[S11 E09] New
On this week's EU, Prof. Wolff presents updates on worsening US inequality, universities borrowing more, billions earned by hedge funds in 2020, Bezos "charity" giving, Macron and French conservatives' anti-Americanism, and Communists after 1945 vs Proud Boys now. On the second half of the show, Wolff interviews socialist Senator Rafael Bernabe from Puerto Rico.
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 and those of our children. I'm your host, Richard Wolff.
I want to jump in today by calling out, a little bit, Janet Yellen, the secretary of the treasury, and indeed the whole Biden economic team. And here's the problem: They are talking a great deal about their concern for inequality. But I'm afraid that we can't have that anymore. We've had a lot of talk about the problem of inequality, ever since Clinton. Then we had it again with Obama. The Republicans don't talk that much about it. The Democrats talk a lot about it, but they don't do much. And I want to hammer at that.
When Janet Yellen was head of the Federal Reserve, she knew, as all good economists do, that if you pump vast amounts of money into an economy that's not in good shape, that money can end up going into the stock market, where it bids up the prices of stocks. That's very nice for people who have stocks. The 10 percent of Americans who own 80 percent of the stocks? They're the richest ones; they're doing real well. But if the system favors them in that way, it's going to worsen inequality. So talking about it as a problem, while you're worsening it, isn't very attractive as an approach. And yet it's what they're repeating now. Again, Yellen, Biden, and others are talking about it.
And now we had 2020, with the covid. We know who's been damaged by covid — restaurants, for example, retail outlets. Those are some of the poorest-paid workers in the American economic system, who do fast food, who do retail, who do all of that kind of work. They were hurt in a way that upper-payment people, people at the high end of the wage system, were not. The statistics all prove it. The programs, if the system were decent, would have helped more those at the low end, rather than those at the top, in order to offset the inequality.
Not only was that not done; the reverse was done. More help was given to high-end industries, who kept up their high-end wages, rather than the middle and the bottom. The big businesses were even able to grab some of the special money that was supposed to go to little businesses. With a minimum of effort being done of that sort, it was corrupted. And that could have been dealt with, should have been dealt with, and still hasn't been.
So the gap between upper-end wages and lower-end wages got worse. And the gap between those who own stocks and bonds — the one percent, the five percent, at the top — and the rest of us also got worse, because of the monetary policies that flowed into the stock market. This is a disaster. And if you keep doing that — which is what the Democratic leadership has done — while you talk about your concern for inequality, the end result is not pretty. And it has to be called for what it is.
My second update has to do with a little story, but a big meaning. The University of Washington, the state of Washington, is selling bonds these days, $325 million. What are they raising money that way for, borrowing? Answer: to do what the university normally does, and — note this — pay off the debts that they earlier incurred. Uh-oh. Most people know that if you're borrowing to pay off bad debts you already have, your debt problem is gonna get worse. You're seeing this in more and more institutions of a capitalism that is in trouble and declining. They can't, or won't, solve their problem now. They will not tax the rich. They will not tax the corporations. Instead they go deeper and deeper in debt. If you're anxious about rising debt (which you should be) in your own life, with the government, then you have to be worried that universities are sooner or later going to come to that point where they have an enormous debt, they're not getting the support from the states that they would like, and the mass of the people will be called upon to pay higher tuition, higher fees. We already have students in greater debt than ever before. Now we're seeing the universities where they go to study also getting themselves into deeper and deeper debt. This is a story that never ends well.
Now to make you happier, I wanted to tell you how some people have been doing real well. I want to start with a group of hedge funds, the 15 best-performing hedge funds in what year? 2020, the year that millions of Americans came down with a horrible disease; hundreds of thousands died from the disease; 25 million people, as I speak to you, collecting unemployment — disaster. Public health disaster, economic disaster, continuing. But over the same year, 2020, Chase Coleman ( I want you to get to know his name) of the Tiger funds (that's a group of hedge funds) took home $3 billion in the year 2020.
It was a great year for Chase Coleman. You know all that money produced by the Federal Reserve, flowing into the stock market? Well, he got a big piece of deciding where that money gets invested for the rich people who brought that money to him. Wow — 25 million people unemployed, while Chase Coleman brings in $3 billion. By the way, I thought you'd be interested in how that works out as a weekly income — you ready? — $58 million per week. You see, Chase Coleman does not have to buy lottery tickets, because he wins the lottery every day, seven days a week, 52 weeks of the year. He won the lottery, where you and I, uh, didn't.
But I also looked, as I said, at the other 14 out of the top 15. Sadly, number 15, who didn't do as well as Chase, he only took home $846 million. So instead of $58 million a week, he only got $16.3 million a week, every week.
