Economic Update: Crosscurrents of US Politics

[S12 E24] New

Direct Download

In this week's show, Prof. Wolff talks about the effect of Ukraine sanctions on inflation, Musk as economic dictator, Idaho progressives’ impressive gains, and offers a practical response to shootings. In the second half of the show, Wolff interviews media host Krystal Ball on US politics.

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. I'm your host, Richard Wolff.

Today, we'll be discussing a number of topics: the sanctions around the war in Ukraine, Elon Musk's behavior, guns, and a progressive movement in Idaho. And we will in the second half be interviewing Krystal Ball, a remarkable and important podcaster, news broadcaster, and all-around analyst, for her views on what's happening here in the United States.

Before beginning my regular updates, I want to do a shout-out to the courageous workers at a Starbucks in Austin, Texas. Working with the Starbucks Workers United Labor Union, they are the first Starbucks in Texas to be unionized. And our hats off to them, as we note, yet more evidence of a rising labor movement in the United States.

I want to talk in my first update about the war in Ukraine, but not actually the war, and so this is not about whatever side on that question you feel you belong to. I want to talk about the economics of the sanctions, the effort of the west, led by the United States to punish, - that's the word they use, - Russia for the invasion of Ukraine. Much of the impact on the inflation around the world that comes, is not coming because of the war, it's becoming, coming to us because of the sanctions, and that needs to be understood.

The sanctions begin when the United States and Western Europe take some of the financial reserves that Russia uses to support and back up its currency, cuts off trade, cuts off access to airplane travel, cuts off corporations, - formally, informally, - continuing their operations in Russia. It's a many-sided attack on the economy, basically, of Russia. And this is having consequences, and it's important to understand what they are, and why they're there, as you think about this war, as it continues. I'm going to give you an example you may not know, just to show you the complexity of this sanctioned warfare and its consequences.

Early on, right after the invasion, the United States, Western Europe, begins cutting off access to its airports for Russian airlines. Okay, predictably because the Russians said so, there were counter measures, and one of them involved the Russians not allowing airplanes sitting on runways and sitting in parking lots in Russian air airports to leave. Well, those are airlines that the western companies who own those airlines, or who lease them, have come to depend on, those planes have to move, if they're going to be used around the world. They can't move. The Russians won't let them. It's a counter-sanction. Well, what happens, then just so you get it, is that the airline companies being damaged by these programs of sanctions on all manner of levels, turn to their insurance companies, and say, “Hey, we pay you an insurance policy to help us, to compensate us for our losses if anything happens to interfere in air traffic”. Now, there's a big struggle going on between the airlines and the insurers, but the insurers know that sooner or later they're going to have to fork up huge amounts of money because of all the air traffic that isn't happening and causing vast losses to the airlines. That means insurance companies are going to be out of money, and guess what, they are! Highly concentrated industry, and if they're losing money in one area, they're raising it in another. That is, rates everywhere are going up, which means every other business that insures itself, which is most businesses, are going to pay higher rates. And, you know how they cover themselves when that happens: they raise the prices of what they charge, which is why we have an inflation. It's the sanctions, not the warfare, that is the problem here. And, I could go on and talk about how the airline companies and the insurers talk about supply chain disruptions. That's a vague, abstract term. The reality are the consequences of the sanction game, and that's what we need to understand.

And here's one more: when a sanction is imposed, it means you can't do normal business, - that's the whole point of this sanction. So, normal business is what every business organizes, to have the best profit possible. If suddenly they can't move because airline traffic has stopped, or they can't move because money can't move around the world, they have to go to a second best, something that's less profitable. And how do they offset the damage to their profits of having to react? They raise their prices. There's another in inflation. Unless you think this is temporary, worry this way, everybody who's adjusting every business that adjusted traffic, to sanctions has to ask itself: “How much money am I going to spend to re-route my activity this way, that way, to go to this provider rather than that one, to cut off my dependence on a Russian intermediary? I don't want to spend a lot of money to adjust. Why? Because, I don't know how long these sanctions are going to last, and I don't want to spend a ton of money. and discover three weeks later that it was for nothing, and I'm going back to what we did before”. So, the very uncertainty of the war means the sanction regime is unknowable, and people, businesses are hesitating to spend the money to fix it. And therefore, the price increase becomes the more attractive way to try to keep your profits. That's what's going on. The sanctions, not the war.

