shape who gets hired and not who has an income who has a career
or not in the recent exposure of sexual harassment and sexual assault
we could see dramatically how that kind of power allowed those who possess it to
get services from those who do not that are disgusting and there's no other word
to describe it but even if you don't have that kind of disgusting consequence
you do have the consequence of discrimination if those at the top
prefer men to women you get the result if they prefer whites to blacks for
whatever reason you get the results that our research through the pew
organization shows us here's an argument that flows from that realization don't
organize the workplace vertically organize it horizontally what do I mean
make it democratic make the decisions to hire and fire some
thing that has to be engaged by a lot of people so that even if a few are racist
or sexist or have any other kind of discriminatory commitment in their lives
it will be a lot less easy for them to impose that on all three buddy
underneath them than is now the case because there'll be more people involved
in participating in and able to raise questions about discrimination at the
workplace not changing the way you organize it maybe part of the reason why
this kind of discrimination has been around for so long and has resisted
other efforts to do away with it the next update has to do with the Chinese
economy look I have to be honest with all of you in a way that the media in
this country tend not to be the Chinese economy is the ascendant economy in the
world no one comes close to what they've accomplished in the last 20 years
no one and no more powerful a change in the world economy is emerging than what
is coming from the People's Republic of China and one of the ways to show that
to you is to share with you some statistics that very recently came out
that drive the point home 2018 the year we are now beginning will show all the
statistics show it, that for the first time, retail sales in the People's
Republic of China, retail sales that means everything sold
in the way of food clothing shelter in the stores where people buy, retail sales
in China will equal or surpass those in the United States which used to be
number one which had been number one in total value of sales for more years than
most of us have been alive that is no longer the case
is a historical change of enormous importance why well the reasons are so
many you don't know where to start it means that companies producing for the
retail market which most companies do are now going to look upon China as at
least as important as the United States for their survival
for their profits for their growth and since the growth path of China is much
faster than that in the United States the years ahead will only make the
difference greater the Chinese economy will become more important to the
producers of food clothing and shelter their profits will become more dependent
on keeping their markets in China which means accommodating to the Chinese
demands for how you do business they're accommodating Chinese political
objectives domestic and foreign if you want to understand why mr. Trump like
his predecessors has had to qualify his noisy protestations about the Chinese
it's because the economic reality of their importance is making every
American corporation selling in China and that's most of our big corporations
the allies of China why because they don't want to disturb the relationships
with a country that has become this important let me give you an idea of
some of the implications of all of this first why has the Chinese economy zoomed
up so that it's as big in terms of retail sales as the United States well
let me just give you the last 10 years 2008 to 2018 this has been a time of
difficulty global capitalism crashed in 2008 the last 10 years will be they
already are being called a lost decade because the wages of
Americans went nowhere over those 10 years we're not earning that much more
today than we did 10 years ago on average the super-rich have done fine
but everybody else not at all we've documented that as have others for
many many months but over the last year in the Chinese economy which was also
hit by the crash in 2008 their response has been completely different and
there's no nice way to say this infinitely more successful the per
capita income in China ten years ago was roughly $2,000 a year the per capita
income in China today is roughly eight thousand dollars per person per year the
Chinese economy has quadrupled its productivity in that time the United
States nothing remotely like that that's why the lines are converging and that's
why the Chinese are taking off it means that an American company is now more
likely to advertise in China than in the United States because it's a more
important economy for them they're going to hire Chinese graphic designers they
are going to hire talent in China to help them figure out how to do what
advertisers have to do in a retail environment they're going to hire people
to work with the public they're going to what they're going to endow University
chairs in Chinese universities to get their products and their companies known
in the academic world they're going to be doing in China more and more of what
they used to do in the United States the world economy is changing and mostly
here in the United States what we have in coping with that is denial the
pretense that this isn't happening and that it won't have all kinds of
consequences let me drive the point home with a
couple of more statistics last year in 2000
excuse me in 2016 the last year for which we have data seventeen point six
million vehicles were sold in the United States that's a lot of vehicles
seventeen point six keep that in your mind how many vehicles were sold in the
