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Richard Wolff

November 22, 2021

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On this week's show, Prof. Wolff presents updates on South Dakota leads US to become world's #2 "tax haven,"  pandemic's economic shock cut by very uncapitalistic means, why employers want the govt to pay workers to go back to work, and how libertarians mistake puppets for puppeteers. The second half of the show features an interview with Chris Hedges on lessons for us from US prisons and prisoners.

Transcript had 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 and those of our children. I'm your host, Richard Wolff.

There's been much in the news recently about tax havens, about people escaping the taxes they ought to pay by hiding the money that they have, and the wealth that they have, and the incomes that they have, so that the tax man doesn't find them, maybe a spouse suing them for divorce doesn't find them, and so on.

And many of you have asked about this and I want to tell you about it, particularly because the United States has become the go-to place for doing this, and that wasn't always the case. It used to be that Switzerland, Luxembourg, the Caribbean were. They aren't. The United States has moved into, well, not quite first place, second place, but catching up. So, I'm going to start by talking about the state in the United States that has gone the furthest, soonest, to become the hiding place for the rich: South Dakota. You might not have thought about it, but there it is. 

Here's what South Dakota has done, and it started back in 1981, when the South Dakota legislature abolished a top, a cap, on interest rates. Most states in the union say you can't charge interest rates above 10%, 20%, 30%, to keep a lid on what credit card companies would likely do. And if you've wondered why your credit card company is now locating its headquarters in South Dakota, well, now you know. They abolished all limits. You can go as high as you want, something that might comfort you in the cold winter night when thinking about what your credit card or your bank is likely to try to do to you in the years ahead.

So, first, South Dakota did that. And why did it do it? So that credit card companies would come to South Dakota, establish an office there, hire a local accountant maybe, or two, or six, or nine, or maybe a local lawyer, or someone to look over all of this, and that would make money for people in the South Dakota area. I'm being as polite as I can.

And then South Dakota just took off. When that wasn't enough, they did something extraordinary. They developed trusts. They allow the law to set up trusts, and I want to give you an idea of how they work. Perhaps the most famous is the “settler” trust and here's how it works. A billionaire, who's a “settler,” that's what they call them, can set up a fund in South Dakota, put it in the hands of a trustee, you know, that's a South Dakota lawyer or a South Dakota hustler of one kind or another, and make it for the beneficiary of say, the billionaire's son, or daughter, or wife, or cousin, or uncle, or you name it. And the beauty: none of this has to be reported to anyone. 

And it's a secret. And if the government of the United States comes and asks questions, or the government of another country if the billionaire is located there, comes and asks questions, no information will be given. The trustee will say, “I’m just holding it for someone else.” The beneficiary will say, “I had nothing to do with setting it up.” And the billionaire who set it up, well, he says, “It's not mine, I gave it to the trustee.” That's all legal. And so nobody is responsible for anything.

Then they did it even better. They made “perpetual” trusts that could be handed down from one part of the family when they die to the descendants. Nobody has to tell anybody or pay any inheritance tax or estate tax because there's no way to figure it out. And then they went one step further: they sealed the papers that set up the trust in the first place. So those are secret, too.

Well, let me give you an idea of how South Dakota has done with this hustle of secrecy. In 2011, roughly 10 years ago, South Dakota trusts held, in total, $57 billion. Now, today, it's estimated at – get ready – $360 billion. And since at least five or six other US states are rushing to do for themselves what South Dakota already did, if you add up what they've already collected, it's now estimated at over $1 trillion of hidden wealth.

Now folks, let's be real clear. If the United States government, republican, democrat, doesn't matter, didn't want to permit this to the billionaires, it would take 5 minutes to pass the federal laws to stop this, to deny to South Dakota or the other states the right to do this. But neither republicans nor democrats have. In fact, the republicans who control South Dakota have gone one step further. They've announced that, you see, this is how – I kid you not – the “free market” works.

In other words, they've clothed their ill – I mean, it's beyond words – their unethical, they're fundamentally illegal in terms of the spirit of the law, behavior, in the ideological clothing of a market economy which is enabling the richest of the rich to hide and steal and deny the rest of us the taxes they would otherwise have had to pay which could provide the services we would otherwise be able to enjoy. The cost is ours, the benefit is to billionaires who could all be assembled in one large auditorium and we would cover all the billionaires of the world.

