NIMA ALKHORSHID: Hi, everybody. Today is Thursday, November 14th, and Michael and Richard are here with us to talk about what’s going on in the United States. Let’s start with Richard. Here is a video in which Scott Bessent (it seems that he’s going to be Donald Trump’s new Treasury Secretary), and he’s talking about cutting the spending deficit immediately.
Here is what he said, and let me know what’s your take on this.
SCOTT BESSENT: I do it through deregulation, energy dominance, and re-privatizing the economy, because we’ve seen this massive government spending. We have a 7% deficit to GDP, which we’ve never had in peacetime, or non-recessionary period.
So, and we’ve got this Elon Musk cost-cutting commission, which over the past weeks, months, when I’ve been out talking to people on the campaign trail, the public is very excited about.
RICHARD WOLFF: Well, if the public is as excited as he just presented his own thinking, we’re in deep trouble. This man doesn’t look like he’s a person who understands excitement, or can experience it. So therefore, who knows what gave him the idea that people out there are excited.
Let me begin by dealing with the particulars he just said, but then make a general point, if I can, about the whole collection of people that are going to be in some way, directly or indirectly, connected to the economy, and the problems of the economy.
So I’m going to begin with Elon Musk and efficiency. Why in the world would anyone entrust Elon Musk with anything, let alone efficiency? What has he got to do with efficiency? Nothing. Absolutely nothing. The number one thing for which this man became famous was producing an electric vehicle. Okay, let’s look at that.
An electric vehicle. Why is an electric vehicle a wave of the future that could make him so wealthy that he could buy votes in Pennsylvania for Mr. Trump? How did that happen? Answer: The private gas-powered vehicle has become so dangerous to the human race that, finally, it developed enough of a backlash, c[a]me under attack. Why? Well, let’s see.
The private automobile is the number one cause of air pollution in the world; so that everybody who cares about lung cancer, emphysema for children, and all the other effects, wanted something other than a gas-powered car. Number two, it is one of the largest causes of death and injury every year, in every country. Car accidents and truck accidents kill more people than the wars we fight. They are a very dangerous way of moving people and goods. And number three, it is a grotesquely inefficient way to move people. If you know how most automobiles work, they are driven maybe an hour a day, and then they sit in a garage or on the street for most of the time.
This is not an efficient mechanism. It is wildly inefficient. And I won’t even discuss how much of the world’s resources – rubber, oil for the plastic, metal – go into these cars, which are rendered obsolete, usually in a few years.
Okay. Clearly, the world needed something better, but we all know what something better is. We all know what will reduce pollution, what will reduce injury and death, what will reduce the waste of resources. And I’m not even talking about what this would imply for parking garages and the horrific real estate they waste.
The answer is (and we’ve known it for decades) it is something called mass transportation – rail, bus, street, railway, jitney, lots of names, for ways many societies have figured out, in many cities, how to move large numbers of people. Comfortable, clean, safe, mass transit. Infinitely better than what? Than what Mr. Musk gave us, which is the same idiotic private automobile. No public transportation at all.
Now, you can say what you want, but it’s clear what ‘Mr. Tesla’ did: he found a profitable way to speak to the anxiety and the criticism of the private gas-guzzling car. A profitable way to get everybody to sell their gas-powered car and buy an electric car.
But that isn’t an exercise in efficiency. It’s an exercise in waste. It’s inefficient to do that. Now we can all keep our electric car in the garage 80 to 90 percent of the time, until it is no longer worth anything, because it’s five or ten years old, and then we can go and buy another one, causing us the same set of costs.
This is beyond inefficient. This is very stupid. But wait, we know why: because it’s profitable. It made Mr. Musk the richest person in the world. What could better symbolize capitalism? That’s how it works. It makes some people wealthy. And only the kind of president we’ve just elected would look at this man, whose money helped him get the job, and give him the task of managing “efficiency.” Why? Because Mr. Trump, like so many others, has in his mind that profit and efficiency are synonyms; they are the same thing. But the truth is, they never were, and to confuse them is to allow people whose only objective is profit to present to you, as if their pursuit was in the interest of efficiency. For God’s sake, don’t be fooled.
Alright. Now, my general point – and I mentioned this to both you and Michael, so maybe Michael can comment on this. As I look at the programs that I hear about – deporting immigrants, erecting tariffs, making the Europeans pay for the war in Ukraine (or else close the war down), or the mumbo-jumbo of privatization… I mean, what you just showed us is remarkable. It’s as if this man was Rip Van Winkle, had been asleep for 30 years, remembered the slogans of 30 and 40 years ago – which were, by the way, privatization, deregulation, energy dominance – articulated by a man who seems bored telling us about it, which is the only glimmer that there’s some intelligence there.
Because bored is what you ought to be, because that is the oldest recipe for something which not only didn’t work, but produced such a backlash that Mr. Trump got elected. None of which seems to have penetrated through the thick skull of this new Secretary of Finance.
