[S10 E39] New
On this week's show, Prof. Wolff presents updates on how capitalism gets in the way of fighting Covid-19, systemic racism and Covid-19, why Europe did not allow the mass unemployment imposed on the US, and Wells Fargo CEO's fake excuse for lack of diversity among bankers. In the second half of the show, Wolff explores why capitalism fears the modern state and how it controls that state.
A special thank you to our devoted EU Patreon community whose contributions make this show possible each week.
Transcript has been edited for clarity.
Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives: jobs, debts, incomes — our own, our children's. And I'm your host, Richard Wolff.
Before jumping into the economic updates I had planned for today, I learned about something this morning that I wanted to tell you about. It has to do with the frontline health-care workers that are called upon for literally heroic actions over the last six or seven months to deal with this pandemic, to pick up the hard work of dealing with it that our leaders failed so desperately to prepare for. And I'm particularly interested in a story that came out of New York City, where Communications Workers of America, a union, Local 1180, represents the administrative managers in the New York municipal hospital system. And I learned about this from a frequent guest on this show, Bob Hennelly, a reporter for the newspaper The Chief Leader, which is carrying this story.
The administrative managers have, among their other tasks, to provide doctors and nurses with personal protective equipment — absolutely crucial in this era when at least 1,000 health-care workers have already died of covid, from the exposure their work involved. They were told to give the masks to the nurses and doctors, which they did. And they were also told by the hierarchy of the Health and Hospitals Corporation that they were prohibited from wearing the masks — whatever lunatic mentality would do that. So they didn't wear them. And at least one woman worker, an administrative manager, has now died of covid that she contracted, perhaps, probably, because she wasn't allowed to wear a mask. Not a shortage of masks, but instead the ranking — the way we organize every factory, every store, every office. Those on top give the orders; those in the middle give some orders, take some orders; and then the majority at the bottom just take the orders.
We're not going through this crisis of virus together, are we? We have a capitalist ranking system, based in our enterprises, that gets reproduced in our public institutions, like health and hospitals. That rank order — who gets the equipment and who doesn’t, who lives and who dies — it's a statement about a system that is quintessentially incapable of dealing with this kind of a crisis, even in the most basic human way.
I want to turn now to the interesting updates for this week. On Tuesday, September 22nd, Dr. Anthony Fauci — a name you all now know; he's sort of the leader of the fight against the coronavirus; officially, he's the head of the National Institute for Allergy and Infectious Diseases — he gave a talk last Tuesday, on Tuesday the 22nd, at the Bloomberg Equality Summit. And here's what he pointed out that I wanted to share with you. People of color — people with brown and black skins — in America hold an enormous, disproportionate number of the essential jobs in this country at this time. They care for others in countless nursing homes, in countless hospitals, in countless clinics. They deliver vital supplies. They are first responders across the board. They have the most dangerous jobs imaginable right now, and often at the lowest pay.
But that's not all. Dr. Fauci went on. They suffer disproportionately, black and brown people, from obesity, high blood pressure, and diabetes. That means they have more than the usual health problems. But because they are relatively poorly paid and have no wealth, they have less access to the quality health care they need more of. And guess what: They have the highest covid infection rates. You know what this picture shows? It shows that everything Black Lives Matter was about — systemic racism — is baked into the way this country works. Think about it. Dr. Fauci, talking about covid, explains what systematic racism means.
I want to turn next to the stark difference between the United States and Western Europe when it comes to unemployment. We have seen a tremendous spike in unemployment in this country, zooming up to 17, 18 percent over the summer, and still involving tens of millions of unemployed people. Nothing like that happened in Western Europe. Those countries did not experience the spike in unemployment. Italy has a lower rate of unemployment now than it did a year ago, before the virus hit. Germany's unemployment went from roughly five percent to six percent — nothing like what happened here. What's that about? In Europe, the decision was everybody keeps their job. The government helps corporations, but on condition. You fire nobody. You keep everybody working. Nobody is going to suffer here. Yes, you may lose a little of your pay. The government comes in and picks up 60, 70, 80, 90 percent of your normal pay. So you'll go down a bit, but you will not have the anxiety that there's no job for you. You will not have the agony of wondering whether the job will be there when you're ready to go back. None of that. None of that.