Now, there is no excuse and there is no need for this, that some people are desperate living on unemployment, or worse have run out of unemployment, while somebody else is raking in $50 million a week. There's no need for that. In a society that already had inequality, that says it doesn't want this much inequality, that has a leadership that says it is committed to reducing inequality, why was this allowed? Why is there not — as we have had in this country — what's called an “excess profits tax,” or an “excess income tax” that says during a time of crisis — you know, like a war, like a catastrophic public health disaster, like a crash of our capitalist system — we're not going to allow some people, millions, to be at the end of their economic rope while other people are collecting, as I said, $50 million a week. There’s no need for it. No morality can justify this that I know of in any of the major kinds of morality.
And staying with this, one more time, I thought I'd talk yet again about Jeffrey Bezos and Amazon. This time I want to talk about Jeffrey Bezos and his ex-wife, MacKenzie Scott. Together — I want to be fair to them — they have given a total of $7.2 billion in charitable gifts. Very nice. Puts them right there at the top in terms of charitable gifts. But if they're at the top in charitable gifts, let's compare that to the top they occupy in terms of their wealth. Stay with me; these numbers are easy to keep in your mind. In 2010 — that's not that long ago, folks — their combined wealth (they were still married then) was $11 billion. Today, it has risen — during the time of colvid, and crisis, and all the rest — their wealth has risen from the $11 billion they had in 2010 to $250 billion, which is what they have now. Out of that they've given 7.2. In other words, they've kept the overwhelming lion’s share.
They can't even spend that money. How could you? You'd have to be spending millions and millions of dollars every day — which I know is a fantasy, but it isn't real. Why haven't they given it away? We're at the worst economic crisis in a century. We have the worst public health disaster in more than a century. If ever there were a time to give some money, according to what you have — you know, Scott and Bezos could give away half of their money to help this country at a time of need, and after giving away half, they'd still be the richest people on the planet. It's amazing to me, as a critic, that just to preserve themselves they don't give away more money, so that people like me could not point to statistics as grotesque as what I just did.
And by the way, for those of you interested in gender: Out of the 7.2 that Jeffrey Bezos and MacKenzie Scott gave to charity, MacKenzie Scott gave 6 billion. Jeffrey Bezos, who has several times what she has, gave only one. But I should be fair; he recently gave, or said he did, $10 billion. But who did he give it to? The Bezos Earth Fund, named that way because it's his. He charitably gave to himself. Folks, you can't make this up. But it has a lesson. And I won't spell it out because you already know it.
Next update: I want to shout out to the president of France, Emmanuel Macron. He and the conservatives in his country, led by the nationally conservative newspaper Le Figaro, have decided to be anti-American in a new way. Here's their pitch: America is threatening French politics and culture. You know how? This may surprise you — because we have exported from the United States, they say, the ideology of Black Lives Matter. Yes, you heard that right. Black Lives Matter sensitivity, as in the Me Too Movement to discrimination against women, etc. — all of that stuff has come to France. Surprise, surprise. And the conservatives want no part of it. They're coming here with their ideas. We don't have a problem of discriminating against women, they say, or racially, they say. For those of us, like me, who are very familiar with France, the ability to blame outsiders for the problem France has had in the relationship of men to women and whites to non-whites, of many decades, is an example of blaming foreigners that for sure they're copying from the United States. That's like Trump on immigrants, or Trump on the Chinese, only they're reversing it and making Americans the fall guys.
My last point for today that we'll have time for: After 1945, the United States went on a tear against communists. It arrested the Communist Party leadership. The Smith Act deported lots of communists, imprisoned a whole bunch of them. And you know what for? “Advocating.” That was the claim. You advocated overthrow of the United States government by force and violence. That was the charge. It wasn't that they did anything. They didn't do anything. And what I want to stress is, they didn't do anything like what was done on January 6th at the US Capitol in Washington. But they were arrested, they were deported, they were imprisoned. Nowadays, if you're a Proud Boy, you can organize and you can assault, and you can kill in an attempt to overthrow the election and the results. But somehow you don't see the government, and the whole country, mobilizing to punish you. Communists then were punished for what they didn't do. Proud Boys and others are not getting punished for what they in fact did. And in that difference, I think you will see a lot.
We've come to the end of the first part of today's show. Before we get to the second half, I want to remind you, our new book, The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, is available at democracyatwork.info/books. I want to thank, as always, our Patreon community for their ongoing and invaluable support. If you haven't already, please go to patreon.com/economicupdate to learn more about how you can get involved. Stay with us; we have an important interview, and we'll be right back.
