Economic Update with Richard D. Wolff XX
[0] Welcome friends to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives and those of our children.
[1] I'm your host Richard Wolff.
[2] Today's program is going to look at the firefighters that have been really battling now for weeks in California where we are having an effect of climate change that is really shaking the country to its roots at least among those who take all this seriously.
[3] I'm going to talk about a change in the labor movement that's not about strikes and not about organizing unions but about changes inside unions that deserve at least as much attention and then finally about the genuine housing crisis that is crashing across the United States and promises now to get worse.
[4] But before we do, of course, I'll go through the two announcements we open our programs with.
[5] The first is a reminder that Charlie Fabian, whom you can reach at charlie .info438 at gmail .com.
[6] And also to remind you of the book we have recently released, Understanding Capitalism, a book I wrote, to work alongside, to be read alongside these programs.
[7] Because the book will explain the economics often behind the analysis in a program.
[8] And likewise, each of the analyses in our programs illustrate, amplify, use what's in the book.
[9] Together, they provide really quite an education into the realities of American and global capitalism right now.
[10] Okay, I want to start with the firefighters.
[11] Like most of you, having seen the dramatic pictures of what's going on there, we're struck on the one hand with the horror of the catastrophe.
[12] and on the other with the heroism of the people who have responded.
[13] First of all, the 3 ,200 members of the Los Angeles Fire Department.
[14] They have shown extraordinary heroism.
[15] They have been very effective in many areas, but they're not enough.
[16] They proved not enough.
[17] And so an interesting thing was done, and this is what I'm after.
[18] An appeal was made by the folks in Los Angeles for help from other brother and sister communities, not only across California, but beyond.
[19] I want to talk about that.
[20] Other departments who have their own expenses, who have their own problems to solve and their own communities to protect, took time off, sent whole contingents of firefighters to the Los Angeles area from all over California.
[21] Then it went beyond that.
[22] Several neighboring states also sent.
[23] But what struck me was the fact that Mexico and Canada also sent across the national border sent volunteer firefighters to help the United States at a time of special need.
[24] And I had two reactions that I wanted to share with you.
[25] Number one, profit is what drove all those people and the home builders and the government officials and the home insurance companies to build all those houses in a way that made fires 10 times more dangerous and firefighting 10 times more difficult.
[26] Profit alongside climate change was a major, a major cause of this catastrophe.
[27] And you know what fought it?
[28] Non -profit.
[29] Fire departments are not profit enterprises.
[30] They don't have to show a profit at the end of the year.
[31] We don't want it and we don't care.
[32] We want protection from fire and that's the priority.
[33] And so we don't have private firefighters.
[34] It's a public service because we need it and we can't make it depend on profit.
[35] Because if it isn't profitable, we still need it.
[36] Guess what, folks?
[37] There are a lot of things like that.
[38] Here's one.
[39] Healthcare.
[40] Here's another one.
[41] Schooling.
[42] Here's another one.
[43] I could go on.
[44] And you know it, too.
[45] We make those depend on profit, which is why they're a problem.
[46] But the fire departments...
[47] Put profit considerations aside.
[48] In LA, first and foremost, in California, in neighboring states, in Mexico, and in Canada.
[49] Imagine if we took other basic human needs and said we're not going to make them profit -dependent, held hostage by profit -making companies who either will or will not.
[50] make them happen depending on whether it's profitable to them, not depending on whether we need it.
[51] Imagine if we had non -profit collective activity the way we've had it in California for other important social needs in our community.
[52] Capitalism is a problem, not a solution.
[53] I can't let this topic go without noticing because clearly this new government of ours hasn't noticed it.
[54] Canada and Mexico in the same period of time that they were at their expense helping us fight a fire in California, were told by the president that they better behave the way he wants or he's gonna hit them with a tariff.
[55] Remarkable way of thanking the folks in those two countries for what they did.
[56] Takes your breath away when you think about it.
[57] Unions in our country have suffered for a long time.
[58] The decline of the union in this country went from the 1950s when about a third of our people were members of unions to the last few years where under 10 percent of them are.
[59] And in the private sector, the major part of our economy, it's much less than that.
[60] Maybe it's an 11 or 12 percent, but nothing like what it was.
[61] And the line of decline of unions in this country is like a straight line over the last half century.
[62] So it has been very remarkable over the last two or three years that unions have come back, led by efforts in Starbucks and Amazon and retail food chains and so on.
[63] Some of the poorest paid workers leading the charge but not just them.
[64] School teachers, government workers, health workers, and so on.
[65] And we've paid attention to the strikes and to the efforts to organize unions.