My next update is about Elon Musk, and I'm getting tired because he's showing up on this program too often, but I have to tell you about this one. Back on June 1st, Mr. Elon Musk used Twitter to inform, - apparently, - all workers, and let's be clear, - Tesla the company of Elon Musk employs about a hundred thousand workers, - we're talking about a large group of people. He informed them that unless they come back to work, they're probably going to lose their job. He doesn't want remote work. See, he doesn't worry about diseases or anxiety about disease. He brushes all that aside. You're coming back to work or you're going to risk losing your job. Nice! On June 2nd, he announces, while this first thing is ramming itself through the consciousness of his workers, he announces he's going to lay off 10% of them, - anyway. A 10% of 100,000, that's 10,000 families, - are now shivering because they're going to get fired. Their breadwinners are going to get fired, he said. Then on June 3rd, he kind of walks it back, but says he does have a terrible bad feeling about the economy, so he's going to do something.

I want to hammer home: Mr. Musk is an individual. I'm glad he's having feelings and telling us about them, but he is exercising absolute power over tens of thousands of people, with what justification? The employees of his company, - 100,000, - have no say whatsoever in what Mr. Musk does. He is a king inside his business, as CEOs often are. His only responsibility is to the shareholders, the board of directors, who are interested in one thing: profit. But of course, one thing isn't all that a business does. It employs 100,000 people, and therefore their families depend on this, and the communities where those 100,000 live depend on the dry cleaners and the gas stations who keep alive because those 100,000 are there. Mr. Musk is an absolute dictator to these people. They have no recourse, no democracy whatsoever.

The CEO is the modern incarnation of the king, and we ought to think about that, because long ago we got rid of kings. We got rid of the monarchy system that anoints a particular person with an absurd amount of power, which was felt to be intolerable in our community. Well, guess what? Mr. Musk illustrates that it's just as intolerable when it's at the workplace, and we ought to think about that.

By the way, in Germany, the IG Metall Union is not sitting down and taking any of this. They've announced that they've worked out deals where workers can be remote at VW, at Mercedes, at BMW, they're not going to let Mr. Tesla do anything different with his factories there in Berlin. And, I'm, of course, waiting for the AFL-CIO to make an equivalent commitment.

In Idaho, something remarkable is happening. A mass program of citizens, not working with either political party, collecting signatures. They've already collected over 100,000, which is a huge percentage of, - you know, - a low population state. They only needed 65,000 to get on the ballot. And here's what they want everyone to be able to vote for: they want to tax, - get ready now, - tax rich people and corporations in order to better fund public education for the people of Idaho. Wow! And, they're doing it really well. They've made the case. Reminds me of the Yellow Vest movement in France. But here it is, in Idaho. There is a danger that the political parties will push back to undo a victory for this initiative, if they can get it, which they look like they're about to. They're worried that a big political party will then undo in the legislature what the people voted for in the referendum and the initiative. And they’re right to worry, because that's what the Republican party in Arizona did with a similar initiative that passed in Arizona and was then killed by the Republicans in the legislature.

And there's a lesson here I want no one to miss. Mass action at the base of society is very powerful. Hats off to the progressives of Idaho for the success, for the initiative, for the work that they've done. It's a wonderful model for the rest of us. But I would urge not to think of this as an alternative to party politics; otherwise you'll be undone by the political party. No, what we need is an alliance, a coalition between grassroots movements like that in Idaho and a political party. If the Republicans and Democrats won't be part of it, which I'm assuming they won't, since they never show their slightest interest in doing that, then let's have our own party. But we need the political party working together with grassroots, each keeping the other one honest, each fueling the other one to act in the right way. That, I think is the lesson of the remarkable activity of the progressives in Idaho.

Last thing, a remarkable report from the department of justice. It asks the question: what would it take to deal with the gun violence in our schools? Their solution, after years of study, if we had, - and here's their proposal, - 500,000 mental-health workers working in every school, figuring out who's getting bullied, who's doing the bullying, who's in need of mental health help, who needs some counseling to get through a rough family situation, a hard point in life, - school children be the perfect place, - and we could have 500,000 professionals paid 70 Grand a year. And you know what it would cost? $35 Billion, way less than we're sending to Ukraine, or to pay for Ukraine. And which of these two things is a greater danger to the United States?