People's Republic of China in 2016 24 let me do that again
seventeen and a half million vehicles sold in the United States in 2016
twenty four million in China which is the more important market for the
automobile companies now and into the indefinite future answer China for
American car companies who currently sell one out of five cars sold in China
sold by an American company producing their that is their future that is their
future they are going to be working very hard to make sure that the United States
government whether it's mr. Trump or anybody else doesn't mess with that
future because it's the survival of these car companies that is at stake
multiply that by all the other industries in a similar situation and
you begin to understand that whatever the diplomats and the politicians do the
underlying economic dependence of American corporations on the enormous
Chinese economy will shape what happens in the years ahead a lot more than most
Americans are led to believe by a media that prefers denial over facing these
realities the next update has to do with a research paper just released by the
Federal Reserve Bank of San Francisco it covers 16 countries and does the kind of
research that Thomas Piketty is famous for here's the research and the results
of that research and you can get this paper by going to
the National Bureau of Economic Research and BER and looking for it's a recent
paper and it has to do with inequality and here's what the paper shows
capitalism as the system produces ever-worsening inequality it does that
across all 16 countries that the Federal Reserve paper studied and over many many
decades here is the pattern repeated everywhere capitalism produces widening
inequality eventually the inequality becomes so extreme that there is a kind
of explosion the mass of people who are more and more falling behind won't
tolerate it anymore partly because they are falling behind they can't buy the
output of this economy which therefore suffers a crash partly the mass of
people are angry and bitter at the inequality being imposed on them by the
way this system works then you have a short period of time of upheaval to deal
with the crash and to deal with mass resentment about inequality and for a
few years the inequality shrinks it is kind of stopped for a while and even
reversed but because the changes made in these periods of contraction are
marginal are merely reforms of the basic system as soon as the crisis passes
capitalism resumes what its march to ever greater inequality and then the
whole thing is repeated in the last hundred years in the United States we
had that leading up to the Great Depression of 1929 from 1929 to 1945
depression and war inequality shrank as soon as the war was over as soon as we
were done with that period capitalism resumed produced another rising
inequality until it all crashed in 2008 sound familiar
it's the same story everywhere and what's the point
and the punchline we we the people who live in capitalism have tried to reform
the system with each of these rising inequalities we've tried to take steps
to stop it with each of the crashes that reverse
the inequality we thought we had achieved it until the next upswing of
capitalism returns us to the kind of inequality we're living with now the
message here is clear reforms adjustments to the taxes minimum wages
all these things don't solve the problem the problem is a system which generates
inequality over and over again punctuated by very difficult crashes the
great 1930s crash and the last 10 years of a lost decade the real lesson to be
learned is you got to change the system or else you're condemned to repeat this
pattern documented by the Federal Reserve Bank of San Francisco's latest
research. Before continuing, let me remind you, as I often like to do, that we
maintain two websites where we provide all kinds of extra material of the sort
that we do on this program. Those websites are available to you without
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reach further to share this information with more folks help us do that partner
with us. We invite you, we urge you. The next update has to do with immigration a
burning topic never more so than these days as the Trump administration tries
to deflect people's upset about the economic and political realities of our
society by acting as though getting rid of immigrants is going to solve much so
let's talk a little bit about immigrants first of all this notion which I need to
deal with that we ought to have immigrants that are highly educated
rather than immigrants that are not let's go into that number one it's
bizarre coming from mr. Trump who wants to make America great again
because if America was great because that's what it means to make it great
again then it had to do that greatness with a flow of immigrants the likes of
which no other country on earth has ever had so when we were great it was we were
a country of immigrants and guess what from the beginning the overwhelming
majority of immigrants had no formal education whatsoever they were
uneducated people and it took the United States to show the world that you may be
uneducated in some ways but you have lots of ingenuity lots of skill lots of
commitment and lots of hard work that can make a country great what in the
world is the lesson you draw from that it's not the one you hear in the
newspaper but there's another economics of immigration I want to drive home
let's suppose the United States were successful in getting a
educated people to come into the United States let's go over what that means the
country in which you are born and in which you go to school spends a great
deal of money providing you with an education it is very expensive to have