Then there's my next update. This is the discovery by economists that over the last 18 months of the pandemic that has killed record numbers of Americans on a scale we've not seen before in American history, the economists are discovering we didn't do all that badly in terms of the overall economy. True, the rich got richer and the poor got poorer, but it wasn't the terrible collapse that had been feared. And I want to explain to them, and to you, why that was. It had nothing to do with capitalism. It was the result of the quintessentially uncapitalist behavior I’m about to describe to you.

In nothing short of 186 countries, that's almost every country on this planet, in 186 countries there were 782 cash transfer programs set in motion by the government, especially here in the United States where – get ready – trillions of dollars were handed out to the mass of people. Checks were sent, remember? Many of you watching got them. Checks were sent out to businesses, to individuals on a massive scale. That's not capitalism, friends, that's the government saving us. And you know what it's saving us from? What would have happened in a pandemic if we had allowed regular capitalism to function. But we didn't. 

So please understand, if things didn't go even worse during the pandemic than they did, it's because we kissed capitalism goodbye and started distributing money to masses of people so they could keep going. Turns out that works. That worked pretty well, even in a pandemic. Maybe we ought to think about it under other circumstances.

My next update has to do with the interview with Chris Hedges that is coming in the second half of today's program where he's going to talk about his work in prisons and what it teaches us. So I wanted to prepare and I looked up what most people in prison cost us as a society. Well, most prisoners are in state prisons in this country and the cost of state prisons per person, per prisoner, per year, ranges from a low of $14,000, that's in states where they take care of prisoners really poorly, all the way up to $70,000 in other states that don't.

But you know something? If the average comes out to $30,000 more or less, which is what the statistics suggest, wouldn't it be cheaper to give folks like this a chance in life? A job with a decent income? You know, then they'd be giving something back to society, the work they do, rather than sitting in a terrified condition in a cell and a cage someplace. We are spending more for people to be idle than it would cost us to give them a decent job. And you'll learn more about that from Chris in today's second half.

My next update has to do with a person to whom I take off the “courage cap” today, but I’m being sarcastic. The man's name is Barry Sternlischt, and he's the CEO of Starwood Capital. That's a hedge fund investment operation that invests rich people's money in real estate. He heard about the labor shortage we've been hearing about and he has a plan.

If the workers aren't willing to work at the wages we offer, he says, the government should pay people to go back to work. Let me make sure you understand what this man has the “courage” to say. He, the employer, doesn't want to pay workers what's necessary to bring them back to work. He wants us, as taxpayers, to kick in the money to the government to pay the difference between what the workers need to come back and what the employer wants to pay. Talk about subsidizing capitalism, this is taking it a new step further. What a creative way to use the concept of labor shortage.

Next update: I recently debated the head of the Ayn Rand society in the United States. I found it remarkable. These are libertarians, you know, they say so, that's the word they use, and here's the mistake they make. It's the mistake of thinking that the puppet show you're watching involves puppets who are making things happen. When you grow up, you learn that the puppet is an inanimate object on the end of a string and that the movement is shaped by the puppeteer, the one who owns and runs the strings.

Well, in our country, the libertarians suffer a capitalism that is broken and is serving a tiny core of rich people these days and nobody else. They see it, too, we all do. But then they make the mistake: they think the puppet, that's the people in Washington, you know, the congressmen and women, and the senators and the president, the puppets are doing it. No, no, no. It's the puppeteer. It's the corporations who put those people in office with their donations. It's the corporations who run and pay for the lobbyists who write half of the bills that are passed. Libertarianism, Ayn Rand, it mistakes the puppet for the puppeteer.

I've come to the end of today's first part and, as always, I want to thank all of you whose support makes this show possible each week. To learn more about the different ways you can support Economic Update, please go to our Patreon page patreon.com/economicupdate or visit our our website democracyatwork.info. 

And forever remember, sign up. Follow us on Facebook, Twitter and Instagram. Stay with us, we will be with Chris Hedges in a moment.

Welcome back, friends, to the second half of today's Economic Update. It is with great pleasure and genuine enthusiasm that I welcome to our microphones and our cameras a friend of mine, Chris Hedges. He really needs very little introduction.  He's been on our program before, but I want to give it to him anyway for those of you that are new.

Chris Hedges is the author of 14 books, including several New York Times best sellers. He is also a Pulitzer Prize winning journalist who was a foreign correspondent for 15 years for the New York Times, where he served as the Times Middle East Bureau Chief, and Balkan Bureau Chief, as well. He is the host of the Emmy Award nominated RT America show “On Contact.” So, first of all, Chris, welcome back to our program.

