BILL MOYERS:
This week on Moyers & Company...
RICHARD WOLFF:
Our system capitalism, which we finally have
to debate now that it's so dysfunctional.
Our system isn't working.
It isn't producing for the mass of people.
And an economic system that is only as acceptable,
or should be, as its performance.
ANNOUNCER:
Funding is provided by:
Carnegie Corporation of New York, celebrating
100 years of philanthropy, and committed to
doing real and permanent good in the world.
The Kohlberg Foundation.
Independent Production Fund, with support
from The Partridge Foundation, a John and
Polly Guth Charitable Fund.
The Clements Foundation.
Park Foundation, dedicated to heightening
public awareness of critical issues.
The Herb Alpert Foundation, supporting organizations
whose mission is to promote compassion and
creativity in our society.
The Bernard and Audre Rapoport Foundation.
The John D. And Catherine T. Macarthur Foundation,
committed to building a more just, verdant,
and peaceful world.
More information at Macfound.Org."
Anne Gumowitz.
The Betsy And Jesse Fink Foundation.
The HKH Foundation.
Barbara G. Fleischman.
And by our sole corporate sponsor, Mutual
of America, designing customized individual
and group retirement products.
That's why we're your retirement company.
BILL MOYERS:
Welcome.
There's hardly a sentient grown-up in this
country who isn't aware that our economy is
no longer working for vast numbers of everyday
people.
The rich and powerful have more wealth and
power than ever; everyone else keeps losing
ground.
Between 2009 and 2011 alone, income fell for
the 99 percent, while it rose eleven percent
for the top One Percent.
Since the worst of the financial crisis, that
top One Percent has captured the increases
in income while the rest of the country has
floundered.
Stunning, isn't it?
The behavior of many of those One Percenters
brought on the financial crisis in the first
place.
We turned around and rescued them, and now
their wealth is skyrocketing once again.
At the bottom, working people are practically
flat on their back.
We talk a lot about what's happening to the
middle class, but the American Dream's really
become a nightmare for the poor.
Just about everyone has an opinion about the
trouble we're in -- the blame game is at fever
pitch in Washington, where obstinate Republicans
and hapless Democrats once again play kick-the-can
with the problems we face.
You wish they would just stop and listen to
Richard Wolff.
An attentive and systematic observer of capitalism
and democracy, he taught economics for 25
years at the University of Massachusetts and
has published books and DVDs such as "Democracy
at Work," "Occupy the Economy," and "Capitalism
Hits the Fan: The Global Economic Meltdown
and What to Do about It."
He's now visiting professor at The New School
University here in New York City where he's
teaching a special course on the financial
crash.
Welcome, Richard Wolff.
RICHARD WOLFF:
Thank you, Bill.
BILL MOYERS:
Last night, I watched for the second time
the popular lecture that is on this DVD, "Capitalism
Hits the Fan."
Tell us why you say capitalism has hit the
fan?
RICHARD WOLFF:
Well, the classic defense of capitalism as
a system from much of its history has been,
okay, it has this or that flaw.
But it quote, unquote, "delivers the goods.'"
BILL MOYERS:
Yeah, for most everybody.
RICHARD WOLFF:
Right.
BILL MOYERS:
That was the argument.
RICHARD WOLFF:
And so you may not get the most, but it'll
trickle down to you, all the different ways—
BILL MOYERS:
The yachts will rise.
RICHARD WOLFF:
That's right.
The ocean will lift all the boats.
The reality is that for at least 30 years
now, that isn't true.
For the majority of people, capitalism is
not delivering the goods.
It is delivering, arguably, the bads.
And so we have this disparity getting wider
and wider between those for whom capitalism
continues to deliver the goods by all means,
but a growing majority in this society which
isn't getting the benefit, is in fact, facing
harder and harder times.
And that's what provokes some of us to begin
to say, "It's a systemic problem."
BILL MOYERS:
So we put together some recent headlines.
The merger of American and US Airlines, giving
us only four major airlines and less competition.
Comcast buying NBC Universal, also reducing
competition.
The very wealthy getting a trivial increase
in taxes while the payroll tax of working
people will go from 4.2 percent to 6.2 percent.
Colossal salaries escalating again, many subsidized
by tax payers.
The postal service ending service on Saturday.
What's the picture you get from that montage
of headlines?
RICHARD WOLFF:
Well, for me it is captured by the European
word "austerity."
We're basically saying that even though the
widening gap between rich and poor built us
up, many of the factors that plunged us into
a crisis, instead of dealing with them and
fixing that problem, we're actually allowing
the crisis to make the inequality worse.
The latest research from the leading two economists,
Saez from the University of California in
Berkeley, and Piketty in France confirms that
even over the last five years of the crisis,
through 2012, the inequality of wealth and
income has gotten worse, as though we are
determined not to deal with it.
