Analysis of the causes of the US election result and what a second Trump presidency means.
Cross-posted from Michael Hudson’s blog
NIMA ALKHORSHID: Hi, everybody. Today’s Thursday, November 7th, and we have the economic roundtable today with Professor Richard Wolff and Professor Michael Hudson, two economists. Thank you so much for being with us today. Welcome back.
RICHARD WOLFF: Very, very pleased to be with you. And my condolences that you have to listen to two economists, not just one.
MICHAEL HUDSON: Indeed. I call myself a futurist now.
NIMA ALKHORSHID: Let’s get started with what has happened in the United States: Donald Trump wins the 2024 presidential election. In your opinion, if you were to mention the main factors that have led to his victory in 2024, what would you mention? Let’s start with Richard.
RICHARD WOLFF: There are, of course, many ways to answer such a question. I don’t pretend mine is comprehensive, but this is what strikes me. I think what we have witnessed here in both elections that he won, and in the interregnum of Mr. Biden, what we have seen is a massive revolt by the American employee class against 40 years of neo-liberal globalization.
In those 40 years, roughly following the “opening up of China” by Kissinger and Nixon, we have seen a massive hollowing-out of American manufacturing, particularly, but allied industries of all kinds, who basically followed the dictum that was taught to them in the business schools of this country; namely, that if you wish to succeed in business, go where the wages are low and the market is growing. The place over the last 40 years where the wages were low and the market was growing the most was the People’s Republic of China. So that’s where they went.
At first, it was only the daring ones who went, because China is far away, China is run by a communist party, and that took a bit of courage. But when they were able to make stupendous profits, it quickly became clear to all their competitors, who were less daring, that they better go to China too; or if not China, well, then Vietnam, or Bangladesh, or somewhere where they could cash in on what was clearly the profit wage of the future. And in a typical manner of capitalists, they cared nothing for the damage that their decisions wreaked on America, on the places in the United States where manufacturing had settled, for example, Detroit or Cleveland or Pittsburgh, and I could go on. Those places were savaged. The jobs disappeared. The people left. For example, in 1970, the population of Detroit was around 2 million. Today, it’s around 700,000.
What a spectacular economic analysis made by people leaving. Because there is no work, there is no way to survive. These towns and cities collapsed. The states that relied on them collapsed. They had to cut back on their social services in the bizarre way that capitalism works. No revenue to the state, so it can’t do public services at the time that people need the most. I mean, you have to be upside down, not to laugh, to keep from crying.
But now, to get to the nub of it, the working class has had its revenge. It has looked at the political parties, Republican and Democrat (and by here, I mean the Republican Party of the likes of George Bush, and the Democratic Party, the likes of Clinton, Obama, and now Biden); and they have said to them, here, let me show you my middle finger because what you have done to me, I am now going to do to your political representatives. Because I can’t do it to you. I can’t get at you – at least, I haven’t figured out how to do that yet – so I am going to punish your political spokespeople: the Obamas, the Clintons, the Bidens (and maybe I should add now, the Harrises).
That’s what we see here. Voting them out. Is that because they like Mr. Trump? Not at all. He is a symbol. Most of the people who voted for him wouldn’t like him, wouldn’t want to have anything to do with him, are in fact sympathetic to a number of the issues where he is on the wrong side for the vast majority of Americans, like abortion, for example, and other issues as well. But that was overwhelmed by what is overwhelming them.
And that is the end of the so-called American dream. It’s completely out of their reach. And it is not going to happen to their children either. And they know it. And they’re angry. And Mr. Trump says, I agree with you. You have been shafted. But I’m going to undo all of that. I’m going to go backwards and make America great again, to what it was before these last 40 years really wrecked you. Now, there is no chance that he can do that.
As far as I can see, he has as much chance as you do, Nima, in accomplishing that. And I don’t mean any disrespect. I don’t think Michael can do it. I can’t do it. No one can do it. He can’t do it. And his proposals to protect the American worker by a wall of steel against the invading immigrants or a wall of tariffs against the product-invading Chinese is childish. It’s silly. It won’t work. It has terrible side effects that drown the objective anyway. But here’s what it is. And this is my last point.
An old teacher of mine once said, over and over again, so I never forgot it: “You can’t beat something with nothing.” What Mr. Trump did in true Madison Avenue advertiser fashion was to claim, I’m the protector of working people. To get up on a white horse, say it over and over again, and my wall of steel against the invading migrants, and my wall of tariffs against the invading Chinese. Look at me, I’m protecting you.
People don’t even know what a tariff is half the time, let alone what its effects might be. Economic literacy in the United States is famous for its deeply under-developed state. But he had an image – a wall of steel, a wall of tariffs. Against that, what did, what did the Democrats do?
Same old, same old, a little puttering around the edges: $25,000 for a family buying a house for the first time, an extension of the child tax credit. Nice things, but with none of the pizzazz, none of the drama, none of the great gestures. So Trump is riding along, talking to them about protection. It’s bullshit, but it is very welcome bullshit.
She doesn’t even give them bullshit. She gives them little details, which they can’t basically understand, which draw no drama at all. And she’s defeated because she represents no big-enough change from what they’ve had for 40 years. Whereas Mr. Trump is all about imagery of change. No real change, of course not.
He’s just a puppet like they all are, but it is a drama of change. That’s why it’s important for him to say what no one else dares say, whether it’s racist or misogynist, or any of the other horrors that come out of his mouth. That’s his brand. That’s what he does. I remember one of the great comedians who’s taught me a lot, Richard Pryor.
He would get up on stage (genius, and he was, and I mean that sincerely), and he would talk about sex, and the people loved it. Sitting in his audience, 50% white, 50% black, they were laughing with an intensity that only a therapist would be able to recognize.
They were enjoying all of those discussions of the details of sex, which they fantasized, but would never dare participate in. He was saying it, they could enjoy it, and if anyone got into trouble, it would be him, the comedian. They were safe. Wow. That’s Mr. Trump. I’m going to stick it to these people. I’m going to stick it to them.
And it’s not serious. It’s not that they really want to hurt anyone, but they want protection, and they want the ersatz joy, the fake joy, of being involved in someone who is going to smite the enemy. That’s what we saw. Our politics is a politics of theater. It has been that way a long time. And we just went through a particular theater, but it’s grounded in the decline of the American empire, and in the crisis of American capitalism, which does not know how to back away from the globalization that it still needs, and to go in the direction of the protection it kind of knows, won’t help it. And it’s caught. It doesn’t know which way to go. And we’re going to watch that crazy struggle be fought out by Mr. Trump.
MICHAEL HUDSON: Well, since Richard has described the economics forces behind the election and said almost everything that I would have said in my own language, that leaves me to discuss the politics of the election.