HEDGES: Thanks, Rick.

WOLFF: Okay, I want to talk about your latest book which we all have begun to read now called “Our Class.” And I know from talking to you over the years how important it has been for you to do the work in the New Jersey prison system that you have done for a very long time. So let me begin by asking you why you wrote this book about that experience, and why you called it “Our Class.”

HEDGES: So I've taught in the New Jersey prison system for about a decade. I've also taught at other schools, many schools, as have you, Columbia, Princeton, etc. 

And about 10 years ago, Celia Chazelle, who was the head of the history department at the College of New Jersey, was running a program where they didn't get college credit, but they had finished their GED –  their high school equivalency – and she was teaching college level courses for a semester inside the prison and then giving them certificates that they could put in their folders, which is very helpful when you go before a parole board. 

It didn't have academic credit. She was having a hard time recruiting people. You have to buy the books. Of course, it's unpaid. You have to drive to a prison, sometimes an hour, an hour and a half away, at night.

And so I was in between books. Usually, when I finish a book, I think I just finished “Empire of Illusion,” you have about 6 months til your book tour starts. I generally don't start another book until the book tour is over, and so I had that kind of interregnum and I used it to start teaching and found these students to be incredibly hungry, incredibly bright and incredibly dedicated. And that started… I now, since 2013, have taught through a program at Rutgers University. They can earn their associate degree, and then go on and earn their bachelor's degree. 

And in 2013, I taught a class, primarily drama, and found that very few people in the room had any experience with drama. And so, just on a whim, I asked them to write in dialogue so they get familiar with dramatic form. Well, what I didn't know is that one of the students in the class, nicknamed “Kabir” –  Kabir in Arabic means “big,” and this guy was big –  had recruited the best writers in the prison. So I brought the scenes home that first week and there were three or four that were just amazing. And this happened after a couple weeks. And I showed them to my wife who's a graduate of Juilliard, a professional actor, and that started this genesis of writing a play.

But it was organic, it was not planned. And the power of them writing scenes from their own lives – and again, this wasn't premeditated – became immensely therapeutic because they were expressing suffering and pain and trauma and loss, things that with those protective walls you have to erect in a prison had not been expressed. And many of those people started speaking about events in their lives that they'd never told anyone in that prison. So I had these huge guys, often covered with prison tattoos, up there holding their scenes, and their hands were shaking, and they were fighting back tears, and it just became immensely powerful. And we put it together.

I remember, when I started teaching, I asked how many people wanted a part, and I had 7 students who wanted a part. And as we got into it, every one of the students, all 28 of them, wanted a part. And we wrote this play called “Caged” that is about the cages: the ones you don't see outside prison for the poor, and the ones that are quite visible in a prison. And it was an amazing process which, when we ended, we couldn't perform it in the prison, there are parts of it that would get my students in trouble. It doesn't take much to anger the department of corrections. So I invited Cornell West and the great theologian, James Cone, to come in and be our audience. And in my last class, I promised them that I would do everything I could to get it produced.

My best writer actually, Boris Franklin, was the first student to get out, and we spent hundreds of hours. We had to reduce those 28 parts to about a half dozen that worked so that it would work on stage, and eventually was performed. Almost every night sold out at the Passage Theatre in Trenton, New Jersey, and then it was later published by Haymarket Books.

WOLFF: So tell us, in some sense, and I know it's a broad question, what did you learn from all of this? What do the lives as exposed in the play, what do the lives of these prisoners teach you about incarceration, about this system, about who does and doesn't go to jail, and so forth?

HEDGES: Well, most of the people in our prison system are poor, and a disproportionate number of them are of color. I would say that that play taught me two principal things. One, the play at its core is really about radical love: the love for families that are disintegrating because of the onslaught of poverty, and the radical love that people within a prison, the bonds that people create within a prison, to sacrifice for each other.

The play actually ends with a scene where the protagonist… a man who had murdered the protagonist’s brother comes in, and the prison code says that you have to take him out, you have to shank him. And one of the last scenes in the play is an older prisoner, who's never going to get out, stopping the younger prisoner from going into the mess hall – the mess halls, along with the yard, are the two most dangerous and volatile places in the prison – from going in. And that was written from an experience that that prisoner had had, stopping another prisoner. 

And actually, it was Boris who wrote it, and he performed that role in the Passage Theatre. Everyone else was equity actors, but he was that figure in the play. And when I first watched it, he was very physical. He kept pushing him. And I asked him afterwards why, and he said, “Because if I couldn't convince him to give me the shank, I had to start a fight so we would both go to lockup.”