All of those headlines you talked about are
more of that.
I mean, the astonishing capacity to make it
harder for people to have a delivery of their
mail on Saturday, to save what is in a larger
picture, a trivial amount of money, but that
will really impact-- thousands of people will
lose their jobs, everyone will lose a service
that is important, particularly in smaller
places around the United States that are not
served by anything comparable to the Post
Office.
And then as you pointed out, and I have to
say a word about it, this amazing display
in which we raise the top income tax on the
richest people from 35 percent to 39.6 percent
only for those over $450,000 a year, while
for the 150 million Americans who get a weekly
or a monthly check, their payroll tax went
up a whopping 48 percent from 4.2 to-- this
is so grotesque an inequality that you're
watching a process that is sort of spinning
out of control in which those at the top have
no limits, don't recognize any constraint
on how far they can take it.
BILL MOYERS:
If workers at the bottom get the increase
in the minimum wage that President Obama proposed
in his State of the Union message, they will
still be faring less well than their counterparts
did 50 years ago.
RICHARD WOLFF:
That's right.
BILL MOYERS:
What does that say to you?
RICHARD WOLFF:
The peak for the minimum wage in terms of
its real purchasing power was 1968.
It's been basically declining with a couple
of ups and downs ever since.
So that if you adjust for the current price,
the minimum wage was about $10.50 roughly,
back in 1968 in terms of what it could buy.
And it's $7.25 today in terms of what it can
buy.
So you've taken the folks at the bottom, the
people who work hard, full-time jobs, and
you've made their economic condition worse
over a 50-year period, while wealth has accumulated
at the top.
What kind of a society does this?
And then the arguments have come out, which
are in my profession, a major staple for many
careers, are arguments that, "Gee, if you
raise the minimum wage, a few people who might've
otherwise gotten a job won't get it because
the employer doesn't want to pay the higher
wage."
Well, if that logic is really going to play
in your mind, then you should keep lowering
the wage.
Because if you only made it four dollars an
hour, just think how many more people could
get a job.
But a job under conditions that make life
impossible.
BILL MOYERS:
Who decided that workers at the bottom should
fall behind?
RICHARD WOLFF:
Well, in the end, it's the society of the
whole that tolerates it.
But it was Congress's decision and Congress's
power to raise the minimum wage, as has happened
from time to time.
But the combination of politics in both parties
and in terms of the arrangements between the
parties meant that they didn't do it.
Even this time, not to be too critical of
our president, but when he was running for
office, he proposed a $9.50 minimum wage.
Here we are in the beginning of his second
term, and something has happened to make him
only propose a nine dollar minimum wage.
So even he is scaling down, perhaps for political
reasons, what he thinks he can accomplish.
When, if we just wanted to get it back to
what it was in 1968, it would have to be $10
or $11 an hour.
BILL MOYERS:
Many economists say, "We just can't do that
because it would be devastating."
RICHARD WOLFF:
Well, the truth of the matter is that there's
an immense economics literature, I'm a professional
economics person, so I've read it.
And the literature goes like this.
On the one hand, there may be some jobs that
are lost because an employer having to pay
a higher minimum wage, will not hire people
or will hire fewer.
That will happen in some cases.
But against that, you have to weigh something
else.
If the 15 million, that's the estimate of
the White House, the 15 million American workers
whose wages will go up if we raise the minimum
wage, we have to count also, the question,
those people will now have a higher income.
They will spend more money.
And when they spend more money on goods and
services, that will create jobs for people
to produce those goods and services.
In order to understand the effect of raising
the minimum wage, you can't only look at what
will be done by some employers in the face
of a higher wage in lowering the employment.
You have to look at all the other effects.
And when economists have done that, economist
from a wide range of political perspectives,
you know what they end up with?
There's not much effect.
In other words, the two things net each other
out and so there isn't much of a change in
the employment situation overall.
To which my response is, "Okay, let's assume
that's correct.
At the very least though, we have transformed
the lives of 15 million American working people
and their families from one of impossible
to get most of what America offers, to a situation
where at least you're closer to a decent minimum
life."
BILL MOYERS:
Are you suggesting then that there is no economic
reason why those at the bottom should not
share in the gains of economic growth?
RICHARD WOLFF:
Absolutely.
There is no economic reason.
And in fact, I would go further.
We know, for example, that the lower the income
of a family, the more likely it is to cut
corners on the education of their children
because they don't have the resources.
So here's an unmeasurable question about the
minimum wage.
How many young people who are born into a
minimum wage family, that is it's so low as
we have it today, will never get the kind
of educational opportunities, the kinds of
educational supports, to be able to realize
their own capabilities and to contribute to
our society?
