d@w Contributor:

Richard Wolff

September 12, 2022

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In this week’s show, Prof. Wolff gives updates on China's changed global economic strategy, California's struggle over higher minimum wages, Boston Mayor siding with Starbucks' strikers, and “regulatory capture" issue again as Philip Morris hires top FDA tobacco scientist. In the second half of the show, Wolff interviews Rob Robinson, formerly homeless community organizer, on today's record homelessness despite decades of programs to "solve" the homelessness crisis.

*Min 2:35 correction: China

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. In today's program we're going to be talking about the economic strategy of China, which is becoming such an important driver of the whole world economy. We're going to be looking at a very contended act, a living wage act in California, on and off the ballot and what that's all about. We're going to talk about the remarkable Mayor of the City of Boston and her solidarity with strikers at Starbucks. And finally we're going to talk about the so-called revolving door in the government, this time in relationship to the tobacco industry in the United States.

So, let's go! China's strategy is becoming clearer with each passing month. How is it going to cope with the changing world? A world that isn't any more a globalization project, where free trade and open exchange is what everybody, led by the United States, wanted and pursued for the last 30 to 40 years, if not longer. The Chinese clearly see that that time is over. Economics have been weaponized. The United States under Trump went right after China, slapping tariffs, engaging in trade wars. Mr Biden, in his sanctions against Russia, has taken all of that even further, literally taking over and freezing their reserve assets that back up their currency, their gold - things that were thought to be unthinkable before. And that, of course, threatens every other country that has assumed the United States would play the role of making sure everything works properly, which it is now leaving behind. So what are the Chinese doing? They're reorienting everything they do, away from areas that are dangerous, like the United States and Western Europe. This has been going on for a while, long before the invasion of Russia into the Ukraine or anything like that. And so China's strategy seems clear. They're going to become less dependent on exports, by building up their own internal market. That's why they have such a remarkable record of rising real wages for average Chinese workers. Which have risen much, much more than the real wages of American or Western European workers.

And the second prong of their strategy is to pull back from relying on exports to the United States and Western Europe. And building up instead their exports to the global south: Latin America, Africa and many parts of Asia. And they're doing this in a systematic way. And they've been doing it for several years. Which means they are in better shape to withstand the efforts of the United States to stop their economic growth, to slow it. It's been very frustrating for Washington. It isn't often admitted unless you go to special conferences, but it is perfectly well understood. Mr Trump didn't get very far with what he tried to do to China. And Mr Biden isn't doing much better. And the ability of the Russians to withstand the sanctions is a demonstration of how much other options are available to them.

So I think a couple of signs of this may impress you, as it did me. One of China's biggest projects is to bring mobile broadband communications to Mexico. Normally you might have thought the United States would be the leader in doing that. No, not only is it the Chinese who have really invested in and built up broadband communications in Mexico, but the company charged with doing it was Huawei Corporation, the one that was blocked from functioning in the United States and Canada. It solved that problem by doing it in Mexico. It is also the case that China has enormous investments in Brazil, in Turkey and in a whole slew of other countries in and part of the global south. And that they are making enormous gains as they do so. When the Chinese invest, usually with a partner of some sort in a country in the global south, the people who run their businesses there (the local people, the partners) become, of course, advocates with their local governments for better relations with China. That's a counterweight to the dominant role the United States once had, for better or worse.

And it's an erosion of the global position of the United States. More and more politicians in those parts of the world are siding with China or with China's allies, like Russia, when the United States had expected, presumed the usual response of doing what Washington wants. The example of Turkey the other day agreeing to pay for the gas and oil it gets from Russia in Rubles rather than in other currencies, something the Russians demand, is a perfect example. The fact that Poland and Hungary are both members of China's Belt and Road Initiative (it's global Eurasian project) should tell you the same story. It's everywhere the same. Erosion of the former dominant position of the United States, replacement by the growing influence of the enormously successful Chinese economic model.