We've come to the first end of the first half of today's show. For those of you who may not know, Economic Update is produced by Democracy at Work, a small donor-funded non-profit media organization, now celebrating 10 years of producing this kind of material on a regular basis. For example, we have the book: “The Sickness is the System: When Capitalism Fails to Save us from Pandemics or Itself”. It's a book that you can get by getting in touch with our website: [email protected]. There, you can also follow us on social media, join our mailing list and, of course, support our work in a variety of ways that makes all this possible.

Please stay with us. We'll be right back with Krystal Ball.

Welcome back, friends, to the second half of today's Economic Update. I am very pleased, happy, and proud to bring to the microphones and to our cameras a friend, Krystal Ball. In 2010, she was the Democratic Party candidate for Congress in the First District of Virginia. She has since then gone on to a remarkable career in media. She is the co-host of “Breaking Points with Krystal and Saagar”, and co-host of “Krystal Kyle & Friends”. She was formerly a host on MSNBC's “The Cycle”. She authored a best-seller, “The Populist's Guide to 2020”. So, first of all, Krystal, thank you for joining us.

[Ball] Thank you very much for having me. It is truly an honor.

[Wolff] Good. I want to, in a way, pick your brain for our audience. You've been watching closely, literally every day, a shift in the politics of this country to the right, however you variously express it. And, I want to ask you, - (a) whether you agree whether there has been this shift, but more interesting, I'm more interested in how you feel about it. What, how you understand it, where you think it comes from, and where it goes.

[Ball] Well, where where it goes, I think is anyone's guess. Do I think that the politics, - especially of the elite political class that runs the country, - have consistently moved to the right? Yes, and I think it only makes sense, since we're basically in this era of, sort of, a shared economic vision of neoliberalism, which is fundamentally, you know, a conservative or a right-wing ideology. And since you have both parties effectively buying into that, then it only makes sense that you know the only shift occurs consistently to the right. You have democrats basically trying to be like the Republicans on economics ever since the Clinton era and probably before. In terms of the population, I think it's really mixed, and you see this not just in the US, but you see it around the world. There's clearly a rejection of this quote-unquote “free market obsession”, where, rather than having any sort of values or principles, or commitment to humanity governing your society, you outsource everything to the markets, and what that ends up meaning, of course in practice, is that the rich get richer and richer, and everybody else is effectively left behind. And, so we see around the world this complete rejection of that paradigm. And, in some places that leads to, you know, figures like Donald Trump, thinkers like Jair Bolsonaro, figures like, you know, events like Brexit. You see this sort of quote-unquote “populist right”, although I would dismiss, I would dispute the idea that they're really populous. The rise of that energy. But you also see a countervailing force on the left, and you know you talked a little bit about my bio, my politics, have shifted significantly since I was first running for congress in the First District of Virginia, or even when I was on MNSBC, and I was a big, you know, Democratic Party cheerleader. There now is, for the first time in my life, a real grounded critique of the Democratic Party that is sort of shared and becoming increasingly mainstream, from the Left. So, you have these two competing factions, neither of which, - certainly the left half of which, - is not represented in terms of institutions of power, but which is growing in strength and acceptance among a broad part of the public. That's kind of how I see things.

[Wolff] Wow! Okay, following right on that, how do you assess, you know, - and it's really your vision that I'm after here, - the so-called “culture wars” that we're having, whether it's around guns or abortion, or all those kinds of issues. What relationship, if any, do you see between wars over culture, and the old traditional class struggle between rich and poor, between employer and employee, and all of that?

[Ball] Well, I am of the opinion that there is no war but class war, so I see these things all tying in, and it's too easy to say that culture war issues like you just mentioned, - gun rights or abortion or white supremacy, - that these are distractions. What I think they are instead, is they mask these deeper issues of class and of economics, and of distribution. So, to explain what I mean: I just recently looked into this with regards to the abortion debate, and the imminent end of Roe versus Wade, which I think is really important, because I think women should have control over their lives, over their bodies, of their autonomy over when and how to start a family. But, the reason why that debate sort of masks what's really going on is, even if pro-choice advocates like myself get what they want, the idea that having, you know, ready access to abortion, is going to actually give women autonomy, - is just not true. And, in fact, because we don't have the economic structures in place to support women and have the full ranges of choices available to them from an institutional and societal perspective. In fact, something like 74% of women who get abortions are poor, so class is the underlying factor here. And, you know, the surface level debate over whether or not you can get an abortion is really masking the deeper problems that are leading women to make that choice to start with. But, you know, abortion is basically split, sort of 50-50 down the middle, so it's this great wedge, divisive culture war issue. It's very easy to have an opinionated take on it. It's extremely emotional, and raw, and sensitive, and it serves the interest of the status quo, because if you were having debate about wages, about unions, about democracy in the workplace, - something you talk about, - well, those are issues that are like 80-20, and they don't benefit the status quo, so we have to push those off the table. It's much easier for the powers that be to focus on things that are split 50-50 like that, like abortion, which mask deeper level problems.