That alone is a reason, whether you think
of it in terms of the long-term benefit of
the country, or you just approach it as a
moral question or an ethical question.
By what right do you condemn a whole generation
of young people to be born into families whose
financial circumstances make so much of what
they need to become real citizens impossible?
BILL MOYERS:
You remind me of something that President
Obama said in his second inaugural address.
PRESIDENT OBAMA:
We believe that America's prosperity must
rest upon the broad shoulders of a rising
middle class.
We know that America thrives when every person
can find independence and pride in their work;
when the wages of honest labor liberate families
from the brink of hardship.
We are true to our creed when a little girl
born into the bleakest poverty knows that
she has the same chance to succeed as anybody
else, because she is an American; she is free,
and she is equal, not just in the eyes of
God but also in our own.
BILL MOYERS:
That's eloquent, but hardly true.
RICHARD WOLFF:
That's right.
And it's painful for some of us to hear that,
because it is so obviously untrue.
It is so obviously contradicted by the realities,
not just of those who work at the minimum
wage, but all of those who work at or even
at 50 percent above what we call the poverty
level.
Because when you look at what families like
that can actually afford, they have to deny
huge parts of the American dream to their
children and to themselves as a necessary
consequence of where they are put.
And I don't need to be an economist to put
it as starkly as I know how.
We can read every day that in the major cities
of the United States, apartments are changing
hands for $10 million, $20 million, $30 million,
$40 million.
People have enormous yachts that they cruise
-- we all see it.
We all know it.
We even celebrate it as a nation.
How does that square with millions of people
in a position where they can't provide even
the most basic services and opportunities?
We don't have equality of opportunity.
Because there is no shortcut.
If you want equality of opportunity, you're
going to have to create equality of income
and wealth much closer to a genuine equality
than anything-- we're going in the other direction.
And so I agree with you.
It's stark if our president talks about something
so divergent from the reality.
BILL MOYERS:
When study after study has exposed the myth
that this is a land of opportunity, how does
the myth keep getting perpetuated?
RICHARD WOLFF:
Well, my wife is a psychotherapist.
And so I ask her that question often.
And here's what she says to me.
Often, people cling all the harder to an idea
precisely because the reality is so different
and becoming more different.
In other words, I would answer the myth of
equal opportunity is more attractive, more
beautiful, more something people want to hold
on, the more they know it's slipping away.
And they would like to believe that this president
or any president who says it, might somehow
bring it back.
BILL MOYERS:
When you say that there's no economic argument
that people should be kept at the-- should
not share in the gains of economic growth,
the response is, "Well, that's what the market
bears."
RICHARD WOLFF:
Well, you know, in the history of economics,
which is my profession, it's a standard play
on words.
Instead of talking about how the economy is
shaped by the actions of consumers in one
way, workers in another way, corporate executives
in another way, we abstract from all of that
and we create a myth or a mystique.
It's called the market.
That way you're absolving everybody from responsibility.
It isn't that you're doing this, making that
decision in this way, it's rather this thing
called the market that makes things happen.
Well, every corporate executive I know, knows
that half of his or her job is to tweak, manipulate,
shift, and change the market.
No corporate executive takes the market as
given.
That may happen in the classroom, but not
in the world of real business.
That's what advertising is.
You try to create the demand, if there isn't
enough of it to make money without doing that.
You change everything you can.
So the reference to a market, I think, is
an evasion.
It's an attempt to make abstract the real
workings of the economy so nobody can question
what this one or that one is doing.
But let me take it another way.
To say that it's the market is another way
of saying, "It's our economic system that
works that way."
That is a very dangerous defense move to take.
BILL MOYERS:
Why?
RICHARD WOLFF:
Because it plays into the hands of those like
me who are critical of the system.
If indeed it isn't this one or that one, it
isn't this company's strategy or that product's
maneuver, but it is the market, the totality
of the system, that is producing unconscionable
results, multi-million-dollar apartments next
door to abject poverty, then you're saying
that the system is at fault for these results.
I agree with that.
But I'm not sure that those who push this
notion of "the market makes it happen," have
thought through where the logic of that defense
makes them very vulnerable to a much more
profound critique than they will be comfortable
with.
BILL MOYERS:
You graduated from Harvard.
RICHARD WOLFF:
Right.
BILL MOYERS:
Then Stanford.
RICHARD WOLFF:
Right.
BILL MOYERS:
Then Yale.
RICHARD WOLFF:
That's it.
BILL MOYERS:
Was this the economy you were taught at those
three elite institutions to celebrate?
RICHARD WOLFF:
No.
No, this is the economy that I came to understand
is the reality.
For me, and I learn things at all those institutions,
it's not that.