So it was that radical love, even when you knew that those you were attempting to protect were often doomed, as I think happens in these kinds of environments. The other thing is, it becomes quite evident how mercenary capitalism is. The more vulnerable you are in a capitalist society, the more they prey upon you.

So here you have, arguably, the poorest families in America, and everything within a prison – we talk about private prisons, which are a monstrosity, but those are actually a small percentage of prisons in the United States. But in state and federal prisons, everything has been privatized. The commissary is privatized. The medical service is privatized. The phone service, Global Tel Link, is privatized. The food service, Aramark, is privatized. The money transfer, JPay, is privatized. And so it's just completely mercenary.

And you're getting, of course, larger and larger numbers of people who are being released heavily in debt. And then, if they can't pay their debt back, and many of them can't get jobs, they're funneled right back into prison. It's why within 5 years, coupled with all of the impediments we place upon those who are released from prison – they can't get public assistance, there are all sorts of jobs they're barred from getting, anything basically that needs a license, including a hairdresser. And so we have a 76% recidivism rate within 5 years.

So I would say the two most powerful points that came out of the writing of that play was: one, the self-sacrifice that people made for each other in these extreme situations; and two, both outside and inside, because most of my students had lived lives where they were constantly evicted. The sheriff's deputies or eviction companies were showing up every few months and throwing all their possessions on the street. They couldn't stay in the same school for any length of time because of these evictions. 

So the mercenary quality, the heartlessness, the viciousness of unleashed capitalism, which is kind of writ large now throughout the society, but it's especially evident when we look at the lives of the vulnerable.

WOLFF: Tell me, the tendency in our society, which is to blame the individual, blame these prisoners, that somehow where they are and what's happening to them is their fault, how does that play out? Do the prisoners understand that they are the victim of this kind of ideology on top of everything else they suffer? Is there some way to deal with that problem, this self-protection of the outside society that makes it want to believe that the people in there really are different from the rest of us?

HEDGES: Well, they're the product of de-industrialization because they come from these de-industrialized areas: Camden, Newark, Patterson. You know, but that's writ large throughout the country, and they're often forced into the underground or the illegal economy to survive. So they're quite aware of how the system works. 

They understand that the judicial system is dysfunctional. 94% of the people in our prison system never got a jury trial because the system would crash if everyone got a jury trial. People are coerced into taking plea deals. And they do that by stacking charges against you that even the prosecutor and the police know you didn't commit, but then they'll peel them off to reduce their sentence for the plea. 

And, in fact, the students that I teach who have the longest sentences are the ones who went to trial, and usually, the ones who didn't commit the crime, and they naively believe that because they're innocent, their innocence will be validated or understood by the court. And, in fact, they're made an example of. 40% of the people in our prison system have never been charged with physically harming another human being.

So they understand white supremacy. They understand neoliberalism. They understand a judicial system that's designed to railroad the poor into prison. And so the whole discussion in a prison classroom begins at a level that privileged kids at an elite university can't even reach.

WOLFF: I want to end, not intentionally on a positive note, but nonetheless, you talk about in the book: a transformation. And clearly, reading between your lines, you had the feeling that a transformation, even under those circumstances, even for people who have suffered so much, was possible. Does that give you some hope, Chris, that outside of prison, where we are all prisoners of a system, even if we're not incarcerated, that that transformation also is possible, and that the prisoners may give us a clue about how to achieve it? 

HEDGES: Yes, but we have to be clear that what I was teaching was not mass culture, it was art. It was August Wilson. It was Amiri Baraka. It was Miguel Piñero. It was John Herbert. And these were all playwrights who dealt with, you know, the deepest subterranean issues of human existence, and in most cases, several cases, what it means to be in prison.

And so, when we dig deep within ourselves and face our own demons, as August Wilson said, then we can finally find our song, find who it is we are. Because for these people, the narrative that they have been fed throughout their lives ignores and attempts to erase their own history. And it was a recovering of the self, I think, that I found so powerful, and that's why I used the word transformation.

WOLFF: Chris, as always, I’m sorry that our time has gone so quickly. But I want to recommend to everyone a book that will move you as well as teach you. Thank you for writing it, and I look forward to the next time we can have a conversation together. And to my audience, thank you so much for paying attention. I think the reward here is obvious, and I look forward to speaking with you again next week.

Transcript by Scott McCampbell
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