Economic Update: Ukraine & An Empire’s Decline

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This week on Economic Update, Prof. Wolff discusses nurses’ suicides as results of our profit-driven healthcare, sanctions and their effect on inflation, US states where 40% of workers earn under $15/hr, and US corporate profits triple from 2008 to present. In the second half, Wolff talks with host and journalist Chris Hedges about Ukraine and the end of the US empire.


Transcript has been edited for clarity

Welcome, friends, to another edition of Economic Update. I'm your host, Richard Wolff. Today I'll be discussing nurses’ suicides, rising inflation, rising U.S. corporate profits, and more; and after the break, I'm happy to tell you we'll be talking to my friend, author-writer-journalist Chris Hedges.

Nurses are committing suicide in record numbers, and they have been now for a year, year and a half. It reminds me of those stories a while back about workers in overstressed Chinese factories—Foxconn and other big factories over there—committing suicide because they were overstressed. But I'm happy to report that the nurses are now organizing and trying to do something. And I want to say something about their situation so it's understood. Some of the media accounts refer to the fact, I kid you not, that there's a mental health care crisis among the nurses. I would like respectfully to disagree. No, no, no—there's nothing wrong with the mental health of our nurses; what we have is a level of stress that no one should be subjected to. Here's what's happened. We've had, yep, Covid, and that has certainly made the environment of our whole medical profession much more stressed. But we could have and should have prepared for it; we could have and should have had the clinics, had the nurses, had the personnel in place to
deal with the viruses we know periodically afflict us. That's a system failure, not a nurse failure, not a mental health problem. And here's what's made it much worse: that we now organize more and more of our hospitals as capitalist, profit-driven corporations, and they're of course doing what profit-making always does, which is—I'll use their language—”economizing on labor costs.” Nurses are labor costs; orderlies, the people who work with nurses, they are labor costs; you cut them and those that remain are overworked, overstressed, and even driven to suicide.

And one last point: we, the public, depend on the nurses and the orderlies to deal with us when we have to go to hospitals and clinics. It's good for us that the nurses are fighting for a better labor situation. It makes our care number one, rather than corporate profits number one, which is the root of the problem.

I want to talk next about one of the many side effects, if you like, of the sanctions imposed by the United States, United Kingdom, and other countries against Russia as a consequence of the invasion of Ukraine, and this one has to do with Canada. Canada is an interesting country because it occupies a geography quite like Russia, and it has under its soil resources quite like Russia. And here's a lesson we can learn: as Russia gets frozen out of the world economy—at least, that's the goal of the sanctions, as the people imposing them, from President Biden on down, tell us—well then, understandably, people who needed exports of raw materials and so on from Russia have turned to Canada because it has the similar products. And the Canadians, of course, seeing profit, are trying to respond. But here's the problem. A sudden increase in demand means Canada discovering it doesn't have the rail cars to move the stuff. It doesn't have the machinery to get this stuff. It doesn't, you see the problem? And here's what's happening. The demand in Canada is driving up the prices, because people are so needful of replacing Russian material that the Canadians can raise the price for everyone, which means inflation for everyone. The sanction program is creating supply chain bottlenecks that are driving up inflation everywhere. Think about it the next time you hear someone, oh, like President Trump, remember? “Trade wars are easy to win.” Not so quick—yours against China didn't win. And this one is running into more and more problems. It's not so clear who's the economic winner and loser on this one.

My next update has to do with a survey. Oxfam America did a survey of all the states, all fifty states in the United States, asking a simple question: what percentage of each state's workers
earned fifteen dollars per hour or less? Let me begin by telling you that fifteen dollars an hour, if you work nearly full time, forty hours a week, nearly all the weeks of the year except one or two, and if you subtract the social security that's withheld from your pay, you're going to be earning well under thirty grand a year. That's a full-time worker. You know what that puts you? Real close to the poverty line in this country right now. In other words, what percentage of the people are living at or below poverty in this country now? Well, let's start with the states that come in—the good news—less than twenty percent of these states’ workers are in that sad situation. I'm going to read off—it's only four states that are in that: Massachusetts, Washington, District of Columbia, and California. They've achieved a situation where twenty percent of their people work at that awful low income or less. Well, I'm now going to read you the states in which, I kid you not, forty percent of the workers are living at that level. Here's the list of those states that are the worst. Ready, here we go: West Virginia, Mississippi, Kentucky, South Carolina, Florida, Texas, Arkansas, and New Mexico. Most of those states are the American South. Most of those states therefore have a disproportionate number of people, nearly half, living at or near poverty. And most of those states vote Republican. Think about it.