And actually, this is one of the few elections where it was a win-win for both parties. Each party got what they wanted. The Republicans won, overwhelmingly, and as Richard pointed out, I think the Democrats only won 35 counties in the entire country. It was a total wipeout with Republican red on all of the maps.
But the Democrats also got their choice. They chose the same, what they made eight years ago in 2016 when they backed Hillary: They would rather lose with Hillary than win with Bernie or a pro-Labor policy. This time around, they lost by appointing Kamala Harris.
Instead of risking a primary that, who knows, someone like Bernie might have won. They’re not going to take any chance at all of there being any Democratic Party candidate who suggests the kind of healing that Richard has been talking about. So they’ve locked in their control of the pro-Wall Street neo-con wing and control of the Democratic National Committee that controls the Democratic Party.
And even Bernie Sanders, in the wreckage of the election, spoke out over what has to be eight years of utter frustration. He wrote on X: “It should come as no great surprise that a Democratic Party, which has abandoned working-class people, would find that the working class has abandoned them. While the Democratic leadership defends the status quo, the American people are angry and want to change, and they’re right.” Well, Harris kept repeating these words again and again, right down to her concession speech. “Dream,” “Aspiration,” and “Ambition” of the American people. Not a word about economic policy, just platitudes.
And I think that that finally led the American voters to get absolutely disgusted at the refusal to talk about economic policy. That left Mr. Trump, the only person talking about this, at least in a kind of mythological, rhetorical framework that Richard has described.
People don’t want to dream. They want to escape from the economic nightmare that they’re in, that will help them get out of their economic bind, their deepening debt bind, and the lack of access to housing. That’s what people said.
And the election also succeeded, both for the Democrats and the Republicans, in preventing any third-party alternative that could possibly have challenged them by having a pro-Labor, anti-war agenda. And I think this election shows that the U.S. really is no longer a democracy.
That’s a victory for both the Republicans and the Democrats. But it’s more than that, it’s a failed state, and the failed state is a result of deliberate policy. It’s not somehow they failed to do what they wanted to do, but both parties, in supporting Wall Street, in supporting off-shoring, in supporting the neo-con wars in Ukraine and Palestine, this is what they wanted. And the voters have said that what they want is something different. All of the polls were utterly wrong when it came to forecasting who was going to win what states, but the polls, I think, were right in what they showed that voters said they wanted.
First of all, they wanted the wars in Ukraine, and especially in Israel, to stop. They’re against genocide against the Palestinians and the destruction of Lebanon. The Democrats are the war party; and I have no reason to think that Trump will be any different for Israel, although we don’t know if he’ll really pull America out of NATO and the Ukraine war.
And the second thing that voters said they wanted was the economy’s polarization. And we know, as we’ve discussed on this show, it’s polarizing between debtors and creditors. It’s leading more and more workers deeper and deeper into debt, and this frustrates them. They wanted someone who wanted someone who would have an anti-war policy and a pro-worker policy, and neither of these options were available to them, at least to the Democratic and Republican candidates. So, there was one candidate who represented what they said, and you’ve had her on the show: Jill Stein.
Here in New York, she was not on the ballot. My wife and I had to write her in. The New York Assembly, controlled largely by the Democrats, raised the number of signatures that any candidate needs to get on the ballot from 35,000 to 55,000. As soon as she met the 35,000 limit, they raised the limit to 55,000, so you had to write her in.
Same thing in Illinois, District of Columbia, Delaware, Iowa, Wyoming, Vermont, Kansas, she wasn’t on any of these ballots. Where she was on the ballot was on Michigan, and this is what we’ve been talking about on your show for quite a bit. In Dearborn, Michigan, that is very heavily Islamic, she got 22% of the vote, largely because of the Islamic population.
And I think that many of the Muslims who she convinced not to vote for Harris, when she described the Democratic Party as the war party, I think they obviously agreed with her; but many decided, well, we’re not going to really actually cast our vote for her, because we want to make sure that the Democrats lose, so we’re going to vote for Trump.
And so, even though the votes for her didn’t show up on the statistical balance sheet, I think the fact that she went around to Michigan, Wisconsin, Minnesota, and other places to say there is a pro-peace option, there is a pro-Labor option, things don’t have to be this way, I think that that certainly catalyzed the feeling that it was necessary to get the Democrats out of power. So she did raise the issue; but nationwide – if you say, how many votes did she get – 0.4% of the national votes.
And she got more votes than any other third-party candidate, but when there are only 0.4%, you realize the impossibility in America of a third party having an alternative that would represent the kind of things that Richard and I and you have been talking about.
The best that Trump could do would be to verbalize them and say, yes, this is really what we need. I’m for the working man; but even he didn’t come right out and say, here are the specific policies that I have. The voters at least recognized, here’s someone who says he’s on our side, the Democrats say they’re not on our side. They say we’re going to talk about identity politics, but not the identity of voters as wage-earners, as being squeezed in their budgets, and being unable to afford housing, and burdened with student loan debt. So I think that explains the overwhelming reaction, not for Trump, as Richard’s pointed out, but really against the Democrats.
It’s their plan that has failed, but they chose to lose with that plan, rather than leave any opening for any kind of concessions to actually help the majority of voters.
NIMA ALKHORSHID: Richard, do you want to add something? Because the point that Michael raised that is so important, why the Democratic Party didn’t open up…?
RICHARD WOLFF: Yeah, well, they’ve been confronted with this for quite some time now that this is an established commitment of theirs, you know, it is often referred to in the popular press, as having been captured by their donors, you know, they they’ve gone to the big money, you have to have a lot of money to run an election in this country.
I believe it’s 10 billion, or some number like that, that was spent this time around, more than ever before. So I mean, where in our culture do you get that kind of money? Once in a blue moon, if you work at it the way Bernie did, you can actually get significant money by having the mass of the people give you 10 or 20 dollars. You can do that, but you have to set out to do that, and you have to give them a reason to do that.
You know, imagine with me, just as an experiment. Imagine with me a campaign that had said, we’re going to stop the war, and we’re going to take the $100 billion that would have been saved by that war, and we’re going to cancel the student debt in this country. All of it. Overnight.
We’re going to liberate, or if you don’t want that, spread it out between student debt, mortgage debt, car debt. So everybody gets a reduction in the burden of their debt. Wow. Will there be problems with such a policy? Of course. Are there wrinkles that have to be worked out, side effects that have to…? Yes. But you would have then had an image of what a vote in that direction, what we’re going to be… and that would have been a way better way to confront a steel wall and a tariff wall. It would have been less murky.
Obviously, the steel wall doesn’t work. It’ll be easy to establish that. And the tariff wall is so crazy that even in our society, the bulk of business commentary on his tariff plan was mockery. I read the financial press. They know that that’s crazy, that the first reaction to a program like that will be a level of inflation we haven’t seen in this country for a long time. And that is a political no-no, given the bad reaction to the inflation we just had, which isn’t the worst that we could have had.