And let me drive home: Yes, the United States gave people unemployment benefits, extra — although that stopped on the 31st of July, but for a while — but that's only part of the equation, keeping people at income. Another crucial thing is you have a job, that job is yours, it's there for you, no one else is going to get it or take it from you. Catastrophic what was done here, to plunge millions of Americans into the limbo they're still in. Only now the extra money has been cut back as well, treating tens of millions of your working class very shabbily. And, of course, we didn't solve the problem here the way they did there. There everybody kept their job.
Here we could have done the following: We could have said, okay, you're unemployed by your private employer. Don't worry; the government has a job for you. We have infrastructure to rebuild in this country. We have the greening of this country, dealing with our climate disasters — you know, like the hurricanes, and the floods, and the fires — those all around us. Lots of work to be done. No reason and no excuse for unemployment. Pay people the money they need and get them to do the socially useful things we all know we need. No, not this capitalism. And let me be blunt with you. Where is Mr. Biden on a mass public-employment program? Where is he?
And think about some of the secondary consequences. You know what it means if millions of people are unemployed? They're not making their contributions to the Social Security System, so it's not getting the money coming in that it needs to pay out the retirement benefits that millions of Americans have been paying into. That's just coming down the road. It is nuts to have millions of people unemployed.
But now let me stick it to everyone watching and listening. Why is the experience in Europe so much better than the one in the United States, for the working class as a whole and for the millions of unemployed? And here's the honest answer. If the European governments — the British, the French, the German, the Italian, or any of the others — if they had dared to do to their working class what the American business community and the American government did to the American working class, here's what would have happened: All of those people unemployed? They wouldn't have gone home to watch TV; they would have gone right out into the streets. And those economic systems would have come to a complete halt. No trains, no buses, no food coming into the city, no truck moves — nothing. And everyone in Europe who runs a government knows it. So that wasn't an option. They didn't even toy with it. Of course everybody got paid, and of course everybody got a job guarantee. That's the way those societies work. Here in America we have to face something. We don't have the muscle in the working class to make it clear to the Trumps, and the Republicans, and the Democrats that they cannot do what they have now done. Think about it, please.
My next and final update that we'll have time for takes us, unfortunately, into the mind and mouth of the CEO of the Wells Fargo Bank Corporation, one Charles Scharf. Scharf, by the way, is the German word for “sharp,” which clearly Charles isn't. Here's what he did. He told an audience that was interested, he told them the reason why the top ranks of bank executives in his company — but he meant it generally, apparently — were not “diverse” (his word). And why were they not diverse? And by the way, you do all know what “diverse” means. It's a code word for black, and brown, and female, more or less. And here's his answer. Classic. Quote, and I'm quoting, “a shortage of qualified minority candidates.”
Well, let's help Mr. Scharf, who isn’t. Black, brown, and women? That's not a minority; that's the majority — the overwhelming majority, if you put those three together. White males? That's a minority. The banks of America, particularly the big ones like Wells Fargo, have had affirmative action in place for 300 years. You know what it meant? White men got the jobs, and other people didn't. It was affirmative for them and exclusionary for everybody else.
And let's see what the white males that run Wells Fargo achieved in recent years: massive corruption. They've had to pay billions of dollars because they got caught cheating in a dozen different ways, setting up massive numbers — millions — of fake accounts for people who didn't want or need them, charging them money for it. I mean, the bank has gone real well with its affirmative-action, qualified candidates that they have put in positions to operate these monumental scams.
But let's give them the benefit of the doubt. Let's imagine there might be a shortage of qualified minority candidates. You know why? Because you don't let them into the institutions from which you hire, do you? Who do you think you're fooling, Mr. Scharf, who isn't. It's a crooked enterprise, the Wells Fargo Bank, and has been caught out doing that for a long time. You're not “not diverse” because there aren't qualified people. You're too busy doing the things you ought to be ashamed of.