MICHAEL HUDSON: Well, I think he’s Secretary of the Treasury, and I want to talk about his economic policy, and the relationship. What Trump has proposed is quite radical. Trump has said that he wants to merge the Federal Reserve into the Treasury. I think that’s a wonderful idea.
The Federal Reserve was created in 1913 to break control of the financial system, away from the government, to put it in the hands of commercial banks. J.P. Morgan and a group of other people said, We don’t want elected representatives to have any say in how the economy allocates credit; so we’re going to create a new institution – the Federal Reserve – and it’s going to take over all of the Treasury’s policies.
We’re going to move it out of Washington to New York, Wall Street, Chicago (with the Mercantile Exchange), Boston, Philadelphia, and other financial centers; and we’re not even going to let a Treasury representative sit on the Federal Reserve Board. The government will have no say at all over financial policy, tax policy, or general (who’s going to get the credit and what will the credit be used for). We at the Federal Reserve will run the monetary system to help the banks, to help Wall Street, not to help the overall economy, which is not what our interest is. Our interest is making money financially, not by helping raise living standards.
Well, just imagine what this would mean to actually put the Fed back into the Treasury. The big fight between them that I remember occurred in the early 1950s, when the economy was just beginning to recover, when Eisenhower was coming in. The fight was over interest rates, just like it is today. The Federal Reserve wanted to raise interest rates because it says, We have to stop inflation. When the Fed says “inflation,” that means rising wages. It said, We have to keep… the economy’s recovering; there’s been this whole post-war recovery, but one bad thing is happening: wages are going up, and that means that the loans that our banks have made don’t have the command over Labor as much anymore. It’s easier for Labor to pay off its debts when prices and wages are rising. So we want to raise interest rates to keep the wages low.
Well, the Treasury came in and said, There’s a problem here: if you raise interest rates, then the money that we pay to bondholders is going to go way up, and the federal budget is going to have to spend more and more money, paying interest to bond holders. Then the Fed said, But bondholders are our constituency; the banks are our constituency. We make more money at high interest rates. The Treasury tried to say, No, we don’t want interest rates to go up; but Eisenhower and the Republicans said, The Federal Reserve has it; the Federal Reserve has dominance over the Treasury. What that means is that the private sector has more control than the public sector. All of this was called the Federal Reserve Treasury Accord.
And that issue is exactly what’s in today. Right now, you have the Federal Reserve lowering interest rates in order to somehow keep the stock market and bond market rising, so that when Trump takes over in January, the Fed can then say, Oh, there’s an inflation: let’s raise interest rates, crash the stock market, as a result of the Fed’s action, and then say, Look at what Trump has done: he’s collapsed the stock market.
The economy is going down (because the economy is the stock market: the economy is what… 10% of the population has 87% of the stocks); so essentially they want to set Trump up for blame. He realizes that and I think that’s what he wants the Treasury to do.
So, now we have Mr. Scott Bessent put in. He’s a hedge fund manager. Imagine looking at the economy as if it were a hedge fund? A hedge fund is a zero-sum game: you bet against somebody else in the financial horse race, and if you win (and he became a billionaire doing this), then somebody has to lose.
He made his first fortune working with George Soros in raiding the British pound. And Soros put together a gang of wealthy financiers that said, We can all sell the pound sterling, and the British government won’t have enough money to outbid us, and we can force the pound down.
They raided sterling. They forced it to devalue. They made a billion dollars on this. Well, just imagine how Mr. Bessent can repeat that today with the euro. It’s pretty sure that the euro is going to go down when Mr. Trump’s policy of cost-cutting comes in by cutting. If Trump can cut the membership in NATO, there goes the euro, down.
The question is, how is this going to affect the domestic economy? Well, as Mr. Bessent said, he’s going to do what Japan’s disastrous Prime Minister Abe did in the 1990s. And Abe did what Margaret Thatcher and Tony Blair did: they’re going to privatize. They’re going to shift the tax burden onto consumers, basically, and they’re going to begin selling off whatever assets the government can have. It’s very hard to actually cut back social spending, because there are a lot of vested interests in there. I guess the only thing you can really cut back is education, because President Trump said he’s going to abolish the education department. Let’s privatize education.
Just as Thatcher began her privatization by selling off British telephone, and the water companies, and the bus companies. And her job was finished by Tony Blair, moving to the right of the conservatives, by selling off the railroads. Prices for everything – transportation for buses, railroads, everything – went way up. Prices of water, way up. Phone costs went way up. The privatization is going to drastically raise prices. And what we’re seeing really is the punch two in the one-two policy that the Republicans have been using for the last 50 years.
First, they cut taxes on the rich – not people as a whole, but basically on the wealthiest 10%. Then they say, Look at the budget deficit we’ve created. We’ve got to fix it. How do we fix it? We cut spending. And as if somehow you bring spending down, to live within the tax cuts on finance and real estate, and basically rent-seeking activities. You don’t raise taxes again. You begin selling off and cutting spending. That’s basically what they want to do.