[66] But quietly something else is going on because in the many years of the decline of the labor movement what declined was not just membership.
[67] not just the social power and social influence of labor unions and those did all decline.
[68] But inside the unions the democratic participation of many gave way to a bureaucratic hardening of the interior life of unions which didn't help them fight their decline at all even though that was what they had hoped.
[69] In many cases it made the decline worse.
[70] So it is important when inside the unions we have, the unions that survived the last half century of decline, there are important new initiatives wanting to change in a democratic direction the internal life of labor unions.
[71] It's a reason to be hopeful doubly.
[72] More unions are coming, but what a union is and means for its members is also changing.
[73] So I want to salute the effort of the Arise Coalition in the United Federation of Teachers, which is an AFL -CIO affiliated union, part of the American Federation of Teachers.
[74] that represents the teachers in New York City.
[75] A group of Democratic insurgent caucuses came together in this Arise Coalition to make the Union better while it makes the Union stronger.
[76] Very important, many similar movements are at work.
[77] inside unions across the country and we need to support them and to understand them and to see them in their historical light.
[78] The third topic for today's updates is the housing crisis.
[79] Let me start with a statistic that should shock you if you weren't already aware of it.
[80] The median price of a previously owned, that is not a newly made, a previously owned home in the United States in 2024.
[81] The year just ended.
[82] The median means half of the houses are worth more and half of the houses are worth less.
[83] The median is $407 ,000.
[84] So if you don't have that available to buy a house, if you can't get it from a bank, well, then you're not going to have your own home.
[85] That amount of money was 5 % higher than the median price of 2023, which means homes went up in price about 5%.
[86] which was much larger than the overall rate of inflation in 2024.
[87] In other words, housing is leading the inflation, is worse.
[88] We may complain about what we pay for eggs or what we pay for fill in the blank, but housing is a killer when it comes to inflation.
[89] Why is this?
[90] Well, we have not had mass construction of homes now for several years, and there's a simple reason.
[91] It's not profitable.
[92] The mass of Americans don't have the money, as you can see, to put down what you need to get a home, previously owned or newly made.
[93] The profit isn't there, and so they don't build them.
[94] Do we need housing?
[95] Of course we do.
[96] We have an enormous number of people that are homeless.
[97] We have an even larger number of people that are not getting enough square feet or paying way more than the 25 to 30 percent we're supposed to pay out of our income for our housing.
[98] Housing is a crisis, but we're not responding to it.
[99] Just like fire is a crisis and I just finished telling you, problems with that.
[100] People who have a house are not willing to sell anymore because they'd have to give up the low mortgage they luckily got a few years ago when interest rates were low and go over now and pay much higher.
[101] Mortgage rates are seven or eight percent, way more than it costs the bank to borrow that money from Uncle Sam.
[102] So why are the mortgages that high?
[103] because it's profitable for banks to make them that high.
[104] So if you can't get one, now you know what your problem is.
[105] Between the banks and the insurers and the builders, the profit motive is the dominant story.
[106] Let me put it in simple English.
[107] To solve the housing problem, you either have to bring down the prices of the home or you have to raise the income of the average American.
[108] Do either.
[109] Do both.
[110] You can do something.
[111] Don't do them, and that's what we're doing, not either of those, and you're going to have a crisis which only gets worse, as it has in recent years.
[112] We've come to the end of today's first half.
[113] Please stay with us.
[114] We will have an interview with economist Professor Clara Mattei that I'm sure you will find very interesting.
[115] Before we jump into the second half of today's show, I wanted to thank you for your very generous response to our fundraising efforts this year and in particular in the last couple of months.
[116] In part responding to that, we are extending the availability of our limited edition linen -covered hardcover version of Understanding Capitalism, the book I wrote and that we have been making available now for quite a while.
[117] If you are interested, I will be signing copies of that hardcover and they will be available to you as they have been over the last few weeks.
[118] Just simply send email to us at info at democracyatwork .info and put in the subject line limited edition.
[119] We will send you all the information you need to order and receive your signed copy of Understanding Capitalism in its hardback.
[120] Thank you again for your kind attention.
[121] to the fundraising dimension of what we do.
[122] Welcome back friends to the second half of today's economic update.
[123] I am very proud to bring back to our microphones and our cameras Professor Clara Matei who's been with us before but before she was a professor of economics at the New School University here in New York City.
[124] But now she's wearing a different hat.
[125] She has become the director of an institution I'm going to ask her to describe to you.
[126] I could not be happier to have the opportunity to see such an institute develop and even happier that Clara is in the position to shape and guide as director what this institute does.