And by the way, it's not ‘little businesses.’ That's a game. “Oh, little businesses can't pay more.” No, a lot of these low-wage workers are the kind who voted for that union, Staten Island—they work for huge companies. Some of the biggest in the country: the Walmarts, the Amazons, the Burger Kings, all of that. But if you really cared and you really didn't want to hurt small business, don't put the small business owner at war with the underpaid low-wage worker. If you want to help small businesses and you don't want to do it on the backs of the poorest of the poor, then you know what? Give the small business people a subsidy. Let them be required to pay the minimum wage, pay better than the minimum wage. Give them an incentive; that way, we deal fairly with those at the bottom and we don't penalize the small businesses. If those are goals, we can achieve them both. We do not need to sacrifice. And the way to do it? Yeah, tax those at the top, those who can afford it, those who've been ripping off the poor for so long. Let's finally do what we kind of all know is the right thing to do.

And now, finally, for my last update that we'll have time for today. I want to talk about corporate profits, and sort of tell you a story. Corporate profits currently are running close to three trillion dollars here in the United States. Back in 2008—you know, when we had that last crash before the Covid crash—they were one trillion. I wanted to drive this home: at the base, at the bottom of the crash of 2008, corporate profits were about a trillion dollars. Over the last twelve, thirteen years since then, when so many Americans have had so many difficulties with their jobs, with their incomes, and all of it, corporate profits in America went from one trillion to three trillion. Please understand, corporate America tripled its profits over the last twelve or thirteen years. How many of you watching tripled your income over that period of time? I know the answer, I look at the statistics. None of you, or so few as being 0.000 of our population. And here's what that means. Through all the thick and thin of our society, whether it be Obama or Trump or Biden, one thing is clear: it's good to be a corporation here in the United States. The government takes real good care of you. Not of most of the rest of us, but of you corporations. You've tripled your income. No wonder people who run the corporations—and by the way, that includes the people who own the media—Facebook, Twitter, newspapers, television, radio—the vast preponderance of owners of our media, our sources of information, they're the ones telling you the economy is doing great. So does President Biden, when he's in power. So did President Trump when he was in power. They accuse when they're out of power, so they can get into power and tell us, again, what is in fact true for them. But not for anybody else.

Corporate profits tripled from 2008 until 2022. What an amazing imbalance an economy has that works in this way. And there's a name for this system, and it really needs to be said. This is capitalism. This is the profit-driven economic system in which the corporate leaders work hard to maximize profits, and, in the United States at least, they've been doing a stellar good job of it, paying themselves huge salaries along the way, and of course, saying the economy is doing well, because that's the truth for them.

And for the rest of us—I'll be polite—not so much.

We've come to the end of the first part of today's show, and as some of you may know, we at Democracy At Work are celebrating the tenth anniversary of Economic Update, and sharing critical system analyses through a variety of other shows, podcasts, and books that we produce to help create a more equitable and democratic society. To learn more about Democracy At Work and the work we do, like producing All Things Co-op, a show that examines and explores the various aspects of co-op work environments, go to our website, democracyatwork.info. There, you can also sign up for our mailing list, connect with us on social media, and more. Please stay with us. We'll be right back with my friend, and today's special guest, Chris Hedges.

WOLFF: Welcome back, friends, to the second half of today's Economic Update. I am very proud and pleased that I can bring back to our microphones and our camera someone who's become a friend as well as a teacher: Chris Hedges. You all know him, so I won't bore you with too many details. He's the author of fourteen books, including several New York Times bestsellers; he's also a Pulitzer Prize-winning journalist who was a foreign correspondent for fifteen years for The New York Times, where he served as Middle East bureau chief and Balkan bureau chief for that paper. He is the host of The Chris Hedges Report and a columnist at Scheerpost. You can find him these days at chrishedges.substack.com. Welcome, Chris.

HEDGES: Thanks, Rick.

WOLFF: All right, let me start. You're a journalist; you've been doing this for a long time. To me, and I want your reaction, the mainstream media coverage of the Russian invasion of Ukraine has been portrayed along the lines of a kind of holy war between good and evil. How do you see it?