I came to understand that in America, economics
is a split, almost a schizophrenic kind of
pursuit.
And let me explain.
On the one hand, there are the departments
of economics in colleges and universities
across America.
But side by side with them is an entire other
establishment that also teaches economics.
You don't have that in other disciplines.
There aren't two history departments or two
anthropology departments, or two philo-- so
what is this?
I looked into this.
It's because there are two separate functions
performed by the economics departments and
then by the other ones.
And the other ones are called business schools
and business departments.
In fact, in most universities, in all those
I've been at, the economics department is
in one set of buildings, and across the campus
in another is the business school.
And there's actually tension in the university
about who teaches the basic courses to students
that they're required to take and so on.
Here's what I discovered.
The job of economics, to be blunt but honest,
is to rationalize, justify, and celebrate
the system.
To develop abstract theories of how economics
works to make it all like it's a stable, equilibrium
that meets people's needs in an optimal way.
These kinds of words are used.
But that's useless to people who want to learn
how to run a business, because it's a fantasy.
So they are shunted someplace else.
If you want to learn about marketing, or promotion,
or advertising, or administration, or personnel,
go over there.
Those people teach you how the economy actually
works and how you'll have to make decisions
if you're going to run a business.
Over there, you learn about how beautiful
it all is when you think abstractly about
its basic principles.
BILL MOYERS:
The invisible hand.
RICHARD WOLFF:
Yeah.
BILL MOYERS:
The Market.
RICHARD WOLFF:
All of that.
So for me, I began to realize, "Okay, I'm
an economist.
I'm in that one.
But I want to understand how the real economy
works."
And then I discovered that I needed to reeducate
myself.
I had to go learn things that I was never
assigned to read.
BILL MOYERS:
After Harvard?
After Stanford?
And after Yale?
RICHARD WOLFF:
It actually happened while I was there.
I was already, there were a few people--
BILL MOYERS:
--as heretics.
RICHARD WOLFF:
Yes, they do.
BILL MOYERS:
A few.
RICHARD WOLFF:
You know, but you know, capitalism-- I like
to say to people, capitalism, like all systems,
when it comes into being, is born a few hundred
years ago in Europe and spreads around the
world, like other systems before it.
It has always produced those who admire and
celebrate it and those who are critical of
it.
I used to say to my students, "If you want
to understand the family who lives down the
street, suppose there's mama, papa, two children.
And one of the children thinks it's the greatest
family there ever was, and the other one is
quite critical.
If you want to understand the family, do you
choose only one child to interview, or do
you think it might be wise to interview both
of them?"
For me, I began to interview the critics of
capitalism, because I thought, "Let's see
what they have to say."
And that for me opened an immense door of
critical insights that I found invaluable.
And I've never forgiven my teachers for not
having exposed me to that.
BILL MOYERS:
But so few have done that.
As you know, as you've written, as you have
said, we've not had much of a debate in this
country for, I don't know, since the Great
Depression over the nature of the system,
the endemic crisis of capitalism that is built
into the system.
We have simply not had that kind of debate.
Why do you think that is?
RICHARD WOLFF:
Well, I think we have had it from time to
time.
We have had some of the greatest economists
in the tradition, for example, Thorstein Veblen,
at the beginning of the 20th century, a great
American economist, very critical of the system.
Someone who taught me, Paul Sweezy, another
Harvard graduate.
These are people who have been around and
at various times in our history, the beginning
of the 20th century, during the 1930's, again
in the 1960's, there was intense debate.
There has been that kind of thing in our history.
I mean, we as Americans, after all, we take
a certain pride, which I think is justified,
we criticize our school system.
We just spent two years criticizing our health
delivery system in this country.
We criticize our energy system, our transportation
system.
And we want to believe, and I think it's true,
that to criticize this system, to have an
honest debate, exposes flaws, makes it possible
to repair or improve them, and then our society
benefits.
But then how do you explain, and that's your
question, that we don't do that for our economic
system?
For 50 years, when capitalism is raised, you
have two allowable responses: celebration,
cheerleading.
Okay, that's very nice.
But that means you have freed that system
from all criticism, from all real debate.
It can indulge its worst tendencies without
fear of exposure and attack.
Because when you begin to criticize capitalism,
you're either told that you're ignorant and
don't understand things, or with more dark
implications, you're somehow disloyal.
You're somehow a person who doesn't like America
or something.
BILL MOYERS:
That emerged, as you know, in the Cold War.
That emerged when to criticize the American
system was to play into the hands of the enemies
of America, the Communists.
And so it became disreputable and treasonous
to do what you're doing today.
RICHARD WOLFF:
And for my colleagues, it became dangerous
to your career.
If you went in that direction, you would cut
off your chances of getting a university position
or being promoted and getting your works published
in journals and books, the things that academics
need to do for their jobs.