WOLFF: Welcome back, friends, to the second half of today's Economic Update program. It is an enormous pleasure, and an important time, for me to be able to introduce to you all Rafael Bernabe. He is a longtime socialist, an activist in Puerto Rico, a member of the Partido del Pueblo Trabajador (Working People's Party), and he was the candidate of that party for governor in 2012 and again in 2016. He was recently elected as senator in the Puerto Rican legislature for the Movimiento Victoria Ciudadana. He is the author of numerous works on Puerto Rican history, culture, and politics. And included in that is his Puerto Rico in the American Century: A History Since 1898, co-authored with César Ayala. Welcome very much, Senator Bernabe.
BERNABE: Hi. I'm very glad to be here with you, Richard, and very happy to be able to talk about the situation in Puerto Rico.
WOLFF: All right. Let's start right off and ask you: Tell us, give us an update, if you can, on the economic conditions of Puerto Rico right now, and then, if you can, in relationship to the broader economic crises that afflict the United States as a whole.
BERNABE: Well, the situation in Puerto Rico, the economic situation in Puerto Rico right now, must be described as a disaster. It’s sort of a crisis that has many layers; it's a multi-layered crisis. Puerto Rico has a colonial economy, a dependent economy, an economy that's completely controlled by very large US corporations. It's an economy that has never been able to provide enough employment for Puerto Rico's labor force. So historically, for example, we've had tremendously high unemployment rates in Puerto Rico.
Since 2006, 15 years ago, that economy has been in crisis. It hasn't grown in 15 years. Over the last 15 years, around a fifth of the jobs that existed in Puerto Rico back in 2006 — 250,000 jobs — have disappeared. Hundreds of thousands of people have been forced to emigrate because they cannot, you know, make a living in Puerto Rico in the last decade. The population of Puerto Rico has fallen for the first time in centuries, ever since they have been taking censuses in Puerto Rico. The population of Puerto Rico has fallen.
As that crisis deepened, the government of Puerto Rico reacted by borrowing an increasing amount of money, which led the government of Puerto Rico to declare a default on its debt payments as of 2015. So you have the economic crisis, and you have a debt crisis. And then Congress reacted to the debt crisis by creating a federal control board, federal oversight board, which basically controls the budget of the government of Puerto Rico. And it has been imposing very severe austerity policies in Puerto Rico in order to put out the more money possible to pay the bondholders. And on top of that we've had the impact of Hurricane Maria in 2017, and now the impact of the COVID-19 pandemic, as has the rest of the planet.
So you have the limits of the colonial economy, the crisis of the colonial economy, the debt crisis that we've had since 2015, the policies of the control board, and now the impact of the hurricane and the pandemic. So this economic situation is terrible. There is no other way to describe the economic situation in Puerto Rico right now. I know the United States is in a profound crisis as a result of economic processes, and as a result of COVID-19, but we are in an even much deeper crisis, if you can imagine, in Puerto Rico.
WOLFF: So tell us a little bit how this crisis situation — the multi-layered crisis you talk about — how has it affected the political situation? And by that I mean the ongoing debate in Puerto Rico over statehood, the colonial status you talk about, independence on the one hand and the whole relationship of a critical movement, in the sense of some movement that's critical of capitalism, that wants a system that would work better. How are all of those things being affected or changed by the economic crisis you describe?
BERNABE: Well, I think the fundamental change that we've seen so far, the most important change that we have seen so far as the economic and the debt crisis deepened, is with the existing dominant parties in Puerto Rico. Puerto Rican politics, like politics in the United States, has been dominated by two major political parties for decades now. One is the Partido Popular Democrático, which defends the existing relationship with the United States. The other one is the Partido Nuevo Progresista, which supports statehood for Puerto Rico. These two political parties have basically monopolized Puerto Rican electoral politics for the longest time.
What we have seen recently is, as people have seen how these two parties are unable to provide any alternative to the terrible situation that Puerto Rico is going through, the support for these parties has been decreasing, election after election. That's a very positive thing. To give you an example, the governor who was elected in 2016, Ricardo Rosselló, was not able to complete his term because in 2019 there was basically a rebellion in Puerto Rico, in the summer of 2019, in which people were in the streets, protesting, marching, picketing, and so on for 20 days, until he was forced to resign. This had never happened in Puerto Rico's history, that a ruler is removed through popular mobilization in the streets. It's the first time this happened in Puerto Rico's history.
And in the recently held elections, the person who won the governorship of Puerto Rico won with 33 percent of the vote. So we have a governor who only obtained 33 percent of the vote. It shows you how deep the collapse of the support for the traditional parties has gone now. And on the other hand, the other side of that point, is the fact that new political forces, like the movement to which I belong, the Movimiento Victoria Ciudadana, did quite well. We got around 15 percent of the vote, which is a tremendous thing for a new party anywhere, but in Puerto Rico in particular. And we were able to elect four legislators — two representatives and two senators — which is again unheard of in many decades for a third political party. The Puerto Rican Independence Party — the party that defends independence for Puerto Rico — its candidate for governor obtained another 15 percent of the vote. Normally the independence candidate in Puerto Rico gets around two percent, or three percent, of the vote. So this increased tremendously to 15 percent of the vote.