So for me, I wasn’t of the opinion that many of my friends were, that had Bernie run, he could have won. I’m beginning to come around to that because he would have had something, and something is better than nothing. He would have been different.
From sitting there with his mittens, to accepting the label socialist, these would have been the left-wing equivalent of misogyny, and of racism, coming out of Trump. He was different because he says all that which is not supposed to be spoken.
Well, Bernie would have been saying what’s not supposed to be spoken, but it is in the hearts of most American working people who are, in fact, eager to get the help that a socialism could bring them. He would be the embodiment of that. I think he would have had a much better chance, much better chance than she did, or Biden would have, because of who he is. And by the way, the polls do indicate, as has been pointed out to me, lots of polls, that Bernie is the most popular politician in the country. The one least associated with being corrupt. Way ahead of Trump on that.
NIMA ALKHORSHID: The question is, what I noticed in those days that Bernie was running against Hillary, the Democratic Party is so much afraid of Bernie Sanders, much more than Donald Trump. And nobody understands. They tried to do everything to cancel him from the election. What is the root of this fear about Bernie Sanders in the Democratic Party?
RICHARD WOLFF: It’s the history. It’s the history of the Democratic Party. It came out of the Great Depression with an enormous left-wing, progressive, I would argue, majority. I mean, Franklin Roosevelt is the most leftist of our presidents. And he was re-elected three times. That suggests an inference: The further left you are, the more popular you’ll be. That’s the history of this country. So the Democratic Party understands, in my judgment, that, and had been fearful. Those who want to be accepted by the successful middle capitalist class, they’ve always been uncomfortable with those people.
That’s why, immediately, 1945, Roosevelt is dead, the war is over. Cancel the alliance with the Soviet Union and commence a systematic purge of everybody, you know, left of Attila the Hun, and get them out of office, and get them to lose their job, make them worry about how they’re going to survive, deport as many as you can get away with… Everything short of mass murder. Okay, so, wow. Are we surprised? And they’ve been, you know, with a mix… if you’re a therapist – I’m married to one, Michael is, so you’ll pardon that we bring them in – but there’s a mixture of guilt, and hatred, and rage. They don’t want those people. They are terrified that they will be stuck as the left wing, and that what will be done to them is what they’ve been busy doing to their own left wing. So they have to clean all that out. And their children have picked that up without knowing it. Not explicit. It’s in the DNA, at this point. So they are afraid of that.
It’s been good politics for them: They got rid of the left, and they were able to occupy the middle position – champion of the working class, get the working class votes, win a lot of elections – that worked. That was their policy. That worked.
The problem now is that the Republicans figured out how to hang them up as not-the-party of the working class, as the party that betrayed the working class. The fact that the Republicans have hurt the working class way worse than the Democrats did, that’s hidden in the denunciation of the Democrats, who couldn’t do more in the way of helping the working class, mostly because the Republicans wouldn’t let them. Genius! You don’t let the Democrats do for the working class, even those who want to, then you blame them for the failure to do, and offer yourself as the alternative to the working class, which is so angry at the Democrats for the fakery and that they want to give the finger to them. And they will vote for Trump. That’s right.
And they will hold their noses. Most of those union men and women who were told by their leaders to vote for Kamala Harris and who didn’t do it, they’re still good union members. They believe in the union. They know that Mr. Trump is no friend of theirs. But they held their nose because more angry than they could ever be at Mr. Trump, they were at the Democrats who don’t do anything for them. And as long as the Democrats stay with that, as long as they talk and think the way Clinton, and Obama, and Biden do, they will be long-term failures.
By the way, the Democratic Party may not survive this. The question is how many people are going to figure out what we’re talking about here and draw the conclusion, finally, that there has to be a real Democratic Party and to put itself forward. And that may take some time, and it might mean that you’re out in the wilderness politically and you don’t get many votes for a while.
Every other capitalist economy shows that you can be in that situation, and then when capitalism has one of its ever-recurring crises, you can suddenly… I want to remind you that the largest block of voters, excuse me, the largest block of elected representatives in the Assemblée Nationale in France are Marxists. They are socialists, communists, and so forth, and Greens, but it’s a coalition of the Left and far Left that emerged victorious. They are now the opposition of Mr. Macron, whose political future is right up there with mine. That is to say, there isn’t any.
MICHAEL HUDSON: Yeah, I think that what Richard says is so obvious, that it should be so instantly understandable, that it shows that Harris probably could have won if all she would have had to say is, we’re going to stop sending our money abroad and begin spending more of it at home.
But she couldn’t even let Bernie write her speeches, which certainly would have been a help. So the fact that they made that choice not to say what Richard says is necessary – to me – shows that the Democratic Party cannot reform itself, mainly because it’s controlled by the donor class that he’s pointed to.
Instead of talking to voters as wage earners that are being squeezed, she played the identity politics card, mainly over the abortion issue, but also over the ethnic and racial issue. And yet the Democrats lost their previous votes that had come from the Blacks and Hispanics. The Blacks and Hispanic voters were turning towards the Republicans, realizing that they were just being used as an identity to distract attention from the fact that they were mainly concerned about the economic issues that we’re talking about. People decided that their identity was basically economic, and economically they were suffering.
Now, if the Democratic Party cannot reform itself, and you’re only left with Trump that makes promises – rhetorical promises that he’s really not going to carry through, certainly not with the support of the Republican Congress itself – then that means America is a failed political state, because of the impossibility of a third-party alternative to the duopoly… The role of the Democrats is to prevent any kind of left-wing criticism, or alternative, to the Republican Party.
The Democrats want to keep the Republican right wing, pro-Wall Street, pro-corporate policies in place, that Richards described, and simply suck any of the progressive, pro-Labor politicians into it and neutralize it, in the same way that they’ve neutralized Bernie and made him urge voters to vote for Harris – losing a lot of his reputation in the process – and also AOC that attacked Jill Stein for saying a vote for the Green Party – and Jill – is a vote for Trump.
Well, we know that that’s not the case statistically because now that the voting figures have come out, the victory of Trump over Harris is so large that if all of the third-party candidates would have gone to Harris, it still would not have been enough to close the gap by which Trump won. And this gap was so large that even all of the shenanigans that could be done by the Democrats in vote manipulation, and the enormous Trump Derangement Syndrome that all of the mass media promoted… none of that had any effect at all.
So, how are you going to get an option in the American political system for solving the problem that the population cannot make ends meet, and more and more voters are driven into debt just to survive. And they’re now defaulting at record rates and so is commercial real estate, by the way, facing default.