So yes, it was shut down and shut off.
And I think we're living the results.
You know, if I were--
BILL MOYERS:
Of the silence?
Of--
RICHARD WOLFF:
Yes.
Of the lack of debate.
We're living in an economic system that isn't
working.
So I guess I'm a little bit like one of those
folks in the 12-step programs.
Before you can solve a problem, you have to
admit you got one.
And before we're going to fix an economic
system that's working this way, and producing
such tensions and inequalities and strains
on our community, we have to face the real
scope of the problem we have.
And that's with the system as a whole and
at the very least, we have to open up a national
debate about it.
And at the most, I think we have to think
long and hard about alternative systems that
might work better for us.
BILL MOYERS:
I was intrigued to hear you say elsewhere
that this is not just about evil and greed.
And yet you went on to say capitalists and
the rich are determined not to bear the costs
of the recent bailouts or the crisis itself.
You even go so far as to suggest, as to question
their patriotism, and that they may not have
the country's interest at heart.
If that's not greed, what is it?
RICHARD WOLFF:
Oh, I think it isn't greed.
It's-- and let me explain why.
Yes, I'm critical of corporations and the
rich because they do call the shots in our
society, and so that brings on them a certain
amount of criticism, even though they don't
like it.
So I will do that.
But beyond that, let me absolve them in the
following way.
Bankers do what this system goads them to
do.
If you talk to a banker, he or she will explain
to you, "These are the things that will advance
the interests of my bank.
These are the problems I have to overcome.
And that's what I try to do."
And my understanding, and I've looked at this
in great de-- is that-- that's correct.
They're not telling a story.
They're doing.
They're following the rules.
They do the things that advance their interests
and they avoid the things that would damage
their interests.
That's what they're hired to do as executives
or as leaders of their institutions.
And that's what they do to the best of their
ability.
So for example, I'm not enthused about arresting
these people or punishing them in this or
that way.
And the reason is simple, if we get, I won't
mention any names, but we get some banker
and we haul him up in front of a court, and
we find out he's done some things that are
not good.
And we substitute the next one.
He gets arrested though, he gets fined, he
gets removed.
The next one is subject to the same rewards
and punishments.
The same inducements.
The same conditions.
If we don't change the system, we're not going
to change the behavior of the people in it.
So in a sense, I do absolve them even when
they are greedy, because they're doing what
this system tells them to do.
And if we don't change the system, substituting
a new crop will not solve our problem.
BILL MOYERS:
Our conversation will continue in a moment,
but first, this is pledge time on public television
and we're taking a short break so you can
show your support for the programming you
see right here on this station.
BILL MOYERS:
For those of you still with us... here's a
report from earlier this year.
You go to a restaurant or diner for a square
meal, but the people who take your order and
clean up after you are looking for a square
deal.
So they marched on Capitol Hill in support
of a fair wage for workers who barely survive
on minimal salaries and customer tips.
Although those tips are often meager or non-existent,
for the past 22 years, these workers have
been stuck at a federal minimum wage of $2.13
an hour.
At the head of the march, Saru Jayaraman.
PROTESTERS:
Roc United!
BILL MOYERS :
The organization she co-founded, Restaurant
Opportunities Centers United, is fighting
to improve wages and working conditions for
the people who cook and serve the food we
eat at restaurants and then clean up when
we're done.
Saru Jayaraman's new book "Behind the Kitchen
Door" is an insider's expose of what it's
really like to work at the lowest rungs of
the restaurant industry.
SARU JAYARAMAN:
There are actually now over 10 million restaurant
workers in the United States.
So seven of the ten lowest paying jobs in
America are restaurant jobs, and the two absolute
lowest paying jobs in America are restaurant:
dishwashers and fast food preps and cooks
are the two absolute lowest paying jobs in
America.
These workers earn poverty wages because the
minimum wage for tipped workers at the federal
level has been frozen for 22 years at $2.13
an hour, and it's the reason that food servers
use food stamps at double the rate of the
rest of the U.S. workforce, and have a poverty
rate of three times the rest of the U.S. workforce.
We got to this place because of the power
of the National Restaurant Association; we
call it the other NRA.
They've been named the tenth most powerful
lobbying group in Congress and back in 1996
when Herman Cain was the head of the National
Restaurant Association, he struck a deal with
Congress saying that, "We will not oppose
the overall minimum wage continuing to rise
as long as the minimum wage for tipped workers
stays frozen forever," and so it has for the
last 22 years.
Imagine your average server in an IHOP in
Texas earning $2.13 an hour, graveyard shift,
no tips.
The company's supposed to make up the difference
between $2.13 and $7.25 but time and time
again that doesn't happen.
