Welcome friends to another edition of Economic Update, a weekly program devoted
to the economic dimensions of our lives, our jobs, our debts, our incomes, those of
our children, and those looming down the road, and boy are they looming after the
United States Senate passed an absolutely remarkable tax bill this last
few weeks, if indeed it took that many weeks.
I'm your host Richard Wolff. I've been a Professor of Economics all my adult life,
and that in a way has prepared me to provide these economic updates to cover
the events of the recent past, and put them in some sort of perspective. I want
to begin with a struggle going on in the United Kingdom. It pits on the one hand
one of the largest banks in the world Morgan Stanley based in New York but a
global bank like the monster banks of today usually are and an up-and-coming
political leader in Great Britain named Jeremy Corbyn this struggle has been
unfolding for a while but really hit fever pete pitch a few weeks ago, and the
ramifications are still girdling around, which is why I want to talk to you about
them. Here's how it began: Morgan Stanley sends communications to its banking
clients and recently sent a communication saying that people should
not just be very worried about Briggs it that's the process by which Britain is
leaving the European Union that it was part of that people know all about but
that the clients of the banks should be just as worried because an equivalent
risk is posed by a government led by the Labour Party whose leader is Jeremy
Corbyn mr. Corbyn did not wait very long to respond and he reacted by reminding
the people of Britain what he thought and indeed what many of
them think of Morgan Stanley let me quote mr. Corbyn to you quote
speculators and gamblers who crashed our economy in 2008 he continues with the
following quote nurses teachers shop workers builders just about everyone is
finding it harder to get by while Morgan Stanley CEO paid himself 21 and a half
million pounds last year there'd be more than that in dollars and UK banks paid
out fifteen billion pounds in bonuses you are right to feel threatened mr.
Corbyn told the bank we are going to change things you are not going to be
taking advantage of the British people in the future the way you have with the
Conservatives in the past that was his message I find it remarkable for two
reasons one we don't see that from the
opposition in the United States the Democratic Party's leaders with the
exception of Bernie Sanders have been notably quiet when it comes to
criticizing the banks and never in language even vaguely like mr corbyn's
but there's a second issue here that even more important the conventional
excuse given by politicians as to why they don't criticize the banks for
example in the manner of mr. Corbyn has been the following if we were to
criticize them and even more if we were to tax them what we ought to regulate
them as we ought to why then they'll just leave and we'll all be worse off
what a convenient excuse I would guess it was written in the
wardroom of a bank by a hired PR executive why
because the threat is phony and empty and let me explain why in a game of
threats between a bank and a country it's the bank that has to worry let's
suppose a government passes attacks on a bank and let's suppose it's the American
government and the bank is Morgan Stanley an American based bank and it
were actually to proceed to leave does that mean the government has no counter
threat that the government has no steps it can take either to prevent or to
punish a bank that leaves the country to evade a legally imposed tax and the
answer is of course it has weapons imagine a president who went to the
people and the businesses of America and said I suggest you don't patronize a
bank that behaves in this a social way imagine a president or a Congress which
began to look into all the things that Bank has been and is currently doing to
ascertain where when and how it violates the law with an attentiveness you don't
normally see does the bank really wish to engage these kinds of risks might a
government decide not to do business with any company that is in turn doing
business with a bank that behaves that way the American government has done
that before to other entities around the world why stop there in other words a
bank that threatens the government when the government is doing its legally
entitled taxing and regulating activities a bank that threatens to
leave can and should provoke in a government counter threats counter steps
that's what mr. Corbyn is suggesting it's a mystery to me but
really why American politicians can't and won't say things like this which
would level the playing field and stop leading our politicians to be such easy
pushovers for lame empty excuses to allow the super-rich to continue to get
their favoritism my next update is about inequality in the United States well I'm
not going to go over the statistics I've done that in earlier programs and I
assume many of you know how grossly unequal the income and wealth
distributions of the United States have become the extraordinary wealth of the
top five or 10% and the economic difficulties surrounding everybody else
but I wanted to bring to your attention one of the consequences of this kind of
inequality it leads businesses to go where the money is
that is businesses that serve your average person you're poor or working
class or middle person those are the businesses that are having trouble as in
the 6,500 malls that will close in 2017 because they can't sell enough stuff but
of course the capital that is in not invested anymore in producing for the
mass of people who can't buy, is now finding profit by producing for the tiny