The next update has to do with California. Under current law in California the minimum wage will rise to $15 and 50 cents in 2023. Mind you, that's a few months away. And that would make the minimum wage in California over double that of the minimum wage - seven dollars and a quarter - on the federal level in the United States. By 2025 under existing California law it will rise again to $16 and 50 cents. Now, there was a new law getting ready to be put on the ballot in California, the Living Wage Act, that would have raised all of that to $18 an hour by 2025. And that would have raised the income of five million Californians, one quarter of the labor force. It shows that at the state and local levels legislation favoring labor is possible, exists, has been passed. In ways that in other parts of the country don't exist. Working people are much better off in California than they are in those other parts. There's simply no way around that. Current calculations as to what a family needs - two adults and one child - if there's a single wage earner they need to get forty dollars an hour for basic, decent living. If you have two adults and one child but two wage earners they would have to get at least 24 dollars per hour. Even California, with among the most progressive approaches to minimum wages, doesn't come close in the United States to providing quote a decent minimum to it's families. That tells you a lot, or it should, about where the American economy is, you know, for the vast majority of us, not for those who own the media, who are the politicians, who run the corporations. Yeah, they tell us what they would like us to believe, but these statistics tell us how it really is.

I come next, and I do this with pleasure, to the current Mayor of Boston, Massachusetts. Her name is Michelle Wu. A strike at Starbucks started there, July 18th of this year. And she went and marched with the strikers. She's the Boston Mayor at this time. And I want to read to you her statement: 'I am here because I want you to know very clearly that the City of Boston stands with you. We are going to make sure that Boston continues to lead the way in fighting for safe working conditions and the benefits and wages and respect that you all deserve.' She was speaking to the Starbucks strikers. Their demands include $25 per hour before tips. As well as job condition improvements. This is another form of labor militancy. Labor is the majority, labor has the votes. Capital has the money but labor has the votes. And politicians know it. And if labor becomes more militant, as is happening... you can see it in the struggles to unionize, you can see it in the struggles to strike, you can see it in the struggles to improve minimum wages. We like to document major steps along the way in this process. Well, here's another one. When the connection between a growing, militant labor movement is made clear to local politicians it turns out that you can get levels of support from them that a year or two ago would have been thought unachievable. I don't want to take away from Michelle Wu's mayoral position and decision to do what she did, but it is not something that can be restricted to Boston. And it is something everyone listening or watching this program ought to be thinking about. What's possible if you mobilize and you organize may surprise you.

My last update for today is about a gentleman. His name is Matt Holman; h-o-l-m-a-n. He was the Food and Drug Administration's top science regulator of the tobacco industry. Remember the tobacco industry knew for decades that nicotine had all kinds of unwanted health effects. And other parts of smoking cigarettes could and did damage your lungs, even causing mass fatalities. Which led to a whole lot of legal wrangling and Congressional action and all the rest. So the Food and Drug Administration was a leading agency. And their man Matt Holman was the scientist who was supposed to decide what the science was. And then on the basis of that what the government should do about the toxic dimensions of the cigarette industry. Well, he announced his retirement after 20 years. And he also announced that he will be joining a corporation whose name you all know: Philip Morris. Okay, what does it mean if a leading official of a government regulatory agency takes a job with the industry they supposedly were supervising, controlling, monitoring and regulating? In the world of industry it's called regulatory capture. It's when the regulated capture the regulators. Which from the point of view of the regulated is exactly what you want. If you can't stop a regulation, well, capture the regulator. And how do you capture him? Well, you offer him a really good job. Or at least a prospect of one. And if you didn't offer it he'd have it in his mind. And you know why? Because he knows the story of Matt Holman, which is reproduced by many others. Matt is not alone, I don't mean to pick on him, he is an exemplar. It's all about the overlap between business and the government. Which you ought to worry about, because it affects us all.