HEDGES: Yeah, it’s—and I want to just throw in that I was in Eastern Europe in 1989 as a reporter, so I covered the collapse of the Soviet bloc in Eastern and Central Europe and the demise of the Soviet Union. There were two universal assumptions. One, NATO had been rendered obsolete. NATO was designed to prevent Soviet expansion into Eastern and Central Europe. And two, any expansion of NATO beyond the borders of a unified Germany was an unnecessary and foolish provocation of Russia. In fact, Gorbachev was reaching out to try and build an alliance, a security alliance between Europe and Russia.

And yet, this understanding—and it was across the political spectrum; Henry Kissinger, George Kennan, everyone understood this—was violated, and it was violated because refitting Soviet bloc countries with NATO military equipment was a multi-billion dollar bonanza. So NATO was expanded, despite frequent protests by Moscow; and then there was an agreement, but with the Clinton administration, that NATO troops would not be stationed in Eastern and Central Europe, and this was violated.

And we talk about Ukraine—I think it was thirteen or fourteen former Soviet bloc countries that are now part of NATO— we talk about Ukraine as not being part of NATO, that's a bit of a subterfuge, because they're a de facto part of NATO, given all the military equipment that NATO has supplied to the Ukraine, coupled with military advisors—I think there were 150 NATO advisers in the Ukraine before the war. And now there's been this explosion of weaponry that has been shipped in from Europe and from the United States, I think close to a billion dollars just from the U.S. alone. Germany has lifted its ban on the exporting of weaponry and then said it will almost triple its defense budget, and then use two percent of GDP for defense, which will make Germany the third largest military power in the world after China and the United States. So it's extremely foolhardy.

I wrote a story in Scheerpost where I quoted a 2008 Wikileaks cable written out of Moscow that warned that this would bait Russia into a conflict and the flashpoint would be the Ukraine. So it was kind of like Gabriel Garcia Marquez's book, Chronicle of a Death Foretold. Everyone knew where it was moving, but try and provide that kind of historical context within the mainstream media and of course you're shut out, because it is—you're right—it's all emotionally driven. It's about self-adulation. I mean, I guess after two decades of committing egregious war crimes in the Middle East, now we suddenly get to feel that we're the moral arbiter of the world. And I just want to be clear, I condemned at the inception the invasion of Ukraine, a preemptive war under post-Nuremberg laws, as a criminal war of aggression. Whether Russia was baited or not is not relevant. But our preemptive wars… Putin has a long way to go before he matches the war crimes that we carried out in countries like Iraq, Syria, Libya and Afghanistan.

WOLFF: Let me pivot a little bit. You've been writing about—as I have been too—but you've been writing about an American Empire that is falling apart or is coming apart at the seams. How do you connect that argument you've been developing for some time with this war? Where does the Ukraine war and what's happening fit into that larger story?

HEDGES: Well, the loss of economic hegemony. The ruling elites are attempting to compensate for that loss with military hegemony, but I think if you look in the early years of any empire, they tend to use military force very judiciously and very carefully. But of course this is a classic example of how military force is counterproductive, and we look at all of the debacles that have been carried out by empire. Go back to Vietnam, the wars in the Middle East, the humiliating retreat from Afghanistan, the retreat under the Reagan administration from Lebanon… It's been one debacle after another, and yet they keep perpetuating these kinds of military fiascoes and are not held accountable. That is a classic kind of sign of late empire, whether that is—go back to ancient Rome or Greece or anywhere else; read Thucydides.

And I think that the wielding of military force without actually calibrating it or understanding the geopolitical consequences is a symptom of late empire. And, of course, we are also baiting China, in the South China Sea, over Taiwan; building security alliances with Australia to kind of hem China in. These are very very foolish moves.

WOLFF: You know I'm reminded, and I would wonder if you could comment on it—the sanctions are a kind of, how shall I put it, economic warfare as an accompaniment to the military warfare. And so I look at it—and I'm an economist—and I say to myself, wow, the sanctions are like an enormous supply chain disruption. They're going to have—they already have—the effect of driving up the price of suddenly broken trade agreements, suddenly broken delivery schedules; prices are going up faster than they otherwise would have; the inflation is lasting longer than folks had hoped it might. This is not really the result of the military war so much as the economic sanction warfare that's going on. And it makes you wonder whether the end result will be a level of economic suffering by all those afflicted by inflation running faster than wage increases; by the price of food literally making people starve. You're beginning to worry or wonder who's going to quote-unquote ‘win’ this so-called economic war, and it may surprise us. If you’ll remember, Trump told us he would win the trade war—he clearly didn't—and now we're being told we're going to win this sanction war. That's not so clear to me either; how do you see it?