number who can. Here are three examples I've found to bring to your attention:
the 2019 Corvette zr1 convertible, don't get too excited,
but let me tell you about it it has a 755 horsepower,
lt5 6.2 liter supercharged engine for those of you that are planning to
do the kind of driving that requires 755 horsepower, but there it is, I wanted you
to know about it and the zr1 convertible will start at a hundred and twenty three
thousand nine hundred and ninety five dollars they will both be going on sale
in the spring of 2018 can you wait the next automobile that caught my attention
when I got on a roll with this was the Land Rover this is the 218 Range Rover
SV autobiography SUV it's getting a BM real mouthful to describe these cars
well this one comes with a 557 horsepower supercharged v8 engine and it
starts at just under two hundred and ten thousand dollars for this little item
and the last one for those of you with a charming Christmas present perhaps on
your mind the Porsche Panamera Turbo S e-hybrid is the world's most powerful
luxury sedan how do I know that because they say so
this hatchback sedan gets 680 total horsepower more than the 911 gt3 and the
Cayenne Turbo SUV I hope these letters mean something to
you they don't to me I'm just reading it off one hundred and eighty eight
thousand dollars will get you that one some people have it and then the rest of
us read about it then my eyes were caught by yet another milestone the New
York Times which is read around the world as what we call the newspaper of
record for the United States, sort of like the Lamond is in France
or DEET site in Germany or Toronto Globe and Mail in Canada and so on the kind of
V newspaper that kind of represents the country so when a newspaper with that
kind of a position makes a big step it's worth talking about what's the step that
the New York Times recently took it's going to cut access electronic access
through the internet to stories in the newspaper free access from ten stories a
month to five if you want to read more than five stories a month in this daily
newspaper you will have to pay in other words the distribution of the news from
the newspaper of record of the United States of America is going to be cut
back to interested people around the world in order for the newspaper company
to make more money if you needed an example of the subordination of the
distribution of information which is the only way a community can govern itself
in a rational way the subordination of information distribution to profit there
it is think about it the next update has to do with mr. Jerome Powell he is the
new head of the Federal Reserve the institution of the United States
government whose job is to manage the monetary system to control the quantity
of money in circulation at least as far as it can to shape the pattern of
interest rates and thereby to shape the economic life of the United States
he said something so astonishing the other day
that I want to report it to you and compare it to something said by a
predecessor head of the Federal Reserve whose name you may remember Ben Bernanke
by name who was the head of the Fed for quite a few years before Janet Yellen
took that position here's what mr. Powell the new head of the Fed said that
caught my attention we no longer have here in the United States he said any
banks that are quote too big to fail let me remind you that in the collapse of
the American banking system in 2008 the lead-in to the catastrophe was taken by
the biggest banks in the United States who went to the federal government I'm
talking about Wells Fargo Bank of America Citibank Morgan Stanley you know
them their names are well known these banks went to the government
particularly in the last four months of 2008 and basically made the following
argument we are bankrupt we are about to fail which means we are about to tell
the depositors who put their money in our bank individuals and businesses
alike that we can't give them access to their money because we don't have it
anymore we invested it and loaned it in ways we cannot recover and if we declare
bankruptcy all of these individuals and all of these businesses will in turn by
not having access to their money be unable to pay their bills plunging
everybody they owe money to into the same catastrophe you the government said
these bankers can't let this happen why because we the bankers said are too
big to fail if you let us fail we'll take the whole
system down with us talk about threats and dutifully the Department of the
Treasury and the government and the Federal Reserve at that time caved in
and bailed them all out since that time most of those banks get ready now have
gotten bigger than they were then but the new head of the Federal Reserve
isn't worried at all in his judgment we don't have banks anymore that are too
big to fail if you believe that friends and neighbors then let me remind
you of a famous statement made by the then head of the Federal Reserve Ben
Bernanke in May 2007 that's just before the capitalist system crashed led by the
bank's mr. Bernanke publicly made the following statement quote we do not
expect significant spill overs from the subprime market to the rest of the
economy or to the financial system in May 2007 to remind you millions of
Americans were unable to cover their mortgage payments which plunged millions
of banks into trouble because they had made these mortgage loans to these
Americans and there was mr. Bernanke explaining to anyone who would listen
yes it's unfortunate for the mortgage market it's unfortunate for those people
it's unfortunate for the banks who lend to them but let me quote again we do not
expect significant spill overs from the subprime market to the rest of the