[127] at the University of Tulsa in Oklahoma, which may, at least for some of you, be a bit of a surprise to hear.
[128] So first of all, let me introduce her formally.
[129] Clara Maté is a well -known economist.
[130] Her research contributes to the history of capitalism, exploring the critical relationship between economic ideas on the one hand and technocratic.
[131] policymaking on the other.
[132] Her first book, The Capital Order, How Economists Invented Austerity and Paved the Way to Fascism, was a bombshell.
[133] It affected many, many people across multiple disciplines and has been translated or is being translated into 10 languages.
[134] and she won for that book the 2023 Baxter Prize of the American Historical Association.
[135] She's currently the director of the Center for Heterodox Economics at the University of Tulsa, a brand new institution.
[136] So first of all, Clara, because we are friends, welcome and thank you for giving us your time.
[137] I know that organizing an institution is an enormous amount of work and that it falls heavily on whoever the director is, but I do want to congratulate you.
[138] And so let's start off by having you tell us what this institute is, what you hope it will accomplish, what its goals might be.
[139] Thank you, Rick.
[140] It's such a pleasure to be here.
[141] Yes, it is more than ever timely to put at center stage economics as a discipline that needs profound rethinking because of how the world around us is going.
[142] We know that with the Trump administration, the austerity policies, the defunding of social services, the...
[143] elimination of ever more taxes on the wealthy and much more is going to be top front of the next years.
[144] And this has not been a break from the previous administration.
[145] It is a continuity.
[146] So why is it that economic policies never serve the interest of people, but always of profit?
[147] This is a question mainstream economics does not know how to answer.
[148] And this is why we need to challenge the limits of the framework.
[149] of uh dominant economic theory and we can only do this if we have this space and the resources to get together and say we can be economists of a heterodox kind, meaning that really ground their work in real life.
[150] Economics is not an abstract exercise of technocratic detached thinking.
[151] It should be about knowing how to explain to people why this economy is not working and how it could work for them for a future that is more sustainable.
[152] The inequality has never been at this levels of of incredible numbers.
[153] We know that homelessness is skyrocketing.
[154] Tulsa, Oklahoma, where the center is going to be based, the CHE, is indeed the hub of how local problems mirror global problems, right?
[155] So we have...
[156] rising homelessness, skyrocketing incarceration.
[157] We have very big inequality and the marginalization of minority groups.
[158] And of course, the relation between race and class that is very evident.
[159] We remember that this was the place where the massacre of Black Wall Street happened in the 1920s.
[160] So we are talking about a place that I think can really serve as a experimental hub for an institution that is at once academic so that she has an ambition of training students in the heterodox economics so we are building a minor and major and hopefully a graduate program soon also though on In parallel, we are building a resource for the community so that we can have what is very important for heterodoxy, which is praxis.
[161] The idea that theory can only develop and become pertinent if it is connected to the social struggles.
[162] And at the same time, social struggles can be informed and empowered by theory that is able to delineate the structural tendencies of capitalism, what you do, Rick, on your show every Thursday for people is something that needs to be expanded also physically in different parts in the United States and elsewhere, right?
[163] And this is, I think, the attempt to do something new that can hopefully be multiplied.
[164] I would like to comment because it's very provocative what you say.
[165] I think there is deep meaning.
[166] in the fact that the good people of the University of Tulsa and the people of Oklahoma would recognize the need for some diversity in economics, for an end to the narrow mathematical neoclassical tradition which you and I are products of in our formal training, and that in economics grounded in the real life of the people.
[167] That will make the university serve the people of Oklahoma and beyond that in a way that conventional economics simply no longer cares to do.
[168] And this is very, very significant.
[169] And I'm very hopeful and I want people to know about it because I hope you are a model that others will replicate across the United States.
[170] Every state needs this, needs an institute that does this kind of practical and without narrow ideological blinders open to all those alternative perspectives that conventional economics pretends it doesn't need.
[171] Absolutely, absolutely.
[172] And this is exactly the idea, that we need fresh ideas grounded on solid tradition.