[Wolff] I want to go back to your comment about the left-wing consciousness. If I understood you correctly, you believe it is growing. Why is that? Tell us. Tell us a little bit how you see that growing critique, if you like, of the traditional Democratic Party, and the attempt to somehow carve out a left wing, or a new Left, here in the United States.

[Ball] I think it starts with the financial crash, you know, the housing collapse. You have the Occupy Wall Street movement, that's the spark out of that, where, for the first time, you know, you have this really visible critique of Capitalism. And, I think the language of Occupy got a lot of things right: the “99 versus the 1%” was the, probably some of the best sort of framing of class consciousness that we've had, at least in my lifetime in the US. Directly out of Occupy, you end up with the Bernie Sanders political movement. I mean, right out of that, some of the same organizers, they organize People for Bernie, they sort of, you know, recruit him into the race. And he creates a permission structure for young Americans, in particular, to think bigger and imagine something different than the bounds of the neoliberal Democratic Party debate. Of course, this comes on the heels of the disappointments of Barack Obama and the hollow nature of the, the “Change” and, and the “Hope” that he ultimately promised. So, you have that, and now you have something different too, which is that, for the first time, again, in my lifetime, you have an energetic labor movement. You have this grassroots movement of workers, saying you know what? This is what Chris Small said at Amazon labor union: “We're not going to quit our jobs anymore. We're going to organize and make these jobs that we have, into good jobs”. So, I think all of those things, the awareness of coming out of the financial crash, the anger coming out of the financial crash, the, the fact that the Millennial generation is the first generation that's going to do worse than their parents, that's meeting every milestone later than their parents, the actualization of that through the Bernie Sanders movement, and giving people sort of a space and a way to come together, and a common framing and a common agenda. I think, that has led to a massively increased Left awareness and class awareness. Now, currently, there's a lot of splintering and there's a lot of fracturing and there's a lot of demobilization. I saw someone online say Joe Biden was basically elected to kill our political imagination and make us believe we can't do any more than what we're doing. I think that's all true, but you know, this, that broader awakening isn't something that you can just put back in the bottle and stuff under the, under the bed.

[Wolff] Do you think we've gone beyond the taboo? You know, I'm older than you, I lived my life here in the United States through the whole cold war, everything. The taboo that you can't speak critically of capital, - you can't say “Capitalism” most of the time. If you do, you have to bow down and celebrate it. You can't attack it, you can't talk about its weaknesses. Are we out of that box? Have we grown-up enough to be able to talk about it? Or, are we still stuck in that frozen period?

[Ball] I think it is very generational, isn't it? So, I think young Americans are very comfortable talking about critiquing Capitalism. You know, I'm 40 years old. I'm basically like the oldest millennial that you can be. And I basically feel like people my age and younger. You know, we didn't grow up with that same cold war sensibility. So, that seems that wasn't as much a part of our cultural upbringing. And, we've also, you know, my age cohort, we were coming of age during the housing crash. All the promises of, “oh, you just work hard, you go to college, you rack up all this debt, but it's going to be fine, it's going to be worth it on the other side”. We see the way that that was, that that was a lie, and that our futures were basically sold out by, you know, politicians before us. So, I think among people my age and younger, there's a lot of comfort with it. You know, older generations, it's funny, because they'll walk right up to the edge, they'll talk about, you know, corporate greed and the corruption, and those are all things that are safe to say. But, to go that extra step further, and say the problem is Capitalism, then it's: “this is scary, this is kind of social-, what are you talking about?” So, I think the sentiment and the awareness that something is deeply broken and rotten and hollow at the core of our society is there, but among older generations, I think there's still a lot of discomfort of naming the problem as Capitalism itself.

[Wolff] Right. All right, I'm gonna ask you the stupid question that people like me ask thoughtful folks like you. But, I'm gonna do it anyway, partly because you're in a better position. Your speculation is, is based on a lot more of the filtering of the news. What is it that you imagine is going to happen in November of this year, when we have the next election, - weird ritual that that is. But, how does it look to you, sitting where you're sitting now?