We've come to the end of the first part of today's show. And for those of you who may not know Economic Update is produced by Democracy at Work, a small, donor-funded non-profit media organization that does a whole variety of things. For example my recent book Understanding Socialism, which tackles the taboos around that subject, and it offers a real alternative way of understanding it. You can find it, along with other shows, books and lectures we produce at our website democracyatwork.info. And there you can sign up for our newsletter, follow us on social media and become part of our supportive community. Please stay with us, we will be right back with community organizer and activist Rob Robinson.

RW: Welcome back friends to the second half of today's Economic Update. I am very pleased and glad to bring back to our microphones and cameras someone who's been on this program several times and has much to teach us. His name is Rob Robinson. He's a formerly homeless community organizer and activist based in New York City. His work focuses on changing people's fundamental relationship to land and housing. He works with social movements all around the world, especially related to access to land and housing, to debt issues and police violence. And he does that in a human rights framework. He lectures widely at many different universities and currently he's an adjunct professor of Urbanism in the Design and Urban Ecology program at Parsons New School University in New York City. So, first of all Rob thank you very much for joining us.

RR: Thanks for having me back Mr Wolff.

RW: All right, let me start with a new report. City advocate Jumaane Williams reports in his latest report that there are eighty thousand New York City residents listed as homeless. Can you just give us, and I know this is difficult, but in your own words, in a short summary way what does this mean? How do we get our heads around 80,000 people in the City of New York that have no home? What does it mean for them? And what does it mean for the larger community?

RR: So, thank you. First, let me say I think that number is a low estimate. I might make the argument, I think I could make a valid argument for the number being close to 150 000. Because when you talk about homelessness you're talking about people in shelters, you're talking about families doubled up, you're talking about people living on the streets. And I'm not so sure we do the best or have the most accurate count when we can. There's a federal account that takes place every year counting people on the streets. And I'm not so sure how accurate that is. But I think the fundamental issue is rents rising faster than wages. And that's always going to put people in a strange and precarious situation. I think you very well know in New York City, where we both are, rents are upwards of five thousand dollars a month for a one bedroom apartment in Manhattan, and I think the outer boroughs are no bargain either. You go to places like Brooklyn it's around 3,500, the Bronx lower, believe it or not, to about 2,200. But these are high numbers. And this is difficult for people to deal with

RW: Why is now the time when we're hearing that these are record numbers? The 80,000 in that report is listed as a record high in the history of the City of New York. I mean what's going on that makes it bad now? And especially given that, at least, I mean you know better than I do, of course, decades and decades of talking about this, of commissions about this, of reports about this, out of politicians promising to deal with it, why? I mean not only did they not solve the problem, but we're at these records. What's going on?

RR: They exacerbated the problem. So let's start with the pandemic and sort of work backwards. The pandemic exacerbated an ongoing issue. This issue is not new, as you clearly laid out. It's been in existence for a number of years here and around the country. But the solutions that people in power have come up with don't work. They fail, right? Because there's a fundamental issue of when somebody is homeless it's because they don't have a home. So our answer has been - in places like New York - to put people in shelters. A shelter is not a home. It doesn't surround you with the sense of community, with the sense of medical that you may need to work on a problem like this or to end this particular problem. And I think we have to get more creative of using vacant spaces, right? We'd rather rent for profit rather than take the money that we spend on homelessness, which is a problem in New York. We spent close to five billion dollars a year in New York City to try to handle this issue. But we're not handling it. We're just sweeping it to the side. And I think part of the problem is a law that came into effect in 1989 in New York called the right-to-shelter law, which we're hearing a lot about now because migrants out of Texas are being sent to New York because of this law. What that law essentially says is if somebody comes to the city on a given night and says I want a shelter bed the city is obligated to give them a shelter bed. And sometimes that sits for solving the problem. That doesn't solve the problem that sweeps it to the side. People are homeless because they don't have a home. So we have to come up with better solutions.