The solution to all this seems to be just the government is going to pump money into the Federal Reserve, to pump money into the banks, to keep lending people enough money to get by, rising the debt exponentially, and leaving the solution to the wage squeeze is simply: We’ll borrow the money. That’s been the policy ever since Obama, that maybe we can talk about later.
RICHARD WOLFF: Yeah, well, I mean, let me be the historian and the dialectician, if I may. There’s many, many examples in human history in which leadership, to consolidate itself, to become secure, excludes everybody else from an ever narrower band of rulers, until they’re the only ones left, and everybody else is excluded. And then comes the revolution. And then it’s over. If you don’t give people a chance to participate in one way, they will participate in another way. Stopping them? Not going to work.
It may take a while, but the American working class is not going to go quietly into the level of poverty that is coming down the pike. It’s one thing if you’ve been poor for a very long time: your parents were poor, and their parents were poor, and your grandparents, and all you know is an endless history, oral or written, of poverty. But the American working class in the 20th century was raised up to be a middle class, in its mind, and in its standard of living. You are taking that away. That’s a whole nother experience. That’s why they’re so angry. That’s why they’re so furious. That’s why they’re recuperating white supremacy, and other utterly discredited prejudices. They’re very angry.
Part of why Mr. Trump is the candidate is he articulates this anger, this turn to violence, all of that. All of that. He does it as theater, but that’s what he does. And maybe, if people are frightened, will it turn into reality? It might.
A new way, a new distraction for the American people would be to find communists under everybody’s bed that have to be rooted out. We’ve been there before as a nation. We can certainly recapture that charming face. But there are alternatives, and the alternatives are that people will, in fact, see that they need another political expression; that the Democratic Party has failed them, and the Republicans, in whom they have now placed their faith as the only alternative, is a dead end also. What then?
Look, it may work for a while to compensate the masses in their anger by saying, throw out the Republican, bring in the Democrat. And then a few years later, reverse. And then a few years later, reverse. But at a certain point, the oscillation itself is no longer acceptable. People see what that means.
The fact that growing numbers of so-called ethnic voters – blacks, Hispanics, and so on – voted for Trump, is that the whole ethnic appeal isn’t pulling the way it once might have. People have outgrown that. It takes a while, more with some than with others. It used to be if you were Irish, you voted this way. If you were Italian, you voted that way. If you’re Polish, you vote that way. Much of that is gone. And it will go with women. It’ll go with Hispanics. It will go with African-Americans. It’s already doing that.
It is also a question of what we on the left do: Can we present, not only a critique that includes the oscillation, but also an alternative? Which means, we have to build a new political party. No one else is going to do it. We’re going to do it. And we have people, allies, that are thinking like that and have been already. Not just Jill Stein, or Cornel West, or the perennial socialist party’s candidates. They too, but a much larger group that is now, you know, the Bernie people. What are they thinking? What are they now ready to do, with or without him?
I think these are the questions that are now on the agenda in an immediate way because the people who are sad that Kamala Harris lost will have to, once their sadness passes, try to figure out what that means for them and the politics they claim they believe in.
MICHAEL HUDSON: My question is, then, how are you going to get a third party? And I think it needs a narrative. And the role of the deep state is to prevent any of this narrative from getting into the mass media or the public discussion, or other people.
Bernie said eight years ago, he’d researched trying to start a third party, and the barriers put up by the Republicans and Democrats to maintain their duopoly was so strong that a third party wouldn’t be viable without at least one billionaire supporting them.
And amazing as it seems, not a single billionaire thought to sort of jump behind the bandwagon. And I think part of the reason is, as Richard just said, they have their own mentality that they’ve been locked into. And it’s a tunnel vision, and it doesn’t recognize what is preventing America from recovering. They don’t recognize what has made America a failed economy, and a failed state, that prevents the economy from becoming un-failed. I think that’s really the problem. I didn’t mean to interrupt you when you paused, Richard. Sometimes I can’t tell whether you’re stopping or not.
RICHARD WOLFF: No, you’re fine. You didn’t interrupt me at all. Let me sketch… I’m going out on a limb here, but let me sketch for you a plausible ( I think) scenario of how things might change. If Mr. Trump carries through… or let me put it differently: if he draws to himself the crazy quilt of advisors that he did last time, and he goes through with his proposal to raise a tariff wall, I believe there are a significant number of billionaires, a significant number of global corporations based here in the United States, who will see that as an existential threat to their business. And they will want to get Mr. Trump and his crazy-quilt advisors out of there.
And they’ll try the usual things they do, which we used to call palace intrigue. And I’m going to assume that those don’t work. And they will eventually then discover that to get rid of Mr. Trump, they need a mass base. Right now, the mass base is apolitical. That’s half the people.
And the other half is divided between Republicans and Democrats. At that point, Michael and I probably won’t be around, but somebody younger than us will go to those billionaires and say, we’ve got a deal: We will give you a mass base, but you’ve got to give us the following:…
And that following will be a struggle between the left- and right-wings of whatever the Left is at that time. What they will demand that those billionaires… and that may be what those billionaires won’t go for… then we’re back to square one. But I wouldn’t be so surprised if among the billionaires, there weren’t those who always had their heart with us, but would never go there because it clashed with their interests. But now, we might be a force that would meet them half-way to their interests; and half-way is a lot better than nothing at all, if you’re existentially threatened.
The American empire is shrinking. I have no doubt that Mr. Trump will not be able to do anything significant about that. Therefore, the situation is going to get worse. A 100% tariff against the best quality, lowest price electric car and truck is not a sustainable position. That’s the position of the Biden administration. And he, committed to tariffs against China, will presumably sustain it. But it’s not sustainable. Therein lies – that’s the opening, right there – multiply that by all the other products now in that situation, or coming into that situation, and I think you have a fracturing of American politics.
And I think it’s very possible that we will see a new Republican Party, of all of those people who are that, and can’t stand Trump but don’t want to be in the Democratic Party for all sorts of reasons. They’re going to do that too. By the way, they’ll get money quicker than the Left, because they can offer what I’m telling you – namely, back to the neo-liberal game, the globalization game – so that these big companies don’t lose the enormous investments they made in China and those other places. That’s very, very important to them on many levels, especially in a declining American empire environment.
So I think we’re going to see all kinds of unexpected… the decline of an empire has that. It always did. It starts squeezing its own people, too much. Everybody becomes indebted, too much. Shocks hit the system that can’t cope with… you know, like COVID, where you lose… what did we lose here? A million and a half people? We can’t handle – in this supposedly rich, medically developed society – we can’t handle… And these leave deep scars, these kinds of failed responses to crisis. And there are more and more of them coming.