[Ball] I don't think it's complicated. I think Democrats are in for electoral disaster, and you know, you could go into all kinds of details about the baby formula crisis, and the war in Ukraine, and all these things that are happening. But, all you really have to look at is 70-some % of Americans say that we're on the wrong track. Biden's approval rating is very low. Parties in power typically do very poorly in the midterms to start with. So, when you look at all those things together, Democrats are in very, very tough shape. I mean, I don't think there's any way they hold on to the House. I think it would take a miracle for them to hold on to the Senate. The only thing that maybe the Republicans throw them a lifeline with, is because they have nominated some people that are just so insane and so extreme and so radical, that, you know, voters say “yeah, just can't go, we can't go there with you”.

But, you know, Biden and the Democrats have completely demobilized their own base. They've routinely, you know, held on promises, whether it's Built Back Better, or even right now, with the student loan debt, before sort of intentionally disappointing anyone who ever got their hopes up. And so, I think, you know, the Democratic side of the equation is, is really demoralized, unlikely to show up. The Republicans, of course, are extremely energized to go out and vote for their people. And, I think it'll be ugly for Democrats

[Wolff] Why didn't the Democratic Party, just for its own survival, do better than this? Controlling both houses and the president, you would have thought the narrowest self-interest might have gotten them to do it.

[Ball] Well, that assumes that their number one priority is winning, and while winning is a priority, the number one priority is, you know, making sure that their particular sort of, you know, establishment-neoliberal-corporate tied band of bandits and crooks, their particular cartel, keeps control of the Democratic Party, and protects their own legacy. And, at this point, their legacy is, you know, the same as Barack Obama, basically saying, like, we can't do any better than what we're doing right now. That's their number one priority interest, making sure that their corporate donors are happy, and that, you know, they're sort of protecting their own power within the Democratic Party.

[Wolff] Krystal Ball, thank you very, very much. As always, I wish we had more time, but I really appreciate your coming on and giving us the benefit of how all this looks to you.

[Ball] It is truly my pleasure.

[Wolff] Thank you. To all of my audience, again, I hope you found this as interesting as I did, and I look forward to speaking with you again next week.

Transcript by Ed Nelson

The original content of this program is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. Please attribute legal copies of this work to democracyatwork.info. Some of the work(s) that this program incorporates, however, may be separately licensed. For further information or additional permissions, contact us.

Want to join the volunteer transcription team? Go to the following link to learn more:

**Economic Update with Richard D. Wolff is a d@w production. We make it a point to provide the show free of ads. Please consider supporting our work. Become an EU patron on Patreon: https://www.patreon.com/economicupdate  and help us spread Prof. Wolff's message to a larger audience. Every donation counts!

A special thank you to our devoted EU Patreon community whose contributions make this show possible each week.

If you would like to make a one time or monthly donation, visit our donation page.

Find quick and easy access to past episodes of Economic Update, including transcripts, on our EU Episode List page.

About our guest: Krystal Ball is co-host of Breaking Points with Krystal and Saagar and co-host of Krystal Kyle & Friends. She’s author of the best-selling book The Populist’s Guide to 2020 and a former host of The Cycle on MSNBC. In 2010 she was the democratic nominee for Congress in the 1st district of Virginia.

Links: Twitter: @krystalball

Podcast: @Breaking Points 

SUBSCRIBE: EU Podcast | Apple Podcasts | Google Podcasts | SpotifyiHeartRADIO
SUPPORT: Patreon

Follow us ONLINE:




Instagram:  https://instagram.com/democracyatwrk

DailyMotion:  https://www.dailymotion.com/democracyatwrk

Shop our CO-OP made MERCH:  https://democracy-at-work-shop.myshopify.com/

Want to help us translate and transcribe our videos? Learn about joining our translation team: http://bit.ly/

NEW 2021 Hardcover edition of “Understanding Marxism,” with a new, lengthy introduction by Richard Wolff is now available at: https://www.lulu.com/

“Marxism always was the critical shadow of capitalism. Their interactions changed them both. Now Marxism is once again stepping into the light as capitalism shakes from its own excesses and confronts decline.”

Check out all of d@w’s books: "The Sickness is the System," "Understanding Socialism," by Richard D. Wolff, and “Stuck Nation” by Bob Hennelly http://www.lulu.com/spotlight/democracyatwork

Customized by

Longleaf Digital