RW: You know, I've heard the following statistic, which is in Jumaane Williams's report again, that the shelter, as you point out, was always designed to be a temporary way-station to what is a permanent, or would be a permanent solution. And yet families in the latest year for which they have documentation, which I believe is 2020, the average number of days in a shelter by a homeless family in New York City was listed as 500 days. In other words we were sticking people into the temporary shelter and they were there more than a year and a half. Isn't that a sign of a failure of a system?

RR: Yeah, absolutely, that's a sign of failure. And that's what brought me to this work. I think you probably know my own personal story. I'm formerly homeless. I spent 10 months in a New York City shelter. And I was told you were only in there for 10 months? Wow! And I thought that was problematic. I thought a shelter should be something that was temporary - 30 days or a month and then you find a permanent solution. But shelters have become homes in New York City and other places around the country for people. They become permanent solutions, right? Because our elected and appointed officials can't seem to come up with problem solving. And part of that reason is because they've never experienced the problem. They're trying to figure out something they know nothing about. Bring in people who have this lived experience, who understand what they went through, who knows what led them into the situation to help resolve the issue. I do think we're moving in that direction a little bit in New York City. We have somebody named Jessica Katz who's our chief housing officer. And one of the first things she did, which other mayoral administrations had never done, was put out a report, a homelessness and housing blueprint. In the past they've always been separated. It made no sense. Why are you separating these two issues? You're homeless because you don't have a home. So whatever you're doing to solve housing solutions should include homeless people. But the city has always taken a road that they would separate the two. And I think the problem sort of spreads across the country. Because people look to New York City for answers, right? Just like the governor in Texas ship people here for an answer to a problem he doesn't know how to answer. I mean there's some other underlying issues of why he did that. But he's saying they handle it better than I do. Well, no they don't, no they don't. It's problematic the way it's being handled. Not only here in New York City but around the country.

RW: You know, I'm an economist Rob and so I look at it through the lens of economics. And here's what I see, and I'd like your reaction. In order for people to have a proper, decent home there have to be two conditions met. They have to be earning enough money to afford a home. And on the other side the price of the home has to be within the range of what their income enables them to afford. And the problem with homelessness is you're either charging too much for the home or you're paying these people too little for their income. And so that's your problem. You've got to jack up the income or lower the price, otherwise you're not dealing with the economics of it. Does that make any sense?

RR: It makes total sense. Well let's take it piece by piece. The landlords certainly aren't going to lower their rent. They're greedy capitalists. They want more, as much as they can make, right? They're going to keep taking and taking and taking. Wages, again, aren't rising that fast. The boss doesn't want to pay any more than he's already paying, right? So you know you're running into two things that are bumping heads with one another. What has to happen is at some point this system has to really implode itself. It's not going to work. Even our government says the money you pay for a home shouldn't be more than 30% of your income. Well, you'll go around the country and most people are rent burdened. They're paying over 50% of their income for housing. So it's problematic, it's problematic wholesale. Then how do you correct it? Well, you could give people rental subsidies. But guess what? Landlords in places like New York don't want to take it. They stigmatize the people who are bringing these rental subsidies to them. Even though the money is guaranteed, it's coming from the Federal Government and the State Government, in most instances. But they stigmatize the people bringing it, saying they're going to bring an unwanted element to my building, I don't want that. So we have a big problem.

And, you know, what the perfect answer is, I don't know. But I would argue, Rick, that we could take advantage of vacant spaces, right? There is plenty of vacant space, particularly after the pandemic, right? We see commercial spaces now shut down. But there are complicated policies in place that don't allow you to rehabilitate those into residential spaces. So you have to remove those policies or change those policies. And then you can start to chip away at this problem. I'm not going to sit here and say it's going to solve the problem. But you'll certainly start to chip away at it. Right now you're not even chipping away at it. You're making the problem bigger the way the system is designed right now.

RW: And you're right to point to profits, because all over the city formerly commercial buildings are in fact being re-renovated to become apartment houses and big hefty rents are charged. So where the profit functions the problem goes away, in the sense that we're seeing housing being built. But for the people who need it, not at all. Profit makes it built for the people who don't need it. And prevents it from the people who do.