[173] uh that exists it just has been marginalized and this is very important for people to understand economics is not a monolith um students go study economics as if it was like a truth coming from heaven in a textbook that no one can argue with we are saying economics is the product of political battles academia reflects the political power structure and economics today defends and justifies the status quo and how does it do it by hiding instead of explaining this was the big intuition of karl marx what is ideology when you hide and find ways to basically mesmerize people rather than explaining the functioning of our economy as an economy that concentrates powers and wealth and marginalizes the majority and these internal tendencies that are historical and political and this why they can change this is very important the economy is us so there's no determinism there's nothing that is stuck as it is we can change things but we can only change things if we find spaces to come together and economists you know and you know this rick very well as any academic are usually very guilty of actually being removed from the real world right people that get into very nice academic careers they have enormous benefits they're amongst the most secure employer employees in the american and global economy so instead of just just benefiting from a privileged life it's very important that economists go out there and understand what is happening think about it theorize about it but this can only happen in combination with people that are living and making the economy who are producing value are getting exploited and deserve an alternative otherwise this world is collapsing in front of our eyes you know uh the fresh air that you're going to bring into the whole economics profession by doing this you know that you start in your place in your corner will spread It'll spread for two reasons.
[174] It's very interesting.
[175] The debates economists have had about economic systems, that opens up a level of alternatives to human beings that we have stifled ourselves.
[176] We haven't done it.
[177] We haven't asked really what history might have to teach us about alternative systems.
[178] We've either been too afraid because of the Cold War and its legacy.
[179] or we've been so narrowly trained that we don't.
[180] This opening up, I cannot tell you how liberating that's going to feel.
[181] You're going to produce students and colleagues there that will give economics the excitement it always should have had or could have had.
[182] And I remember my own first reaction, all excited to learn about the economics of the world and having my teacher require me to do little graphs on the blackboard in which I had to write down a line that captured the preferences of human beings as if the complexity of a human being could be captured on two axes and a little line.
[183] It taught me the narrowness.
[184] Forget the particular ideology, the narrowness of it.
[185] I know it's clear in your mind, but I think our audience would benefit if you talk just a bit more about what heterodox means and what it will mean in your program.
[186] Yes, this is crucial.
[187] The idea is that the heterodox tradition is actually a very pluralist tradition.
[188] It's a tradition made up of different schools of thought that have because of how the the political academic history has built, been left at the margins.
[189] But we're claiming that it should not be the margins, it should be central, because post -Keynesianism, Marxian economics, Zerafian economics, institutional economics, all of these traditions have in common the idea that you cannot have a sturdy, rigorous knowledge if you do not...
[190] start with the concreteness of the real world and this seems like it's such a banal intuition but it is actually surprisingly something that mainstream economics forgets because as you're pointing out the abstraction is what keeps people away from the real problems and i'm telling you there's so much interest in for in students i see the students have been changing dramatically i've taught eight years and i've seen how there's thirst for actually saying no we want knowledge that is empowering not knowledge that conforms and the knowledge that conforms is completely now showing its incapacity to live up to the the challenges of the time so the idea is that our center will be able to expose um students and people to a broader way in which indeed knowledge can empower.
[191] Knowledge is what scares the establishment the most because it can get people excited to come together and organize.
[192] We are having our inauguration on the 6th, 7th and 8th of February.
[193] It is going to be a moment in which a lot of economists, thinkers and organizers will come together to think about serious topics.
[194] For example, The one timely topic, which is the political economy of occupied Palestine.
[195] Another timely cop.
[196] topic which is inflation and austerity the crisis of care and the climate and much much more this is going to be the inauguration you can follow the inauguration online so we have the luck of actually uh collaborating with rick and democracy at work so we will be able to stream everything so you don't have to be in tulsa it's nice if you come but you can be wherever and join in the collective struggle for knowledge that empowers after that we will have also monthly speakers events rick will be the first one with kali kuno to speak about worker self -management as an alternative to uh current uh relations of production and after that we will talk about the right to housing the carceral state and many other topics that are relevant for the tulsa community but also for the communities around the globe to say the economy is us Let's make the best of it.
[197] Let's organize.
[198] And instead of just depressing ourselves and thinking nihilistically that nothing can change, well, history shows that capitalism is fragile.
[199] Capitalism is extremely fragile.
[200] That's why you need thinkers that comply and you need policies that disempower.
[201] We want the opposite.
[202] We want thinkers that are able to actually have the courage to break the limits of academia and hopefully spur policies.
[203] that will be also for the people, not against the people.
[204] Well, as we used to say, more power to you.
[205] This is, for me, a wonderful carrying forward of the kind of work I've tried to do, others like me have tried to do.
[206] Here it is developing in the heartland.
[207] I want to remind people that the state in which the legislature had the most socialists ever elected to office was the state of Oklahoma many years ago and who knows what might reappear in the flow of history.
[208] Thank you very much Clara.
[209] Everyone pay attention Center for Heterodox Economics University of Tulsa Oklahoma.
[210] And as always, I look forward to speaking with you again next week.