The question is, what on earth do they have to sell off? What can they privatize here, that’s left? Well, they’re going to probably privatize the Post Office. They’ll merge it with, maybe, United Parcel, or someone else. Imagine what that’s going to do, not only to your Post Office fees that you have to pay out to a monopoly, the prices that you’re going to have to pay.
Privatization of schooling is going to be, essentially… there will be no more free public schooling. It’ll all be, either the students and their families will have to pay, or the localities (New York City and other cities) will have to pay for the education.
So there’s a huge shift in the cost of government, off the, being financed either out of taxes or out of simple government money creation. The fact is that it isn’t necessary to finance the budget deficit out of cutting taxes. As Modern Monetary Theory points out, the Treasury can solve it very easily. You print a trillion dollar coin, give it to the Treasury… now you have a balance sheet. Now you don’t have to borrow anymore. You finance the American economy today, like the United States financed the Civil War: you just print the money. It’s no more inflationary than borrowing the money from bondholders – and, actually, it’s less inflationary because you don’t have to pay interest.
I think you can expect Mr. Bessent to point out that the government accounting office says that if the budget deficit grows at the rate we expect, and interest rates return to normal high rates, like they are today (or at least last month), then the payments to bondholders are going to be larger than all of America’s military spending. This (also) forecast is rising.
So we’re in an economy that looks like it’s going to be essentially draining the whole economy to pay to the bondholding and banking class. That’s the problem that Mr. Bessent at the Treasury faces, and that’s also the solution. Right across the board for Trump’s appointees, he wants to abolish federal agencies and essentially do to America what Thatcher and Tony Blair – and Prime Minister Abe did in Japan – did.
And it’s going to raise costs very substantially. It’s going to put the class war back in business. It’s going to mean that the wealthy people who used to pay the costs of financing government are replaced by the lowest income brackets. It’s a degree of polarization that they dare not say out loud, but that’s the policies, and that’s certainly the attitudes that they have.
You have a deficit, cuts… we’ve created the deficit by cutting taxes (now that’s the one-two punch). Let’s cut… we can’t cut spending that much, but we can begin selling off the whole country. We’ve already sold off politics through the Citizens United ruling of the Supreme Court. What else do we have to sell off? Maybe that’s what we should…
We have to be a stand-up comedian, I guess, to really begin discussing this.
RICHARD WOLFF: Yes. Let me pick up what Michael said, but come at it from a slightly different vantage point. In my judgment, what he said could be summarized as a set of consequences, or effects, from what I keep referring to as the declining empire.
When this system can no longer pull wealth from the rest of the world, the way it got used to doing in the second half of the 20th century, it is now facing contractions. And it didn’t expect to lose the war in Vietnam. It did. It didn’t expect to lose the war in Afghanistan. It did. It didn’t expect to lose the war in Ukraine. It is in the process of losing that one, and perhaps ending it
is what Mr. Trump is going to do, because it is such a losing proposition.
Well, the importance here is if the American economy is constricting, then the people at the top – the policy makers, the CEOs, the big political leaders, all of them – they basically face an existential choice. They can say to the people, Our empire is now in decline, as every empire has always been. It’s not our fault. It’s the way empires go. And we are now going to all have to get together and work out how we as a society navigate a decline.
It can be done. Even the British, who didn’t do a good job, were able to navigate, in the end of the 19th and across the 20th century, the disappearance of their empire.
So that’s one way to go. And the other way to go is to say, We are the rich and powerful. We can, and we will, hold on to all that we have gained in the last century. We, who benefited most from the American empire, we will hold on, and will off-load the costs of a declining empire onto everybody else. Who needs a college education? Who needs payment to working-class people who have no job? Who needs, who needs, who needs…? We don’t have to have that. We can deregulate and privatize… or any other Madison Avenue B-S to cover it over. But what it is, is: We are going to keep Ours. In fact, We are going to grow Ours. You? It’s your own fault.
Look at the tone that is even more brought in by the people that Trump is gathering.
But here – that’s the bad news. Here comes the good news. The decline of the American working class is now 30 to 40 years old. Real wages are completely stagnant, for 30 to 40 years. The Wall Street Journal and other magazines and newspapers like that have to say, Wait a minute… no, no, no! Over the last 50 years, we’ve done the math: it’s up 10%!
If you get a real wage increase of 10% in 50 years, that works out to less than half a percent a year; and that’s a rounding error. You can’t even be sure your measurements are not the reason for such a change. That’s called stagnation. Over the last 40 years, the real average, real wages in China have quadrupled. There is no contest here. We are sticking it to the working class.