We've come to the end of the first part of today's show. Before we move on, I want to remind you that we've just released my third book with Democracy at Work. It's called The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself. It's a compilation of essays that aim to explain how and why capitalism is the sickness underlying all the symptoms we see around us. Get your copy at democracyatwork.info/books. I want to also thank our Patreon community, as I always do, for their ongoing support. If you haven't already, please go to patreon.com/economicupdate and sign up today for access to exclusive content and more. Stay with us; we'll be right back.
Welcome back, friends, to the second half of today's Economic Update. I want to talk today about a major topic of importance that many of you have written to me or asked me about: What is the relationship between capitalism and the state, the government? What is the relationship, if you like, between economics and politics, if politics is focused on the state? And I want to answer it because I think in that way I can engage many of your questions.
There's a fundamental problem that the state represents for capitalism, and it always did. And that has to be foregrounded — that's why I'm starting with it — so that you keep that in your mind as we go through the rest of it. The problem of the state for capitalism has to do with what we call “universal suffrage,” the extension of the right to vote to everyone. That has now become the norm in modern society. At first, in the early days of capitalism, they didn't have this problem with the state because early capitalism didn't give the vote to everybody. Even in the United States in our early years of independence, voting was restricted to males, not females; to white people, not brown people; to people who had wealth, not people who didn't — all kinds of restrictions.
But we now have universal suffrage, meaning everybody has the right to vote. And the minute you have that, capitalism has a problem. Why? Because in capitalism a small number of people control the economy. You know, the employers. If you add them all up together, all the employers, all the bosses, whether it's a little business owned by an individual, or a bigger one by a family, or an even bigger one by shareholders in a corporation — whatever. You put them all together, and those who own and run corporations are a small minority of the population. The vast majority of the population — say, in the United States, or in Western Europe, or Japan, or virtually everywhere else — are the employees. Which means that when you have elections with universal suffrage, the employees should dominate, because they're the overwhelming majority. What they want rules.
That's what a democratic, one-person-one-vote, universal-suffrage-based state would mean. And that's a danger for capitalism. Why? Well, it's really pretty obvious. The workers have different interests from the capitalists. Since the workers would control the government in a world of universal suffrage, which is what we've got, then it's really only a matter of time, and not much of that, before the workers realize what their political power with universal suffrage might mean. Let me give you some examples. The majority of Americans indicate, in poll after poll, that they think that the wealth and income in this country are distributed unequally. The rich get too much, and everybody else too little. Well, if they're the majority, they could easily predominate, take over the state by winning elections, voting, and then the state could rearrange the tax system, moving wealth from those who have too much to those who have too little. End of story. Very simple. Easy to do — if the workers voted their majority position — would be easy to do.
Here's another example. Laws could be passed giving incentives, giving breaks, to worker co-ops, who decide how much everybody gets paid democratically by everybody getting together. Those co-ops never give a few people millions and everybody else hasn't got enough to send their kid to college. That's not the way co-ops work, or ever did. And if you had the working people voting their majority in a universal-suffrage system, they could convert businesses from capitalist enterprises owned and operated by a few, to worker co-ops, which would make sense because they'd be more democratic.
Let me give you another example — comes right out of the first half of today's program. If working people, who know what unemployment means, who have suffered unemployment directly or through their families — you’d think, if they were the dominant force politically in a system based on universal suffrage, they would long ago have agreed that if you lose your job in a private sector, if private companies are not hiring enough of us, then the government comes in and does it. A government hiring program would be obvious. You go work for the government until a job opens in the private sector that you would rather have. Then you move back. Easy, obvious, and workers could have that. We did that in the United States in the 1930s, so there's ample precedent. No problem.
And you could also have the governments running enterprises for the mass of people that compete with private enterprise. And let the more efficient run. Let the government run the food industry — clean, good, healthy food. And let's see. If the government can do it at a lower price than the private sector, why should we go with the private sector? We want to get the best quality for the lowest price. Let the government come in and compete, whether it's with utilities, or food, or — here's another one — health care. Maybe if the United States spends more than any other country on health care, which we do, and we get mediocre outcomes, which we do, it might be better to have the government run the health-care system, like they do in most other industrial countries, because we could get better care at a lower price.
We could do all those things by simply using universal suffrage. But you know who understands that best? The capitalists. They know how vulnerable they are. They are an embattled minority. So here's what they've done — and this is important — to make sure that the state does not threaten or undo their privileged position, their minority privileged position, in the American System particularly, but in capitalism generally.