So two forces that you could describe as left forces — forces that are against neoliberalism, forces that are pro-working-class, pro-women, pro-democratic rights of all oppressed communities and so on, pro-environmental policies — these forces did very well. They got around between them — the Partido Independendista and Victoria Ciudadana — you know, if you combine these two votes, you get up around 30 percent of the vote. And, as I said, the person who won the governorship got 33 percent of the vote. So I have to say that we’ve had very positive electoral results. That is, left-wing forces, progressive forces — whichever way you want to call them — did very well. And that, you know, bodes well for the resistance to the policies of the board, and so on.
WOLFF: Yeah, I would like to pick up on that. That's a very important thing, and particularly for my audience. I would like you to comment, if you will, are there parallels, or do you feel some sort of participation, let me call it, with the growth of a socialist presence here in the United States? Bernie Sanders, Alexandria Ocasio-Cortez — that movement that is developing in this country, which accepts the word “socialist,” as you do. It's very important. Part of why I was so eager to have you on the program was I want people on the mainland to understand that, in a way, you are doing similar things to what is happening here. And I'd like to see how you see all of that relationship.
BERNABE: Well yes, absolutely. There are many things one could say about this. I mean, regarding my perspective, I should point out that I am a supporter of the independence of Puerto Rico — I think Puerto Rico should become independent — but the independent Puerto Rico I'm fighting for is a Puerto Rico that is a socialist Puerto Rico. You know, an independent Puerto Rico that is dedicated to the well-being of the majority, or the working-class majority, and so on. And that cannot be built in isolation. We see our struggle in Puerto Rico as part of the struggle that you are leading in the United States, for social justice in the United States. So for us, at least for me, it's very important that progressive forces grow and become stronger in the United States.
And, of course, we have drawn much inspiration from the fact that in recent years progressive forces have become very visible in the United States. I think Bernie Sanders has the historical merit — whatever criticisms you may make of anything that he has ever done — he has tremendous historical merit. He has put the issue of socialism, the issue of alternatives to capitalism, has put it on the agenda, has put it in the mainstream discussion. And that is fundamental, I think.
I personally think that, you know, either we put an end to capitalism, or capitalism will put an end to us. So for me, the rise, the growth, the development, of progressive, anti-capitalist forces is very important anywhere in the world, but it is particularly important in the United States, the United States being the center of capitalist power in the world. So the fact that a growing number of American people are questioning this economic system, are seeking alternatives to this economic system, is something that fills us with enthusiasm and hope, that we have allies, and our allies are getting stronger in the United States.
WOLFF: Yes, and I want to make very clear to you that we feel the same thing. That's why it's so important to hear your story about the victory of the two senators and the two representatives from an explicitly socialist perspective, that you have an audience, and you have support, in Puerto Rico. That makes us stronger here in the mainland, you know, so that we can in a sense help each other.
In the little bit of time that we have left — what would you say is the thing that we here on the mainland can do to make your struggle more successful?
BERNABE: Well, I think there are three areas, three things that we have to address. One of them is self-determination for Puerto Rico. As you said, Puerto Rico is a colony of the United States, and the Puerto Rican people should be allowed to decide what they want to do regarding their relationship with the United States. We need a fair and balanced process of self-determination through which the Puerto Rican people can decide if they want to become a state, if they want to become independent, if they want to become freely associated with the United States — which option they want. There should be a self-determination process. And Congress should be pushed to take action in that direction.
Secondly, we need to cancel Puerto Rico's debt. Puerto Rico has a public debt which is $70 billion. It cannot be paid unless you impose on the Puerto Rican people unacceptable sacrifices. So we should struggle to have that debt canceled; that's the second thing.
And the third thing is we have to reconstruct Puerto Rico's economy. As I said, it is completely destroyed. And for that the Puerto Rican government has to adopt new economic policies. But we also need Congress to assume its responsibility to fund Puerto Rico's economic reconstruction. So in the same fashion that you demand that Congress in the United States provide for the inner cities, and provide job programs for the unemployed, and so on and so forth, Congress should also provide for the economic reconstruction of Puerto Rico.
So self-determination, debt cancellation, and economic reconstruction — these three things are crucial for Puerto Rico's future.
WOLFF: Well, we've run out of time, and you have been wonderfully clear and eloquent in what you've had to say. Thank you so much, Senator Bernabe.
And to all of you in my audience, I look forward to speaking with you again next week, when we will continue this kind of programming.
Transcript by Marilou Baughman
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