But why is that good news? It’s good news because that’s why Mr. Trump was elected the first time. And because he didn’t stop that process, Mr. Biden was elected the next time. And because Mr. Biden didn’t stop that process, Mr. Trump could get back in. And you know what? If Mr. Trump keeps doing what he did before, and what Biden did, he will go out in four years as spectacularly as he just got in.
Because neither he – and to be fair – neither he nor the Democrats are facing what the problem is: telling the American people what it is, and coming up with something that might unify the country in dealing with an existential decline of an empire. That is rough! But they’re not doing it. They’re pretending they can do whatever they want. They can, you know, blow up the pipelines in the North Sea. They can push Europe into the status of a vassal in a feudal arrangement… It’s horrific to watch. The only thing uglier than what is being done to Europe is the complicity of the leaders of Europe in all of that happening, because they’re so desperate.
And the rise of China and the BRICS is the counterweight to all of this. And there’s nothing in Mr. Trump’s economic proposals… and please, Michael, if you disagree, point it out to me. I would be happy to be corrected. I see him doing tariffs; that’s going to worsen the inflation! But the inflation is what got him into office! He can’t do that.
You deport 10 million of the lowest-paid people in the country? Put aside the moral horror of it. You’re going to take away the people who do the lowest-paid jobs. Those jobs have to be done: they are essential. I’m not even going to that point about how much it would cost to do that, although that’s relevant. I saw a statistic recently that one out of 15 families in the United States have a relative who’s an undocumented immigrant; so you’re talking about touching millions of American families with a personal catastrophe. The political implications of that, they don’t seem to have understood.
But I want to say, I’m an economist… so, you get rid of 10 million of the poorest-paid people… Remember what an undocumented immigrant has to go through: if you’re an undocumented immigrant, and you’ve done a good week’s work on a construction site somewhere… and so it’s Friday afternoon, you’re about to go home, you’re very tired, they work you hard, and you go to pick up your pay envelope… and the boss says, Sorry, we’re having financial difficulties, we can’t pay you this week. What is the undocumented immigrant going to do? He or she can’t go to the police because then they risk being deported. They can’t go and complain to some employment bureau, for the same reason. The first rule of all undocumented immigrants is never go near any agency of the government. It’s too dangerous.
Why am I telling you this? Because every employer knows that. He knows he can periodically make a worker work longer hours, not pay them, make them do dangerous work, make them do work where they buy their own equipment, their own uniform… it’s endless; and it’s a significant part of the profits of those industries. If you really remove the immigrant, they can’t do that. It’s not just that they have to pay someone a higher wage, which they will, but it’s actually a much higher wage when you factor in what never shows up in the statistics, which is all the horror that undocumented immigrants suffer!
Okay. Lots of wages are pegged to the minimum wage. There are lots of job categories where you are told by the employer, We pay $1 over the minimum, or $2 an hour, or three. Okay. If you raise the minimum, then everybody’s wages go up. That’s why we haven’t raised it. I mean, here’s the reality: the federal minimum wage is $7.25 an hour. It’s been that since 2009. Look what we have done: for 15 years, every year prices went up – sometimes only 1 or 2%, sometimes 7, 8, 9% – but in every one of the last 15 years, a worker getting the minimum wage – $7.25 – could buy less than he could the year before. Every year.
What kind of society does this to the poorest workers among itself? What kind of society treats the lowest-paid people in that way? That’s a level of cruelty and immorality that is beyond language. A lot of Americans wonder, how do the Israelis perform the horrors in Gaza that they are now performing? But you don’t have to go to Israel.
We are systematically savaging our working class. And you can pretend otherwise, but the numbers are right there. They’re in what Michael said, and they’re in what I’m saying. And the anger of the American people, so obvious in the support for Mr. Trump. It’s not anger at Kamala Harris – no one knows who that is. It’s anger about their economic pinch that’s hurting them; and doesn’t look like it’s stopping; and doesn’t seem to change with Republicans or Democrats.
So the Republican who looks like he’s a little different from the George Bush-boredom is Mr. Trump; so they go for him. And because Kamala Harris is, you know, the Vice-President of Biden, and Biden is the same old-same old, you got something new – Trump – and the same old-same old… As my grandmother used to tell us, you can’t beat something with nothing.
That’s the problem here, but that’s a problem that Mr. Trump shows no sign… What he’s going to do – flamboyant things: merge the Fed into the Treasury, end the education department, deport the… It’s wonderful, it’s how he ran his office… Remember how he ran. He had two ideas, very bold: I’m going to have a Wall of Steel against the Invasion of the Immigrants; I’m going to have a Wall of Tariffs against the Invasion of the Chinese Goods. That’s it: Mr. Wall Man.
But those were dramatic ideas. He didn’t have to say more. People understood… Oh, he’s doing this… He’s doing something dramatic…
Everything Kamala Harris said was small, wasn’t dramatic: I’m going to extend the child tax credit; I’m going to give first-time homebuyers $25,000 towards it; I’m not going to tax tips… Very nice, very good, but there’s no drama. There’s nothing big. There’s nothing spectacular.