And when slow night happens and you don't
earn anything or very little in tips you often
can't pay the rent.
And I guarantee you in every restaurant in
America there's at least one person who's
on the verge of homelessness or being evicted
or going through some kind of instability.
It's an incredible irony that the people that
who put food on our tables use food stamps
at twice the rate of the rest of the US workforce.
Meaning that the people who put food on our
tables can't afford to put food on their own
family's tables.
The other key issue that we find that workers
face is the lack of paid sick days and healthcare
benefits; two-thirds of all workers report
cooking, preparing, and serving food when
they're ill, with the flu or other sicknesses.
And with a wage as little as $2.13, so reliant
on tips for their wages, these workers simply
cannot afford to take a day off when sick,
let alone risk losing their jobs.
The majority of workers are adults; many are
parents and single parents, single mothers,
using the restaurant job as their main source
of income.
We partner with more than a hundred small
business owners around the country who are
doing the right thing, providing good, decent
wages, better working conditions, paid sick
days, benefits, opportunities for advancement.
So I think that's the first thing I would
say to a small business owner is, "Look, there
are tons of people who are already doing it.
We're here to help you, they're here to help
you try this new way of doing business."
PROTESTERS:
We're workers united, we can't be defeated.
We're workers united, we can't be defeated...
BILL MOYERS:
Acting on that democratic impulse, Saru Jayaraman
and the protesting workers march from Capitol
Hill to the Capital Grille steakhouse, owned
by one of the biggest restaurant chains in
America...
SARU JAYARAMAN:
Eighty-six thousand customers of yours have
signed a petition calling on you to pay a
minimum of at least five dollars an hour to
your workers cause $2.13 is just not enough
to live on.
So here you go.
CAPITAL GRILLE MANAGER:
Thank you.
SARU JAYARAMAN:
Thank you.
NARRATOR:
We now return to Moyers & Company...
BILL MOYERS:
You're also not enthused about regulation,
which is what so many liberals and others
are calling for now.
Is there some parallel reason for that?
RICHARD WOLFF:
Yes.
I find it astonishing to hear folks talk about
regulation.
We regulated after every one of our great
panics in the 19th century.
By the way, in those years, we were more honest.
We didn't refer to a "Great Recession."
We used much more colorful language, "The
panic of 1857."
I mean, that describes what people felt.
Anyway, after every one of our panics, crises,
recessions, depressions, we have regulated.
And the regulations were always defended,
first by lower-level officials and eventually
by the president and the highest authorities,
usually on two grounds.
"With this regulation, not only will we get
out of the crisis we're in, but," and there
was a pregnant pause, "we will prevent a recurrence
of this terrible economic dilemma."
It never worked.
The regulations never delivered on that promise.
We're in a terrible crisis now.
So all the previous promises about all the
previous regulations didn't work.
And they didn't work for two reasons.
BILL MOYERS:
Yeah, why?
RICHARD WOLFF:
Either the regulations that were passed were
then undone, or they were evaded.
And that's the history of every regulation.
During the Great Depression, it was decided,
as it has happened again now, that banks behaved
in an unfortunate way that contributed to
the crisis.
And that in particular, they took the depositor's
money, businesses and individuals, and then
made speculative investments and then the
house of cards came tumbling down.
So in the Great Depression, a bill was passed,
a regulation called the Glass-Steagall Act,
1933 Banking Act, which basically said, "There
has to be two kinds of banks, the banks that
takes deposits cannot make risky investments.
For that we need something separate called
an investment bank.
The first thing will be a commercial bank,
takes deposits, and we'll make a wall between
them."
Okay.
The bill was passed.
For the banks, this was trouble.
This was a problem.
They didn't like this.
So they spent the first 30 years, 20 to 30
years evading it in a hundred different stratagems.
Meanwhile, they began to realize that with
some work with politicians, they could weaken
it.
And after a while, they decided that even
better than evading and weakening, why don't
we just get rid of it?
And so in the 1990s, they mobilized, led by
some of our biggest banks, whose names everybody
knows, and they finally succeeded.
The Congress repealed the Glass-Steagall Act,
and President Bill Clinton signed the repeal.
BILL MOYERS:
It was a bipartisan repeal.
RICHARD WOLFF:
Right.
It's a joke.
That allowed the banks to make risky bets
with their depositor's money.
Eight years later, our financial system collapsed.
It's like a joke.
Don't you learn over and over again that the
regulations are simply another problem from
the businesses you're regulating.
This is a system that creates in the private
enterprise a core mechanism and a logic that
makes them do the very things that need regulation
and then makes them evade or undo those regulations.
BILL MOYERS:
You probably saw the recent story that Facebook,
which made more than one billion dollars in
profits last year, didn't pay taxes on that
profit.