Mr. Trump’s theater, highly developed for vote-getting, can’t do anything about those. It’s not about votes. It’s about something else. And they’re not good at that. They’re just not good at that. Look how badly they handled the pandemic. What a disaster of management that was! It’s not an issue. It’s not a disease. We don’t have it. We don’t need it. Drink bleach. I mean, come on! This is a level of fumble-bumble that people ought to think about. It’s not just those officials didn’t do the work. This is a systemic failure.
I think Michael, in the end, maybe proved more right than he knows, that we are living through a decline, but we’re also living through a state that cannot function, that was able to function on the ride up, when all of your mistakes and sins are forgiven, because the trend line is carrying you. Now, the trend line is your enemy: You make mistakes, it exaggerates them, rather than obscures them. That’s what happens when you’re in decline, and I think that’s what we’re seeing. This vote is a vote of a system that’s declining. It’s voting for the clown, the theatrical performance. The wall did nothing. The wall is a joke. It’s a waste of money.
And yet, there it is. It’s a powerful symbol, and it’s going to… Look, Biden spent money on that wall. He could not walk away from it. He couldn’t. And Kamala Harris mumbled (remember?) about immigrants. She felt she had… instead of turning around and giving an alternative, a theater of welcome to the, you know… would have been much more effective, much more effective.
NIMA ALKHORSHID: Michael. You didn’t mention RFK, Jr. in your calculation… I think Trump’s wild card in 2024 election was RFK, Jr., which was the problem that the Democratic Party defeated itself by the situation with RFK, Jr., which helped Donald Trump.
MICHAEL HUDSON: Well, I don’t think RFK, Jr. is going to the core problem. I think that what Richard has talked about is probably the most logical and reasonable way for America to try to escape the failed state corner in which it’s painted themselves. But his hope is based on corporate America. And, of course, corporate America would be disastrously hit, if Trump actually were trying to impose his tariff policy.
But the problem that is really blocking that, even if you solve that, you’re not going to deal with the – to me, even larger – financial problem, and that’s Wall Street and the debt problem. Corporate America is suffering, in a way, just as much as the wage-earning class, by the fact that it’s been financialized into a debt overhead. And I don’t think there’s been any real discussion of debt.
Ever since 2008, the zero interest rate policy that was supposed to pull America out of a depression, only made the wealthiest 10% enormously richer. While the 90% of the population has drifted down, in the sense of their wages and living standards. That’s the problem that really has to be solved. And the idea that you can solve the depression by giving more money to Wall Street, not to the corporate sector, except in a financialized way, but to the stock market, the bond market, and the real estate market is, I think, the false narrative that they’re going to use to confuse the voters, and sort of throw a monkey wrench into that.
I want to quote something that Obama made remarks in April 2009 when he was criticized for bailing out the banks and evicting millions of American families who were victimized by junk mortgages. I think in one paragraph he summarized the whole Democratic Party policy. Ever since, it’s been American policy, and it explains why we’re in a permanent financial depression without a radical change.
What Obama said, I’m going to quote, “There are a lot of Americans who understandably think that government money would be better spent going directly to families, and businesses instead of the banks. ‘Where is our bailout?’ they ask. The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.”
This multiplier effect of debt is what is strangling the economy, because the multiplication is compound interest of debt. And the Democratic Party has capped their military Keynesianism, the idea that, well, if you employ… employment by the merchants of death group – the Military Industrial Complex – that’s going to create jobs.
The Democrats have now added this – the financial Keynesianism – giving money to the financiers, to the stock market and the bond market and the banks. The bankers as the merchants of debt, will enable banks to lend America enough money to cover the fact that their wages are not keeping up with their living costs, and the solution is simply to give more credit. And that’s what’s popularized almost every week in the main media: The solution to the depression is to leave the American economy more debt-ridden. I think that that is a block that corporate America is going to have difficulty separating its interests from the Wall Street interests.
And it’s a financial problem that I think voters are mainly complaining about when they’re talking about the economic problem. I think that is what essentially the Democrat solution is: Well, sorry, your wages haven’t kept up with inflation, but we’ve helped you borrow enough to get by, and even to buy your own homes by lowering the down-payment rates, and giving new buyers some kind of subsidy to take out a large enough mortgage to outbid the interest payments that other buyers are willing to pay in their attempt to join the middle class.
The fact is that the access to the middle class is closed off, except by running into a lifetime of debt that actually ends up on your back, is a burden on your back. And I think this housing squeeze is something that is independent of the corporate interests when it comes to trade with China and tariffs, and the rest of what corporate America wants in supporting a popular party. I don’t think you can have a popular party that doesn’t recognize the debt burden. And that’s why Richard pointed out that Harris could have won, if she would have promised to wipe out the student loan debt, probably other kinds of debt and arrears. She could have wiped out that, and reverse the debt overhead. That is the one thing that is anathema to the Democratic Party.
And housing and debt is now a requirement to join the middle class. And mobility is now closed off to most wage earners, unless they have wealthy families who have given them a house to inherit. I guess that only works if you only have two children.
So the policies that the politicians have sponsored, extending home ownership, have had the opposite effect. By loading the economy down with debt, they’ve prevented wage earners from joining the middle class. And the result is that absentee-owned real estate, corporate real estate like Blackstone and other investors in housing. Landlord ownership of homes has increased by 10 percentage points since Obama. We’ve reversed the whole movement towards America to become a middle class. That’s part of what’s closed off.
And it’s been the Democrats that have led this precisely, because of what Obama has sort of justified and what you see defended by people like Paul Krugman and the other Democratic promoters in the New York Times, and the other media. You could say that raising a mortgage banker’s guidelines. So, you know, in the 1960s, when I bought a home, the banks wouldn’t lend if the mortgage payments absorbed more than 25 percent of your income. But now the government guarantees payments, mortgages up to 43 percent of American income.
Well, imagine 43 percent of your wage is going for for housing, 18 percent for medical care, then local and taxes… No wonder there’s there’s a wage squeeze on America. But the price of housing is not included in the inflation index. The things that really matter to most voters are not included in the wage index.
So this idea (of we’ll solve all of your problems by keeping prices down so that you can afford to somehow get by without debt) is meaningless if they don’t address the actual financial squeeze – requiring lower down-payments, raising the portion of income that’s paid as interest. It’s squeezing wage earners, but it’s also squeezing corporations. We’ve just discussed before how corporate income has now been taken over by the chief financial officer, who uses the income to increase stock prices by stock buybacks and by paying out the profits as dividends.
Look at Boeing (aircraft), it’s a model of the American economy as a whole. It used its income not to pay wages, but it essentially declared war on its workers: It stopped paying them the retirement income that it had promised them. It had used the income… instead of keeping the wages in-keeping with the prices of the Boeing aircraft and the profits, they simply used their profits to increase stock prices and pay the executives more. So just imagine what the workers see is their narrative, is you have the, let’s say the upper 10%, or 1%, they’re living in a different world.