The reason people now say Bernie Sanders would have had a better chance is precisely because he, by the very label “Socialism,” would have been there saying, I’m going to do… and then come up with some New Deal-y package that would have been big and bold. And that might have had a real chance because big and bold, otherwise, was the monopoly of Mr. Trump; but his big and bold is – as economic policy – utterly incoherent. He can’t afford an inflation. He can’t afford all this spending. He can’t afford, and do that, and cut back on taxes… He can’t do it. And if he does do it, the chaos will claim him as one of its major victims.
MICHAEL HUDSON: Well, I think that what Richard has described politically is that America is in for, as far as the eye can see, one-term presidents: Trump gave way to Biden; Biden was, quite rightly, replaced by the opposition, by Trump again. Trump will not solve the problems that Richard’s talked about, and so he’ll be replaced. I guess the idea of the duopoly we have is, let the American voters vibrate – Republican, Democrat, Republican, Democrat – as long as they’re all saying the same thing, as long as there’s no real change, and everybody’s just getting more and more miserable. All they can do is vote, throw the bastards out.
But I want to comment. I think what Richard said in his first sentence is really the key to analyzing what’s going to happen to the U.S. When he said, What do you do when an empire is collapsing and you can no longer support your riches by what you can obtain by imperialism? An empire and imperialism go together. What do you do?
Well, there are actually two possibilities there. The first possibility is, well, the old imperialism didn’t work: let’s see how we can still extract something from the rest of the world. In other words, let’s try to solve it internationally, and then domestically. Richard was talking about domestic attempts to solve it. I want to talk about Trump’s international attempts to replace the failed empire with the new post-empire form of exploitation.
Well, the first thing he’s going to do is realize, why do empires collapse? The main reason is they don’t really pay in the end, and one reason they don’t pay is because of their military spending. It’s really, very hard. Trump has already said he doesn’t want to pay for fruitless wars like the war in Ukraine against Russia.
He’s quite happy to pay for genocide wars in Palestine but not the Ukraine war.
So he essentially has criticized NATO, said, We’re not going to pay for NATO’s spending anymore, we’re going to cut it. If the Europeans want to indulge in the fantasy that Russia is going to somehow create a 200-million-man army that it would take to march back into Poland, and Czechoslovakia, and East Germany, on their way to England, then let them indulge their fantasy; but we’re not going to pay for that because we have no interest in the NATO fantasy that Russia is somehow an imminent threat.
Well, immediately that’s going to cause a repercussion in Europe. Europe is run, basically, by NATO and the European Union leaders like von der Leyen, and most of the other ‘NATO’ leaders. Already you’re having the crisis in Germany where the pro-war parties – Scholz and the Social Democrats, the Christian Democrats, and the Greens – are being thrown out by the anti-imperialist parties: the nationalist Alternative for Deutschland and the left-wing Sarah Wagenknecht party.
I think you can see all throughout Europe, you’re going to have a revulsion against NATO, and a revulsion against the United States. Now, imagine that… I can see what Trump is thinking. He said, Well, now if we’re not going to pay for NATO, one good thing – for America – that the fighting in Ukraine has done, it’s emptied out all of Europe’s armaments. How are they going to remake the armaments? Well, they don’t have gas and power to make metalwork and much manufacturing. If they really want to indulge, and by adopting the American imperialist fantasy that was, they’ll have to buy American military arms.
So, essentially, Europe will face the problem very much like what Richard has described here. Is it going to be for the right wing, the military, to benefit Europe as it goes down, to try to maintain the power that it’s had? Or will there actually be a European attempt to create a democracy, and overthrow the people there? They will have a one-term presidency, overthrown, and again…
Well, the second thing that’s going to preserve America’s ability to exploit foreigners is going to be Trump’s proposal for tariffs. He has a fantasy about what tariffs were in the 19th century. Before 1913, when the income tax was created in America, how did America finance the Treasury? It was indeed through tariffs, mainly protectionist tariffs. And Trump believes that we can go back. We don’t have to tax anyone. Get rid of the income tax. He’s proposed that. Let’s impose tariffs. Well, what do we do? If we have a 10% tariff on European goods, that’s going to create money.
And he’s proposed a 100% tariff on Chinese goods, which will double immediately the prices of all the consumer goods through Walmart, and also the industrial goods needed by American companies of vital components that they’re getting from China, from Apple to all sorts of computer makers, to automobiles, to airplanes, right down the line.
Well, China will simply say, Well, we don’t want – I think we’ve discussed this on an earlier show with Nima – we don’t want America to get rich and have the money to use the tariff receipts from our trade to spend on surrounding us with military installations – you know – we’re going to impose our own 100% tariff on goods sold to the United States. So you can just see where this is leading: enormous rise in prices and a disruption of the American economy. This is the kind of short-sightedness…
And I think when Nima and Richard talk about the fact that everybody’s going their own way, there doesn’t seem to be any synthesis going. This is what happens when you have everybody with a tunnel vision looking for their own self-interest. And there is no real concept of a national interest. That’s called the road to serfdom.