And actually got a $429 million rebate from
you and me and all those other taxpayers out
there.
GE, Verizon, Boeing, 27 other corporations
made a combined $205 billion in profits between
2008 and 2011 and 26 paid no federal corporate
income tax.
What will ultimately happen, Richard if the
big winners from capitalism opt out of participating
in the strengthening, nurturing, and financial
support of a fair and functioning society?
RICHARD WOLFF:
Well, the worst example I just learned about
a few days ago.
And I got it actually from Senator Bernie
Sanders from Vermont.
That during the very years 2009, '10, '11,
that the federal government was basically
bailing out the biggest banks in the United
States, they were busily establishing or operating
subsidiaries in the Cayman Islands, in the
Caribbean, in order to evade taxes.
And it's a wonderful vignette in which the
very government pouring money to salvage these
private capitalist institutions is discovering
its own revenue from them being undone by
their evasion of the regulations about income
tax by moving to Cayman Islands where the
corporate tax is zero instead of paying their
corporate tax in New York or wherever they're
based.
BILL MOYERS:
Your assumption that runs through your books,
through your teaching, through this very interesting
DVD, is that democracy, theoretically if not
practically, but you hope practically, acts
as a brake, B-R-A-K-E, a brake on private
power and greed.
And it's clear that that brake doesn't work
anymore.
That it's not slowing down the growth of power
to the capitalist class.
RICHARD WOLFF:
Right.
And I think it's very poetic here in the United
States.
In the 1930s, when we after all had a crisis
even worse than the one we had now by most
measures, higher unemployment, and greater
incidents of poverty and so on, we did still
have a political system that allowed pressure
from below to be articulated politically.
We had the greatest unionizing drive in the
history of the United States, the CIO.
We had strong socialist and communist parties
that work with the CIO, that mobilized tens
of millions of people into unions who had
never been in unions before.
And they went to the power structure at the
time, President Roosevelt as its emblem.
And they said, "You have to do something for
us.
You just have to.
Because if you don't, then the system itself
will become our problem.
And you don't want that.
And many of us in the union movement don't
want it either."
Although some of the Socialists and Communists
might have been quite happy to go that direction.
And I think Roosevelt was a genius politician
at that time.
He understood the issue.
He went to the rich and the corporations of
America, the top, who had become very wealthy
at that time, and he basically said to them,
"You must give me, the president, the money
to meet at least the basic demands of the
massive people to be massively helped in an
economic crisis.
Because if you don't, then the goose that
lays your golden egg will disappear."
And he split the corporations and the rich.
Half of them were not persuaded.
And I believe they represent the right wing
of the Republican Party to this day.
But the other half were.
And they made the deal.
And so we had this amazing thing.
Politics, the threat of the mass of people
from below to politically act to change the
system led us to see something we've almost
unimaginable today.
A president, who in the depths of the Depression,
creates the Social Security System, giving
every American who's worked a lifetime of
65 years a check for the rest of their life
every month.
He created unemployment compensation to give
those millions of unemployed a check every
week.
And then to top it off, he created and filled
12.5 million federal jobs because he said,
"The private sector either can't or won't
do it."
So in the midst of a terrible depression,
when every level of government says, "There's
no money," Mr. Roosevelt proved there is the
money.
It's just a question of whether you have the
political will and support to go get it.
And when people listen to me explain this
history, and it's always amazing to me how
many Americans kind of never got that part--
BILL MOYERS:
Don't know it.
RICHARD WOLFF:
But when I do that, and they say, "Well, that's
a very risky thing for a politician to do,
support the mass of people by taxing the rich,
unthinkable."
And then I remind them, Roosevelt is the most
popular and successful president in American
history.
Nobody had ever been elected four times in
a row before that.
And it was so upsetting to the Republicans
that after Mr. Roosevelt died, they pushed
that law through that gives us a term limit
of two presidential terms.
So it wasn't the end of his political career,
it made him the most powerful popular president
we've ever had.
There must be a lesson here somewhere.
BILL MOYERS:
Well, it was one of the few times in history
in which the political elite and a few financial
elite formed an alliance for the people.
RICHARD WOLFF:
Right.
BILL MOYERS:
And yet, Richard, it still took the war the
create the spending that pulled us out of
the depression, right?
RICHARD WOLFF:
Right.
Because they were always large groups of corporations
and the rich who were angry at all of this,
like they are today, who didn't want to pay
higher taxes, much higher than corporations
pay today, who didn't want to pay high personal
income tax rates, much higher than they are
today.
But they had to.
Right, people don't remember in 1943, President
Roosevelt proposed a top income tax bracket
of 100 percent.
BILL MOYERS:
Yeah.