I think on Naked Capitalism there was an article by Lynn Parramore about… look at how we have two different worlds today: one world for medical care for the wealthy; another for the medical care for the poor. Not so heavenly. Look at travel. Look at the way that the 10% can travel with their yachts and their personal jets, flying around the world to great parties with each other; and compare that to the struggles that most Americans have in trying to take a vacation as they’re cutting back what they’re doing.
Look at the difference in housing, between the mansions and the housing that’s available… as construction becomes shoddier and shoddier for the Americans. Look at the educational difference. The wealthy class is getting into high universities with their parents paying for their college education, as opposed to wage earners who have to have their own families, or themselves, take on the student debt. We’re back in the epoch of Charles Dickens, in the mid-19th century, describing this “tale of two cities:” one city for the wealthy, one city for the masses that are looked down upon both by the Democrats and the Republicans.
The problem of getting the corporate industrial class to realize this problem, at a time when the corporate industrial class itself has been taken over as an arm of Wall Street, just like the political parties have been taken over by Wall Street, I think, is so insurmountable that that’s why Richard said it probably won’t be in our time when we see the solution. And I agree with him. There cannot be a solution to the problem that we’re in without a revolution.
And you have the deep state hijacking the American political process, but also the American economy, the corporate economy, foreign trade, and all of the other elements of the economy. It has all been hijacked, and Trump has perceived the anger at all of this. And, certainly, the voters are disillusioned with the Democratic Party.
As I said, I think the Democratic Party is unreformable. You’ve seen what they’ve done to Bernie. Of course, if Kamala Harris would have said, what Richard said, [they] would have won. You know, we’ll solve your student debt problem, we’ll act on your behalf… of course, they could have won.
It was their choice not to. And Bernie, who can voice these problems, who recognizes many of these problems, couldn’t get any acceptance within the Democratic Party except to be co-opted.
And that’s the problem that, I think, whoever tries to work through the Democratic Party is going to be co-opted, just as Bernie, and AOC, and any other would-be populist… So as things stand, the only hope of getting a third party is trying to convince the corporate class that there is another narrative. But the corporate class itself has a lot of barriers about raising any of these points, and acknowledging these points.
So, you need, not only a description of how people are suffering – yes, there’s one economy for the wealthy, there’s another economy for the 90%, for the 99% – but there’s also a different narrative of how economies work. And I think that’s what Richard and I as economists are trying to explain. We’re really discussing a different economic narrative, as well as a political narrative.
And the problem is that this economic narrative that we have is limited to your show, and our own blogs, and the sort of satellites, the groups, all around us that have ideological agreement with us; but we’re pretty much in a minority and we have our own glass ceiling that we can’t make it into the mainstream.
NIMA ALKHORSHID: So, Richard, do you want to add something or I want to ask a question…?.
RICHARD WOLFF: I do want to add… I want to pick up on that quotation from Michael from Obama, that the dollar given to the bank multiplies through lending, whereas the dollar you give to a citizen who’s been hurt by something, doesn’t.
That’s the kind of mistake which a student in a freshman class in economics is understood to be allowed to make. But for the President, the only reaction I have is, shame on you. If you give a dollar to a worker, where do you think he puts it, you idiot? He puts it in the bank. And there’s the extra dollar from the government, via the worker, that goes into the bank. If they want to lend it out, lend it out. That’s what they do with deposits. You don’t have to give it to them directly. You can give it to the business. You can give it to the worker to resolve their debt problems. For example, they will then put it in the bank, or they’ll pay their creditor who will put it in the bank. The extra money will find its way into the banking system where it will get multiplied in the way that the banking system does.
What Mr. Obama was doing was reading a mediocre brochure put out by the local bank to make itself look like it’s a socially useful institution. That’s the level of economic literacy we have, that a President who graduated from Harvard can’t do better than that? Wow! That the people listening to him think that he just said something that isn’t embarrassing? Wow! That’s what we got to deal with, though. That’s why changing the narrative is so important. It reminds me of George Carlin, who said, “You know why they call it the American dream? Because you have to be asleep to believe it.” He understood.
That’s where Wokeism comes from. You’ve got to wake up, Jack. Otherwise, you are being led down that garden path to your own demise. Look, it is very important for people to understand that if you cut the profit in half, you could give all workers a lot more wages, and then the profit would be in half. And then you would have to deal with whatever the fallout is from cutting the profits in half. And there will be consequences. And you would have a government designed to deal with those consequences. But no one should imagine that this isn’t an eminently reasonable policy.
The last 40 years in the United States have seen real wages flat. They’ve gone nowhere, in 40 years! Before that, they rose for a century or more, every decade, from 1820 to 1970, every decade. Even in the Great Depression, real wages rose in the 1930s. Then, in the 1970s, they stopped.
Meanwhile, advertising went crazy. If you want to be a real American, you should have a car, a vacation, a washer/dryer, a ‘this’ or ‘that.’ In other words, if you want to participate in America, you’ve got to consume; but we’re not going to give you the wages with which to do it. What did the poor American working class do? Two things. One, went to work more hours; took a second or third job. Very famous. Wrecked the family. Second thing, borrow money like no working class in the history of the world. That’s how they were able, over the last 40 years, to survive a flat real wage.
As a footnote, in the People’s Republic of China (which has a lot of problems), real wages have quadrupled in the last 40 years. That’s the biggest difference in the world! Flat here, 400% over there. Wow! No wonder the world is experiencing the decline of one empire and the rise of another. And we can talk to the people about it. They don’t have to imagine that one of these policies… it’s like, my last… it’s like listening – and I go nuts with this – to the discussion of our national debt. And here’s how the discussion goes in America: Well, we either have to cut back the spending, or we’ll have to borrow more. And we don’t want to borrow more because we have a big national debt, but we don’t want to cut the spending… They talk as if raising taxes can’t happen. As if God himself or herself has said, you can do this and you can do that, but you can’t do that. What? What?
If we taxed all wealth above $1 billion a person, we’d have a solution to most of the problems. Elon Musk, alone, could actually do something patriotic, which… give us $240 out of his $241 billion of assets. He’d have to live on $1 billion, the poor fellow. And so too Warren Buffett. And so too Bill… We can tax. There’s no problem. We have the majority. We tax. We solve the problem. We can maintain spending, and we don’t have to borrow a nickel. We can retire the debt. In fact, that would be one of the ways to offset whatever negative things happen if you tax the rich.
The notion that you can’t go there, that’s simply an attempt on the part of that part of the population to rule any burden on them out of discussion, off the table. And the Democrats talk like that. They’ve accepted that rule. And that’s the worst example you could possibly come up with, with them offering no significant alternative at all.