schools hire teachers provide learning materials etc etc what in the world do
you think we're doing to to the rest of the world if we outsource the costs of
education to every other country in the world and then say when you get to be 21
years of age or 25 or 30 then you come to the United States the other country
bears all the costs of giving you productivity and the United States gets
the benefit of all the productivity you provide when you work that's a way of
making a rich country the United States richer and the poor countries from which
these educated people come even poorer they have to bear the costs of the
education and they don't get the benefit because the person leaves that's a real
serious problem and it has been a serious problem for a long time to act
as though there's no cost to the rest of the world means that you're going to
make the inequality in the world between rich and poor countries worse by this
sort of immigration take everybody otherwise you haven't learned the
lessons of history and you're not doing the world right now any good whatsoever
inequality between men and women we've talked about let's talk about the
inequality between black and white I know a lot of people's don't like to
hear this but every now and then it's really good let me give you the results
of all the statistics that have been done for 2016 the last year for which we
have it I'm gonna compare black and white three statistics real simple
what's the ratio between what white people earn and black people earn in
their jobs median hourly wage 50% people get more fifty percent people get less
but it's a good way to compare black people get 75% of what white
people get median hourly wage okay now let's move to the household what's the
median household income when you put together what husband and wife or
partners are both earning now already we starting to shrink 60% african-american
median household is sixty percent of the white one but now we get the median
family net worth how much property how much wealth does the family the average
family the median family have and remember why the wealth of a family is
important if you have a sudden illness if you have a sudden accident if
something in life happens it costs a bunch of money or that interrupts your
work so you don't know an income for a while you turn to your savings your
wealth to see you through a hard period in 2016
the median family net worth of a black family in America was 10% of a white
families white families had ten times more wealth to turn to if something
unfortunate happened to them in their job in their health in their personal
life with a divorce or whatever it might be this is a capitalism that has not
overcome inequality it's a system that discriminates it's a system that
systematically puts african-american people at a disadvantage there's no way
out of that and one of the consequences is in a way my last update for today one
of the consequences of that inequality and this has to do with a report issued
in January 2018 by the United States Civil Rights Commission a government
body in Washington and it talks about the name of this report public education
funding inequity and basically here's what this
port fines that students from ethnic that's a nice way of saying not white
students from ethnic and poor neighborhoods guess what they get poor
schools poor education low spending per pupil in other words we haven't lived up
to the so-called promise of America called equal opportunity we haven't
given people from poor backgrounds from tool families people who have 10% of the
net worth that white people have we haven't given them a way out by giving
them decent schools it's not that we haven't given them extra schooling which
would help get things equal we haven't even given them equal schooling which
couldn't have been expected to undo the other inequalities no we've done worse
than that we've provided them according to this report poorer schools poor
quality education than we have provided to the white folks in this society in
other words American capitalism criticized in the past for the racial
inequality that has been so bad a problem in our society has not only not
solved that problem but here we are half a century after the famous 1954
education decision of the Supreme Court that SEP that said separate and equal is
not possible that if you're separate you're going to be unequal that was wise
of the Supreme Court then 50 years later we see how wise it was this is a system
that can look nowhere else to explain the racial tensions the racial
inequality the racial conflicts that beset us as a nation doesn't have to
look anywhere else but to the economics we have it has failed to overcome that
inequality it has failed even to live up to the commitments its leaders have made
to remedy the discrimination the inequality to live up to what its own
Supreme Court said was the law of the land at the very least give equal
education to the unequally treated people in our society this system didn't
succeed and one more educational reform is going to be no more successful than
all those we've lived through over the last half-century the system that works
this way that Swartz and frustrates all these reforms is the problem you've got
to change your system give everybody a decent job so that we don't have the
inequalities to begin with and the rest can begin to be addressed we have a long
way to go but denying the systemic problem is no way forward we've reached
the end of the first half of today's program please stay with us we will be
right back after a short interlude
welcome back friends to the second half of economic update I am very welcome the
microphones an old friend a former student and now for many years
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