Number one: They came up with this ideology called “laissez-faire,” that the government shouldn't meddle in the private economy; the government should stay out of the economy. Why? Because private enterprises are efficient, and government enterprises are not. I'm a professor of economic history. I've taught this subject all my life. There is no evidence for this. This is a believe-it-on-faith kind of argument. For every private company that's been efficient and successful, I can show you a dozen that haven't. And for every government program that has been inefficient, I can show you a dozen that haven't. There is no basis for this. This is pure ideological pap. But it's powerful. It gives people a reason to back away from giving the government the authority that the majority of people would give it if they understood what was at stake, and what their real power is.
The second way that capitalists have hobbled the state is by making it budget troubles. The government can't raise enough revenue. It gets people to believe that somehow the government is abusing or misusing the taxes it raises. You shouldn't trust the government. The government is stealing from you. And then when the government can't raise enough money to do even the most basic things, you know what we do? The government goes and borrows the money; it runs a deficit. And you know who it borrows from? The rich, the capitalists. They're the overwhelmingly dominant lenders. So the government is now dependent on the capitalists being willing to lend. They make the government dependent on them to control it.
And then there's the ideology that the government is the great danger to your freedom, you see, and so you've got to keep it small, weak, indebted, dependent, so it doesn't abuse you. This whole notion that the government is somehow a bad thing that you should keep at bay — that's where my libertarian friends come in. For them, it's the government that you have to watch out for — how convenient — not the capitalists, not the minority who own and operate all the businesses, that produce the goods and services we depend on. No, no, no, no no, not them. The government, those political officials.
But the capitalists are not content with ideology and budget problems. They have a battery of other uses they can pull in to control this scary government for them. They buy the politicians. They buy the parties. And they buy the lobbyists, who actually write the laws. That's right. Capitalists are the dominant funders of our political parties — at least the major ones, Republican and Democrat, in the United States. That makes sure that when they get into office, they don't use what universal suffrage might get, which is a real change for the benefit of the majority of people. They make the political apparatus depend on their money.
And then finally, they demonize the government. Here again my libertarian friends come to the rescue. The government is the bad thing. What a terribly convenient ideology for capitalists. You know, in America I've always been amazed to watch the following: Unemployment affects one state or another, and people get angry. But who do they get angry at? The senator, the congressman, the congresswoman. They get angry at their political representatives because private capitalists fired them. During the great recession of 2008, 9, and 10, when millions of Americans lost their homes, you know who foreclosed on them? Banks did. And private lending companies. You know who threw you out of your home? A capitalist threw you out. But who'd you get angry at? The government. Libertarians are doing capitalism a major service by getting people to scapegoat the government. Never asking the obvious question: Why does the government — in a society of universal suffrage, where the majority is the working class — why is the government serving the capitalists so well and the working class so poorly?
And you know, we all pay the price of a hobbled, crippled, underfunded government, because when we really need it, it can't perform. Example? The pandemic. We weren't prepared for covid. We haven't been able to contain it. The United States has four and a half percent of the world's people and 25 percent of the covid cases and the covid deaths. You know what that's called? Big, fat failure. And part of that is a weak, underfunded, scapegoated government where the political leader who wins office and gets the biggest amount of donations is the one who says that he or she is not part of the government, is an outsider, won't have the government . . . it's endless.
The irony is, the government is the greatest threat to capitalism, and they know it, which is why they've spent so much time, so much energy, and so much money — to this moment — to control, to limit what the government can do. Don't be fooled. Government could be a positive, transformative agency, helping all of us live better lives. But to do that, we, the majority, would have to control what the government is and what the government does. And that could be very different from the role it plays now. There's nothing intrinsic about what the government does now. What you're seeing when the government functions, is you're seeing the puppet. You're not seeing the fellow on top who pulls the strings.
In a future program, I'm going to talk about socialism and what its relationship to the state is, as a kind of parallel to what we have discussed today. Thank you for watching, thank you for your interest in Economic Update, and I look forward to speaking with you again next week.
Transcript by Marilou Baughman
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