They are so bamboozled by the media and the Republican domination of this conversation, that they can’t advance any tax at all. Even when they say, tax the rich, when you look at what they propose, it’s childish. One half of 1%? It’s not going to solve anything. You cannot mess with the distribution of wealth and income.
And the proof of it, we just had a presidential election in which neither candidate acknowledged, spoke about, promised to do something about the fundamental distribution of wealth and income. Not one word. Amazing.
NIMA ALKHORSHID: Michael, do you want to add something?
MICHAEL HUDSON: Well, this problem is not only in the United States, it’s worldwide. Let’s suppose Harris somehow would have won, and the Democrats could have stolen the vote. That would have meant the end of the Democratic Party because it would have shown how absolutely bankrupt it is.
I think voters didn’t have to go through the trauma of a Harris administration to realize this. They’ve all realized how bankrupt it is. But let’s look at what’s happening in England under Keir Starmer’s takeover of the British Labour Party. Same thing.
People thought, the Conservative Party is so right-wing, so pro-wealthy, so pro-financial, we’ve got to smash things up and vote for Labour. And immediately, Starmer and the Labour Party did just exactly what happened under Tony Blair. He moved to the right wing of the Conservative Party, and now his popularity has plunged way down to the all-time low for the Labour Party. That is what would have happened in the United States, had Harris won. That would have been a kind of revulsion that would have led people to think, there must be an alternative.
But I think the deep state and the Democratic Party strategists have tried to say, how do we prevent any alternative from developing? How do we prevent the kind of escape to save the American economy, and a society that Richard has described? I think that, as I said, nobody’s been able to solve the problem of how to politicize this.
And if you look at how radical parties have been made successful in the last 100, 150 years, very often it’s been from the wealthy classes. It’s not been from below alone, it’s been by wealthy supporters. That is what is lacking today, because it’s the whole mentality, it’s the whole narrative that the wealthy people believe that they’ve actually earned their wealth. And the American GDP statistics describe the wealthiest 10% as being the whole core of the growth in the GDP. All the growth in the GDP since before 2008 has been to the wealthiest 10%, not to the 90%.
It’s a fictitious picture of growth because it doesn’t realize that there are two economies, the kind of the rentier economy, Wall Street and finance, real estate, insurance and rent recipients of various forms; and the economy of production. They just don’t think in that way.
And I wasn’t able to work it into the academic curriculum when I was teaching, and Richard had a very fortunate opportunity to do that in Massachusetts, that is by no means available nationally these days. So the problem is that… even Obama in that 2009 speech said, I want to quote what he said. They realize this.
It’s not sustainable to have an economy where in one year, 40% of our corporate profits come from the financial sector that was based on too much on inflated home prices, maxed out credit cards, over-leveraged banks and overvalued assets, or an economy where the incomes of the top 1% have skyrocketed, while the typical working household has seen their income decline by nearly $2,000. Well, that’s just what we’ve been discussing, and what Richard said.
But the Democratic Party thinks that if we can just say that we feel your pain, that people are going to think, oh, I’m so glad you feel our pain as you’re causing this pain. That obviously isn’t going to work. It’s as if the Americans have hit a political wall of being locked in, that is blocking the solution of its economic problems. And I think that’s why we’ve become a failed state. Harris lost despite a shift of the affluent voters her way. It was the low-income voters who provided the margin for Trump. Trump had a massive improvement of voters under $50,000, 49% to 48%, and even more when it gets even lower.
But Harris won the voters over $100,000 a year, 54% against 45%. So certainly you’re not going to have the wealthy class recognizing that its control of the economy can’t survive politically. They’re trying to figure out, well, how can we make the deep state, the FBI, the Justice Department, just prevent us from losing this position? How can we say, well, if you’re making the kind of criticism that Richard and I have been making, we’re going to block you from the media, access to the media.
Starmer has made it a penalty in England to criticize the Israelis and to stand up for the Palestinians in this. You can look at what’s happening in England as the iron fist of the right wing in the deep state and what it’s trying to do. And obviously that’s what America should avoid. But the question is whether we have exactly the same dynamic here that’s destroying the policy.
It is interesting that overnight while we were watching what was happening to the votes, the Dow Jones Industrial Average jumped 1,300 points. That’s over 3% on its way to jumping 15%, 1,500 points by the end of the stock exchange yesterday. You’ve seen the financial class applauding what Trump is doing. Do they think that he can solve their problems? What are they thinking? How do you explain this? I can’t explain it. I would not have thought that from anybody’s victory would have forced up, created a stock market boom. I don’t think there’s anything that I can think of that would have justified a stock market boom. But there you go.
It’s going way up. It’s as if what we’re describing is an illusion, certainly it’s covered the class wealthy enough to have significant stock and bond holdings. Interest rates are jumping at the same time. It’s very rare that interest rates would jump up at the same time when the stock market’s going up. They’ve always been the inverse.
We’re in a world of chaos right now, and I can’t imagine what Trump is really going to do. I don’t know the difference between what he said he’s going to do to get support of backers by promising he’s going to put nutcases like Pompeo or Tom Cotton in charge of the military and State Department, or whether he’s doing what Roosevelt did and just, well, OK, I’m going to talk about a wide range of possible survivors, while actually doing what he wants all along.
I have no idea what’s going to really happen and whether the investors in the stock market who think they’ve got the world running their way and we’ve solved the economy’s problems, which means their problems of how are we going to keep making money financially… How long can that idea, that getting the wealthy stock market Wall Street investors rich is solving the economy’s problems…? I think this is inherently unstable. It’s not a problem that other people are recognizing, or even talking about. That’s why I think we’re in for a chaos period.
RICHARD WOLFF:Let me offer an answer. I think I know why the stock market is booming. Here’s what it is. If you look at the first time Trump was president – those four years (2016 to 2020) – lots of bloviating, lots of bullshit, lots of noise. One, ONE legislative achievement. The tax cut of 2017 (December). A massive tax cut favoring corporations, on the one hand, and the top 10% of the individual income distribution, on the other.
An immense gift to that class of people, coming at the end of a 40-year period of massive redistribution of wealth, from the bottom and the middle, to the top. The logical argument would be, excuse me, that a tax cut at that time for those people was less needed than at any other time in history. They are doing wonderfully. The stock market is booming after 1980 – famous for that. They don’t need a tax cut. He gave them a tax cut.
The market is going up because they think, especially if he wins the house for the Republicans (which I believe is still in the air), he will do it again. It’s the only thing he did last time. That’s the one thing he can do; partly because the Democrats (a good number of them will vote for that too, for fear of what might happen to them if they didn’t vote for it – and the big donors in their district will go find a Democrat who will). So that’s why we have it.
Why the interest rate? Because this lunatic is going to do something with tariffs and that’s going to heat up the inflation again. And that means the interest rates, in anticipation of that, are going to go up.