RR: And that's the big problem. That is something that's going on. Even when the city and the state and federal government offer subsidies to developers they're flooding the market with market rate housing, which isn't the need, right? So they'll make an agreement to set aside 20% of those for fixed or low-income people. That's not going to meet the need of the city. The 80% that you're flooding the market with should be reversed. You should be building 80% affordable and what is the need, and 20 percent market rate. Flip that around a little bit, you'd start to erode the problem.

RW: You know the irrationality of it all gets even worse. In that Jumaane Williams report which says 80,000 citizens are homeless it gives the number 4.2 billion as the city spent in the last year on homelessness, like you said earlier, about five. Okay, well that all works out to over 50 grand of spending on homelessness per homeless person. Well, if there's a family of four that'd be 200 grand. If you paid these people a decent wage for an important piece of work done in this society they'd have the income so they could go out and get an apartment. Or at least they could afford it. And they'd be employed. And there wouldn't be the need to tax. This is crazy. This is a system that is destroying itself. It is so committed to the profit primacy that it is undercutting its own survival.

RR: I think what makes it even worse, Professor, is the problem that there are not-for-profit organizations that are building a lot of these shelters. So a majority of that money goes for quote-unquote not-for-profit organizations and it just keeps expanding and expanding. So I make the argument somebody must be profiting because they certainly don't want it to go away, right? They keep building and building and building. So that is a problem. And I think until we start to look deep into that problem, you know, we'll never change the system. The system has to change dramatically and people have to have... the elected and appointed officials have to have the political will to make that change.

RW: Rob Robinson you know this from both ends. From both working with the city officials and being in the homeless community. I wish there were more of you that were active in making the kinds of arguments and pushing for the kinds of changes you do. But in any case 'bravo!' for your work. Thank you for joining us.

To all my audience this is the homeless problem that this U.S capitalism now displays to the whole world, something important to think about. And I look forward, as always, to speaking with you again next week.

Transcript by Brendan Tait

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About our guest:  Rob Robinson is a formerly homeless community organizer and activist based in New York City. His work focuses on changing people’s fundamental relationship to land and housing. He works with social movements around the world including the Movement of People Affected by Dams in Brazil (MAB), the Landless Workers Movement in Brazil (MST), Abahlali baseMjondolo in South Africa (the Shackdwellers movement) and the Platform of People Affected by Mortgages in Spain (the PAH). Rob is the USA-Canada Coordinator of International Alliance of Inhabitants, an alliance of 12,000 members worldwide which supports a Zero Evictions Platform. As a longtime member of the US Human Rights Network, his work is framed in international human rights law. In the US he works with communities on several social issues including, poverty and debt, police violence against the poor, gentrification and access to broadband. He is a regular guest lecturer at the City University of New York Graduate Center. He has lectured at several US law school human rights institutes, including University of Miami, Northeastern University Massachusetts, University of California at Berkeley and Harvard. Rob is currently an adjunct professor of Urbanism in the Design and Urban Ecology program at Parsons New School University.

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• China's changed global economic strategy: https://asiatimes.com/2022/07/sino-forming-of-global-south-passes-point-of-no-return/?mc_cid=5f71076de4&mc_eid=8fb953d004
  • https://carnegieendowment.org/2022/07/11/localization-and-china-s-tech-success-in-indonesia-pub-87477
• California's minimum wages: https://capitalandmain.com/california-living-wage-act-bumped-from-ballot-as-affordability-crisis-deepens
• Boston Mayor: https://www.nbcnews.com/business/business-news/starbucks-boston-strike-mayor-joins-picket-line-saying-boston-stands-rcna40128 
  • https://www.nbcboston.com/news/local/workers-at-boston-starbucks-go-on-strike/2775078/
• The FDA’s top science regulator of the tobacco industry: http://www.healthcommentary.org/2022/07/28/revolving-door-doesnt-quite-describe-it-its-an-integrated-career-ladder/