When you talk about taking, looking at the economy as, a whole road to serfdom, that means government planning, that’s “Communism”… and who says that? People who want to deregulate the economy; to prevent economic regulation; to get rid of the anti-monopoly legislation that we’ve had; to essentially take away the government’s power to even exist.
And everything is going to the private sector. That is really the attempt to use the ending of America’s ability to get rich from foreigners, to make a grab bag here. And we’re going to see a kind of grab bag. Of course, the wage earners are going to be the main sufferers because the vested interests are trying to say, as Richard said, As the empire is going, how do we, the vested interests, make sure we don’t lose? We’re going to try to make the rest of the world lose in other ways – not military imperialism, like in Ukraine, not military force, but financial, fiscal, all sorts of other economic forms of exploitation.
I want to say something… when Richard’s talking about the undocumented immigrants, it occurred to me that people are taught right now… there’s all the talk about artificial intelligence and robots doing jobs and replacing labor. There’s one kind of labor that I don’t think that the robots can replace, and that’s the kind of labor that’s done by the undocumented immigrants. You can take them by categories. A lot of the Filipino immigrants have specialized in nursing, taking care of old people, personal caring. And construction, as Richard pointed out, is another thing. How are you going to robotize construction? It’s a dangerous job. It’s almost impossible to do that.
The work that immigrants, especially the undocumented ones, perform, can’t be replaced by automation. There’s nobody who is going to replace them because the American ideal of working as a wage earner to get your way into the middle class – defined as buying a home – is not open to undocumented immigrants. How are they going to borrow money? How are they going to go to a bank and get a mortgage? But more important, how can they even accumulate the down payment and earn the money to pay the mortgage to buy a home in today’s environment, unless there’s a massive investment in public housing?
Well, instead of a massive investment in public housing, what we’re seeing by Trump’s whole team, that they have in common, is the idea of: let’s privatize it all; let’s sell off what private housing we have. Their product is homelessness, basically. You could say that’s the product of the policy.
Well, if that’s followed, you can imagine that what happened to Prime Minister Starmer in England… The British voters voted against the disastrous Conservative Party. They went to the opposite extreme: Let’s get the Labour Party in. Starmer – as the Labour Party always does in England – moves to the right of the Conservatives, and is even worse. And now his approval ratings have fallen from, I think, something like 70% to 18%. I mean, just absolutely plunging.
We’re seeing throughout the world, I think, from Europe, England, the United States: throw the bastards out. Is there an alternative to the idea of, well, our way, the wage earners’ way of coping, is limited to just changing the guard, that’s the vested interest lobbyists who are appointed for us to vote for in the elections, throwing them out? Or, are they going to do what Richard and I have spent our life talking about, saying there is an alternative? I think that’s what is unfolding in the next four years.
RICHARD WOLFF: Yeah, let me comment a little bit about that last point particularly. But first, I want to invite people to enjoy the irony. Michael says everybody is going their own way. There is no coordination. I couldn’t agree more. You know, China and the BRICS are developing their notion of how to proceed. The United States is doing its thing. Europe does not know which way to go.
This is all supposed to be okay, because if you remember how they’ve interpreted Adam Smith, if everybody pursues their own self-interest, well, it will all work out really well in the end, as if God had led us by his invisible hand to just that happy outcome.
This bizarre rationalization of chaos has gripped the excitement of people like our new Treasury Secretary, but its patent absurdity couldn’t be more obvious than it is today, given everything we’ve had to say.
Let me also underscore that you can’t get rid of the undocumented immigrants, in terms of the work they do. We have, in the United States over the last 40 years, made it impossible for the old traditional family to survive. You cannot survive on the husband, the man’s so-called family wage that was sufficient to take care of him, and to take care of the wife, and to take care of the children, and possibly the elderly.
Step by step, starting in the 1930s, Social Security had to help take care of the elderly; and then, after the war when, basically, the women were pushed out of the labor force, and then forced back in… because the stagnant wages of the male made it impossible to afford the so-called American Dream… unless two things happened: the wife, the teenage children and the elderly, would all go out to work. The elderly would become greeters at Walmart, the teenagers would do something on the weekend, and the wife would get a service-sector job or a manufacturing job.
But of course, the family then falls apart, because the enormous domestic labor that the women always – the wives – performed, now has to be performed by whom? By an undocumented servant whom you can get away with treating, and paying, and working, in a way you cannot get, most native-born people.