So, you get the chaos. Michael’s right. You get the unusual… that instead of low interest rates, letting people buy on margin, et cetera, et cetera, and boost the market; now you get the boost from the tax cut expectation. Meanwhile, the policy suggests you better be careful with your interest rates. You want to lock in higher interest rates, right? So you’re going to pay less for your bond… all of that, the way that normally works.
The last point I really do want to make is that all of this – the booming stock market, the rising interest rates – you know what that does? It worsens the inequality. It gives the rich – remember 10% richest people own 80% of the stocks and bonds… So if you boost the stock market, you’re rich enriching the already rich, which makes them further away from everybody else. Meanwhile, rising interest rates mean that everybody has to pay more for their credit card. Everybody has to pay more if they need to get a car. Everybody will… fill in the blank. This is terrible.
And if the tariffs go through, that’ll give us an inflation, and inflation hurts people who have less money relative to people who have more money. Because the people with more money can afford to pay the higher price everybody else can’t. So what are we doing? We’re making the situation that brought him in worse. And so whoever runs for the Democrats will be saying about Trump what Trump said about the Democrats: Failed economy. Vote him out. They’ll say, about Trump. Failed economy. Vote him out. That’s it. It’s just the oscillation that passes for politics.
One of the reasons the narrative is empty is because the two parties have a rule: You can find fault with the other party, but not in any way that goes into the actual economy and how it works. When Bernie said it’s rigged, the mass of people nodded. They know, it’s rigged. They know that the rich do what’s necessary to protect and enhance their wealth. That’s all. But the two parties cannot… That’s why there’s no discussion of unequal distribution of wealth.
Before and after the election, Janet Yellen gives speeches about, you know, we need to be more inclusive in the beneficiaries of our system. Oh, interesting! But nobody says a word during the campaign. She’s out there giving these speeches, mean nothing. It’s just verbiage.
That’s the rule. You can’t talk about business cycles. You can’t talk about a declining empire. And you can’t talk about distribution of wealth and income. Why? Because those are the three most important aspects of the economy we’re living through, and those are taboo. It’s unbelievable. It’s like pre-Freudian psychology: You can talk about everybody’s mental health, but you can’t refer it to sex.
What does Freud tell us? If you don’t refer it to sex, you’ll never understand it. You’re crazy, with what you’re doing. All right. That’s what we have. We have a taboo that precludes us from understanding; and then we scratch our heads and wonder why we can’t control, and can’t understand, what’s happening to us. It’s a remarkable moment we’re in. But again, it is not atypical for a declining empire to be going through it. Declining empires always breed in their people selective denial.
The first reaction to a declining empire for many people is, what are you talking about? There’s no decline. Okay. That’s one. Okay. Next. Okay, there is a decline, but it’s not us. It’s an external foreign evil force, China, or immigrants. And then, when you get through that one, you begin (I hope) to listen to, and participate in, conversations that talk about how we are our own biggest problem. And until we deal with that, we’re not going to stop the Chinese, and we’re not going to stop desperate people from migrating. What we can do something about is our own economic system; so let’s talk about THAT. .
And that would be my hope from all of these conversations we have. And it goes back to what Michael said at the beginning. We need to change the narratives about what’s going on.
MICHAEL HUDSON: I think Richard’s got it right. He points to something that is very ironic. In the past, for hundreds of years, inflation has always benefited the workers primarily. That’s why the right-wing anti-socialist economics – the Austrian school, the Chicago monetarists – have all been against inflation. What they mean is, how do we prevent wages from rising?
The peak of American wage increases was during the Vietnam War inflation of the 1970s. It was to oppose the rising wages that the Republicans came in with the austerity program raising interest rates.
Now, but as Richard just pointed out, in the case of tariffs that Trump is proposing to impose, these tariffs are going to be borne by American consumers. So, this inflation is going to be very different from all the inflations in the past that have tended to benefit Labor’s wages.
This inflation will be at the cost of real wages, not reflecting the increase in wages. So, in a way, what Trump is proposing is to put the class war back in business, cutting taxes for the wealthy when they don’t need it. And what the economy needs is raising taxes on them and imposing tariffs that are going to eat into the wage levels.This is exactly the dilemma that we’re in.
RICHARD WOLFF: All right. One… I know we keep saying last. One last comment. One of the aspects of a declining empire that I think we all need to focus on… When an empire declines, those at the top – the rich, the corporate leaders – they are in the best position to navigate a declining empire. They have the power and the money with which to hold on to the wealth they’ve accumulated. And that means off-loading the costs of a declining empire onto somebody else.
The middle class, the working class, the poor: they’re the ones. That’s why we have an inflation that the Social Security doesn’t keep up with. That’s why we haven’t raised the minimum wage from $7.25 an hour since 2009, even though every year has been an increase in prices. Some a lot, some a little. But we have savaged the poorest among us.
And the inflation worked that way, too, because we had a short-term inflation, where the prices led the wages [that] never really caught up. So that worked again to shift. The people at the top are taking care of themselves. And that means the costs of a declining empire are felt that much more on the middle and the bottom. That, too, is part of a declining empire; and that’s another factor shaking up the old consensus ideas of how you should vote, or what’s going on in the world. All right, folks, I think we have lost it.
MICHAEL HUDSON: Who will the costs be pushed on? They’ll be pushed on to other countries. That’s the first thing that Trump has promised, as you know. He said, you know, we’re not going to pay for the war in Ukraine anymore. That was his one anti-war statement. We’re going to make Europe pay for their own defense. No more payment for that.
You can imagine the hysteria that this has all caused from the Ukraine, to Germany, to the NATO…
RICHARD WOLFF: By the way, just a footnote, the German government collapsed overnight.
MICHAEL HUDSON: Yes. And it’s because Scholz, the Social Democrat, said we have to fire the free enterprise pro-financial finance minister because the finance minister who says we can’t run a budget deficit… well, if you can’t run a budget deficit, with Trump not paying the cost of NATO and the war anymore, if Europe continues to support the war on Russia in Ukraine, then it has to drastically cut back all of its social spending programs in an economy that’s already the most depressed economy in Europe. So that’s solving the American decline in empire is going to, first of all, have reverberatory effects on all the American satellites that Trump will be able to push the costs onto.
RICHARD WOLFF: And all the other European governments that have aligned themselves with the United States are going to now realize they probably bet on the wrong horse.
MICHAEL HUDSON: Well, it’s pretty hard to reverse it now, I think. It’s going to take decades for them to reverse it. They’re stuck too.
NIMA ALKHORSHID: Yeah, we can wrap up this session right now. Thank you so much for being with us today, Richard and Michael.
MICHAEL HUDSON: Well, we ended on an optimistic note. There’s going to be a revolution.
Richard D. Wolff
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