HEDGES: Yeah, well, there are two winners. One is the arms industry, and we were all very foolishly in 1989 talking about the ‘peace dividend’ and naive enough to believe it. That was never going to happen; they were going to continue to loot the state the way they did during the Cold War. And the other is the fossil fuel industry. You can't talk about war without talking about markets. And so you cut off Russian gas; well, they've got to get it from the States, although Europe doesn't like it because it's a lot more expensive. We can't pump oil out fast enough; and that gets into the whole issue of the blowback from the climate crisis. So those are the only real winners. But yes the—we as people—and then of course, remember, the Ukraine is a huge net exporter of wheat in particular, and all of this is going down the tube.

So yes. And then I think we should talk about, by pressuring, by imposing these draconian sanctions on Russia, we are accelerating the search. I mean, the other irony is that we push Russia into the arms of China, so the whole Sino-Soviet alliance… The whole Cold War was built around putting up a wall between Russia and China, and of course now we've created this coalition.

And what they really want to do is extract the dollar as the world's reserve currency. You're an economist, you know more than I do, but they're certainly moving in that direction. That's catastrophic for the U.S. economy. Go back and look at what happened when the pound sterling in the 1950s was dropped as the world's reserve currency: plummeting in value; exports are exponentially more expensive; nobody wants to buy treasury bonds. That's a really catastrophic blow. So yes, I think many of the moves that Washington and NATO have taken potentially are very, very counterproductive for them.

WOLFF: Exactly, and you know, if we had time I'd go into this stuff with the dollar and the fact that that Russia is now demanding payment for oil and rubles; that they're linking the ruble to the gold value, which means they're putting a floor under the gold price; that shapes the United States… I mean, they're beginning to counter-sanction, and we haven't even begun to understand where that's going to go, on top of the first wave, you know. Because with Russia and China the counter-sanction problem becomes a very serious one, which seems not to have been calculated. But hence my question, how do you account for taking this step, these steps, when they could be as counterproductive as you say? Is this a sign of desperation? Are we watching a Hail Mary pass here?

HEDGES: It's a sign of ineptitude. I mean, let's look at all of the policies, especially in terms of war, that the United States has embraced over the last few decades. It's just been disaster piled upon disaster, and yet for this tiny cabal—arms manufacturers, the fossil fuel industry, private contractors—they make a killing, so what you've had is this kind of corporate coup d'etat. You service the profits and interests of these corporations at the expense of the nation and, frankly, at the expense of our democracy. And they're driving the country into the ground. And—if we talk—again, go back to the climate crisis—the rest of the planet with us.

So it's utter ineptitude and corruption on the part of a global ruling elite, which Julian Assange exposed through the leaking of all sorts of documents, which is why they are psychologically and physically destroying him in Belmarsh Prison. I just came back from London; I was one of six guests invited to his wedding, and of course when the six of us got to the gates of Belmarsh, none of us were allowed in. Just part of the kind of sadism that defines prison culture; I teach in a prison. So yes, it is. But again that is a symptomatic of late empire, where you compound problems through rulers who are so corrupt and so visionless and so inept that you in many ways become your own worst enemy.

WOLFF: Chris, in the time that we have, do you see any link between everything you've been saying and the upsurge of at least some degree of labor militancy inside the United States, whether it be in strikes or the unionization efforts. Is there—are we beginning to see some level of recognition and pushback against what you've just been saying?

HEDGES: Yes, because the ruling elites—and it doesn't matter whether they're Republican or Democrat—have zero credibility. The established elites, because remember there's a fusion now between the old Republican establishment, the Mitt Romneys, the Liz Cheneys, the Bill Kristols, and the Democratic party, they are one entity, and they are opposed by this kind of proto-fascist, Christian fascist, cult-like worship of Donald Trump. But of course their way to deal with it is through censorship. So I think on the ground, yes, people have realized that nobody in the ruling elite is gonna watch out for their interests. They've gotta watch out for their own. But take a look at my column, “Let Us Now Praise Courageous Men and Women,” that talks about how vicious the capitalist class is going to be in terms of breaking and destroying this nascent labor movement.

WOLFF: Chris, as usual, we've come to the end. I want to thank you very much for joining us. And to my audience, stay up to date with the latest from Democracy At Work. Join our mailing list. And as always, I look forward to speaking with you again next week.

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About our guest:  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 fifteen years for The New York Times, where he served as the Middle East Bureau Chief and Balkan Bureau Chief for the paper. He is the host of The Chris Hedges Report and a columnist at ScheerPost. You can find him at chrishedges.substack.com


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