You do away with them, you will take the family – which is an institution on life support, as it is in our country – and push it over the edge. And that too will come back and kick the bastards out, as the rage about all of that gets focused by the Democrats on the Republicans, just like the Republicans just did to the Democrats, as we have tried, as we have tried to say. And now finally, what’s the alternative? I think the alternative is what we are doing. Granted, we’re not clear yet, we’re groping, it’s tentative, it’s mixed; but there is an enormous sense that the world could be operated under different principles.
That you could have used the 100+ billion poured into Ukraine for a lot of other things that the American people care more about than Ukraine, which a majority of people cannot locate on a map in this country…
Okay, those issues are coming to the fore. When Michael points out, correctly, that the level of debt service that the federal government now has to undertake is second only to the defense budget – and catching up quickly – far larger, for example, than the combined outlays of Social Security and all health services, it is going to become very easy for radical Democrats to look at that.
Defense, and paying off the rich creditors of America are the priorities. Social Security and health, far behind. We, the socialists, represent the reversal. There’s a dramatic issue. We are going to prioritize X and Y, not A and D, and that’s going to be the big choice.
You give people a choice between guns and butter. After years of too much guns and too little butter and you’re going to see the same swing of the voting population that you saw this time, in one direction, next time in the next. But the next, if the next one is another Democrat, they may win. But if they don’t understand this, then they will go out in four years and will have the one-term see-saw that Michael is talking about.
The irony here is… and I think both Bernie and a few others have already said in the last few days, and it’s not just the progressive wing of the Democrats taking advantage of the defeat. I mean, it is that, but it’s not just that. It’s also beginning to recognize that Bernie might have done a hell of a lot better than Kamala Harris, and that freezing him out may have been good for the centrist wing, but it wasn’t good for the party as a whole. And that perception is going to eat into the Democratic Party.
So it’s important for Michael, for me, for you, Nima, to keep these conversations going, because they are the fuel to find that new direction; so we don’t keep digging a deeper hole for the whole country, which is what we are doing now.
There’s a new… just to give you an idea, Peru made a deal with China, the Cosco Company of China – not the Costco that we know here (the discount retailer) – it’s a Chinese company. They are building, they’re just finishing now, a port on the Pacific Ocean in Peru, which cuts the travel time between Shanghai, China, and the Western Hemisphere, by two weeks. It’s an enormous amount of time cut, thereby cheapening the cost of shipment, and becoming a way for the entire rich agriculture and mineral resources of the southern half of Latin America to create… they will now be exporting to China. China needs it, they need it, you know, and this keeps going, it’s been going on since 2019.
While all of these shenanigans here – the reality on the ground is changing everything in precisely the direction we’re talking – just like the endless discussion of selling F-16s to Zelensky. Meanwhile on the ground, the Russian army takes another 12 square miles, takes another village, you know, on the ground, and that’s becoming the dominant shaper, as the rest of the stuff up above goes nowhere. They’re boxed in.
And the last thing. Much of what we do on this program with you, Nima, is an attempt to break through the enormous level of denial that we face. Look at the people being appointed by Mr. Trump: are they talking about the declining American empire? Not a word. Did Kamala Harris or Donald Trump talk about the declining American empire during their campaign, and what we need to do about it? Not a word. Did they address the catastrophic inequality that now grips this economy? Not a word. What this is called in psychology is denial, a way of coping with your problems by pretending that they’re not there. But that doesn’t solve anything.
And the mixture of the experiences this country will have to go through, and a critical discourse about it, which is what we try to do, those are the crucial two elements which will eventually give us what Michael is looking for.
NIMA ALKHORSHID: Michael, do you want to add something?
MICHAEL HUDSON: Yes. Richard has said so many different things. I want to, I’ll have to pick and choose. Right after Bernie Sanders, a few days ago, said, The reason the Democrats lost is they’re not representing Labor; they’re not coping with the problems that working-class people actually are suffering; that’s why they’re not voting… the head of the Democratic National Committee immediately said, What an awful thing for Sanders to say! He doesn’t really belong in the party at all (you know), let’s repudiate him very strongly. And said, We are never going to let Sanders and that wing of the party gain power here.
So if you have the way in which the Democratic Party is organized as a corporation, legally owned by and run and administered by the Democratic National Committee, and they are dead centered on doing what Richard said the vested interests do when an empire is falling apart – making sure that they get to keep their own rake-off and living standards and make the rest of the economy suffer – that seems to be the set Democratic Party policy.
I don’t know how, within the duopoly system, without having a representative parliamentary government like in Europe, there’s no way that we can have here a number of different parties like Germany, and France, and other countries have, where there is an alternative to the vested interests that monopolize things.
America has run up against the constitutional problem of how the electoral system is set up in a way to prevent democracy. How are they going to do? Well, the way the Democratic Party copes with the polarization we’re having, and the way the Republican Party is coping with what Richard has called Chaos, they call the Magic of the Marketplace.
And it’s the marketplace that the vested interests shape, and has spent the last 100 years – more than that – shaping and controlling, to make sure that they are in control of the marketplace; they are in control of the relationship between debtors and creditors; between wage earners and employers; between states and localities, on the one hand, and the federal government on the other.