economy he was as wrong as wrong can be and
that's the case with mr. Powell why - before moving on let me remind you
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this program on television in that way returning to our economic updates I was
struck by another act of Congress recently you know businesses have been
trying and successfully for many years to prevent the people they harm with a
bad product with a misleading advertisement in any of the ways that
business harms the public and its customers it used to be possible for
individuals to begin a lawsuit to compensate themselves for the damage
they've suffered and to make that something called a class-action suit a
legal form in which all the people who are victimized by a company can together
sue for compensation and to get the company to stop this behavior companies
didn't like that surprise surprise so they developed a
very interesting gambit in tiny print towards the end of contracts and public
relations about what they do they carry a little demand that anybody with a
complaint about something they've done cannot go the route of a class-action
suit has to go to binding arbitration that requires individuals to pay the
high costs of a lawyer to fight it out in an arbitration and allows the company
with its deep pockets to have a much more expensive law firm and you can see
what's going on here and there had been action by aggrieved public and aggrieved
customers to get a law that prevents companies from being able to get around
the legal resource and recourse that people have and a law had been passed
but with a new Congress and the power of the money that buys particularly
Republicans but Democrats too in the main the Congress undid that law so now
companies are free to require binding arbitration which vast numbers of people
cannot and will not afford and not the success the class-action suits
always or at least often had this leads to a general understanding regulating
capitalism is a thankless long term failure as a strategy why because the
people who are aggrieved by the behavior of corporations particularly big ones
who get a regulation don't understand that the minute that regulation is
passed after momentous opposition by the companies they then go to work to undo
the regulation to amend it to change it and they have the money and they have
the incentive to keep at it in the way that the aggrieved public doesn't it's
an unfair setup it's only then a matter of time before the regulation is
eviscerated destroyed the abusive behavior by the company resumes the
victimization of the public of the employees of the customers becomes so
outrageous that they rise up and oh no pass another regulation and that repeats
the whole game eventually people have to learn the problem is the system
regulating it doesn't solve that problem so long as we let businesses that do the
production of the goods and services we need be run by people whose first
priority whose bottom line is their profit whenever there's a clash between
that and what we the public or we the employees need you know as well as I do
what gets sacrificed and what gets the priority regulation can't solve the
problem the last update we have time for comes from Italy and indeed from Sicily
the southern most part of Italy and has to do with oil companies and something
they have done for years in this case the oil company is Eni it's the largest
oil company in Italy and it has run an oil refinery in gala gele and Sicily for
54 years for the last 10 years there's been a battle between the government of
Sicily and Eni why because it turns out that
the Eni oil company dumped huge amounts of toxic waste in a three mile long
undersea dumped off Sicily close to Galya where hundreds of people over the
last decades have had an unusual kind of illness actually a set of different
illnesses trying every whichaway to figure out what it was where it came
from and they have now persuaded scientists and others to look into it
with the result that I'm reporting to you the problem is that secretly unknown
to the people there for decades an oil company dumped toxic waste under the
water off of Sicily when you hear about these stories please remember one key
fact whatever other horror this brings up when you imagine what's going on this
company did what companies in general do it was stuck with a toxic byproduct of
whatever it was producing in this case oil now it had to do something with this
toxic by-product it could have tried all manner of chemical and other procedures
to make it not toxic failing that it could have tried to find safe places far
away from human beings to encase this toxic material so it doesn't hurt
anybody those kinds of efforts are expensive
over long periods of time if you can even find them
they didn't want to spend the money they wanted to be more profitable and had
they spent the money it would have increased their costs the people running
this oil company are not monsters they're not all that different from you
and me they're not the problem a system that works this way is imagine an oil
company run by the people who are its customers who need the oil to run their
vehicles to heat their homes to run their businesses suppose the workers and
the customers together ran such a business would they have made themselves
sick in this way or might they have found a better way if you answer a
better way you've become a critic of capitalism -
thanks for paying attention please stay with us we will be right back
excuse me after a very short intermission
you
For more infomation >> J Krishnamurti Bombay Mumbai 1984 Public Talk 1 A different quality of life - Duration: 1:14:34. 
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