So we’re dealing with a fixed marketplace that isn’t anything natural at all, not an expression of the natural order that the Enlightenment economists talked about. It’s a stacked marketplace in which the casino always wins, and the marketplace is in a casino. The rules are stacked against wage earners who are not being able to increase the minimum wage, not being able to do any of this. And Richard (quite right) points out the irony that while Trump wins on a populist program, any party who is going to throw out a polarized dictatorship is going to win on a populist program, what does this mean in practice?
The way that the ruling class is coping is to change the meaning of language. Chaos becomes the natural workings of the marketplace. Well, doesn’t everybody voluntarily sign the contract? Don’t the debtors sign their IOU, the credit card companies, because they believe that borrowing money will benefit them?
Well, of course it benefits them, if the alternative is being homeless, or going without food for dinner; but that’s not really what the economic structure is all about. You have the economic curriculum and universities not talking about this. You have the mainstream media not talking about the kinds of economic problems that we’ve just been discussing for the past hour.
However, I think before you can have a political upheaval of a socialist form, you have to have an alternative narrative, an alternative set of statistics, to steadily put the charts and pictures before the people to see what’s happening. You have to have a vocabulary and a narrative that is now almost completely absent from the discussion here. It’s the kind of narrative that the BRICS countries are trying to put together, as they’re trying to spell out: how do we avoid the problems in America?
Other countries are looking at the American debacle, and saying, Let’s look at the American empire, and what it’s become. How do we avoid becoming, sharing the fate that the American economy has had? That’s basically what it’s all about right now. And the question, the political challenge to Trump is, how is he going to avoid becoming an American Starmer, the Labour Party person in England? How is he going to avoid becoming like the Japanese Prime Minister Abe?
RICHARD WOLFF: If I could interrupt just one moment. I love what you’re saying about the narrative. And I would like, give me a minute, to give an example of a change in the narrative that could help us at this point.
Let’s take immigration. We have seen that Mr. Trump has made the crusade against the immigrant, demonizing them: they’re an invasion; they are rapists; they bring disease, and crime – I mean, the most extreme language – and he’s now nominated a person who talks even more extreme than he does about it. Okay. And we watched the sad spectacle of Kamala Harris doing a kind of “Me Too,” but not so harsh. Okay.
Here’s an alternative narrative that a Left that was conscious of the situation in the way you described it, Michael, might have responded. Here we go. Across the 19th century and into much of the 20th, the United States experienced extraordinary economic growth, from being a small colony of the British Empire, to becoming a global power. It did so by means of attracting and integrating immigrants. Step two: a healthy, growing economy attracts and integrates immigrants, who then go on to become productive members of the community. That’s what we did in the 19th and 20th century.
What Mr. Trump represents is an indirect admission that we are no longer a healthy, growing economy, but instead of doing something about it, he’s going to deport the immigrants, which is a stupid, self-destructive response. They, therefore, will not go on to adapt and become productive citizens. The country’s economy will be minus the products of what they could have produced. And then we could string in 400 examples of stunning immigrants, you know – like, I don’t know, Elon Musk and others, you know – easy. But we make the deportation either a stupid act, or an admission of something they don’t want to admit, or both. It’s a way of saying we’re not… we are about the growth of the American economy and therefore we will accept them.
And now imagine the last step: the declaration of a new Marshall Plan (a kind of, let’s call it, not a Green New Deal, an inclusive New Deal). Every person is guaranteed a job. First priority, all Native citizens who want a job will get one. Second priority, all immigrants who want a job will also get one. That takes care of the competition between domestic and imported workers. They will not be one another’s enemy, and we will do something – both of them will applaud.
And by taking those millions off of unemployment, the government will help pay for this program. And by raising the taxes on all the expenditures these employed people will now be able to make, you’ll generate government revenue, etc. Here’s a plan, and a good one, and a bold one, and a lot better than what Mr. Trump either offered, or is able to do in the period coming ahead.
And I think comparable shifts in narrative will build the very movement that Michael’s talking about.
MICHAEL HUDSON: I think what Richard shows is that the narrative should be historical, not economics. Instead of just talking about economics in the abstract, telling the historical, how history works out. What Richard has just said, this is the way that people will understand it better.
So you call us economists, but what we’re turning out to be, really, is historians, is the way to get our point across.
RICHARD WOLFF: I agree. I agree. The history is always, always the best guide to these sorts of things. Always.
NIMA ALKHORSHID: Yeah. Thank you so much. I think we can wrap it up. Great pleasure as always, Richard and Michael.
RICHARD WOLFF: All right. These really are important conversations. And again, Nima, I want to thank you for organizing and making sure that they keep happening.
NIMA ALKHORSHID: My pleasure.
MICHAEL HUDSON: I agree. Thank you.
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