RICHARD WOLFF:
His bill that he sent to the Congress, a proposal,
was that anyone who earns over $25,000, which
would be roughly $350,000 a year now, in current
dollars, would have to give every nickel of
it, beyond the $25,000, to the government,
100 percent.
That's maximum income.
The President of the United States, with massive
popular support.
And when the Republicans said, "No, we can't
do that."
They fought.
And the compromise was a 94 percent top rate.
RICHARD WOLFF:
Compared to the 39 percent, and .6 percent
that we have today.
I mean, you can see there that that-- that
was a lesson.
That I believe the corporations and the rich
in America have learned.
They saw that they were forced between two
choices.
A real revolutionary possibility, or a compromise.
They voted for the compromise.
They gave the mass of people real support,
far better than anything they're getting now.
And they did that because politics was a real
possibility to undo their economic system.
After the war, I think our history is the
history of a destruction of the Communist
and Socialist parties first and foremost,
and of the labor movement shortly thereafter.
So that we now have a crisis without the mechanism
of pressure from below.
And that may look to those on top as an advantage
because they don't have that problem.
They don't have a C.I.O.
They don't have Socialists and Communists,
the way they do in Europe.
But I think it's a Pyrrhic victory, because
what you're teaching the mass of the American
people is that politics, debate, and struggle,
is a dead end.
And if you think people are just going to
sink into resignation, that's wishful thinking.
They're going to find other ways to protest
against the system like this, because the
pressures are building in that direction.
I think this is a capitalism that I would
say has lost its sense of its social conditions,
its social limits.
It's killing the mass support without which
it cannot survive.
It is creating tensions and hostilities that
will take left wing, right wing, a variety
of forms.
But it's producing its own undoing and doesn't
imagine it because it focuses so much on making
more money in a normal way of business that
it somehow occludes from itself.
It doesn't see the larger social conditions
and what its behavior is doing to them.
BILL MOYERS:
For a moment, wasn't there kind of quirky
or eccentric symbiosis between the Tea Party
and Occupy Wall Street?
That, 'cause in their own different ways,
they were reacting to the colossus that was
coming apart all around them.
And upending their lives.
RICHARD WOLFF:
Absolutely.
I think in country after country going through
this crisis, you're seeing more or less the
same thing.
A upsurge of right wing agony and hostility
and opposition to what's happening in this
capitalist system and a left wing one.
But only difference from country to country
is the balance between the two.
And I think the Tea Party comes first because
being a right wing party in this country's
much easier, much more socially acceptable
to form, and there's the old roots of it,
anyway, in the John Birch societies and all
the rest in American history.
So we have a Tea Party resurgence.
Then echoed a couple years later by the Occupy
Wall Street, which is a left wing response
to all of this.
And I don't think we've seen the end of either
of these.
I think these were the first explosions of
this process, the first reflections and signs
of a society coming apart because capitalism
can't deliver the kind of society and results
that people want.
And I think we're going to see more of it
and there may be difficult forms of it.
But it is part of a system that has come,
I think, closer and closer to its historical
if not end, then a severe crisis.
BILL MOYERS:
But there is no agitation here.
People seem not to know what to do here.
RICHARD WOLFF:
I think Americans are a little bit like deer
caught in the proverbial headlights.
They thought that they were in a society that
kind of guaranteed that each generation lives
better than the one before.
That the American dream gets better and better
and is available.
They promised when they got married to one
another to provide the American dream to each
other.
And then they promised their children to provide
it to them, that the children would have a
good education, that children would have the
opportunity.
They can't quite believe that it's not there
anymore.
You know, for 30 years, as the wages in America
stopped rising since the 1970s, Americans
reacted by doing two things.
Because they couldn't give up the idea that
they were going to get the American dream.
How do you buy the American dream, which becomes
ever more expensive, if your wages don't go
up, per worker, per hour?
Which they haven't since the '70s.
The first thing you do is send more and more
people out to work.
The women went out in vast numbers.
Older people came out of retirement.
Teenagers did more and more work.
Here's a statistic.
The OECD, leading agency gathering data on
the world's developed economy shows that the
average number of hours worked per year by
an American worker is larger than that of
any other developed country on this planet.
We work ourselves like crazy.
That's what you do if the wages per worker
don't go up.
You send out more people from the family in
order to be able to get that American dream.
But of course if you do that, everybody's
physically exhausted.
The stresses in your family become more powerful.
What's happened to American families is a
well-known result over the last 30 years.
But the other interesting thing, to hold onto
the American dream that Americans did when
their wages didn't go up anymore, was to borrow
money like it's going out of style.
You cannot keep borrowing more and more if
your underlying wage is not going up.
Because in the end, it's the wage that enables
you to pay off what you've borrowed.
And it was only a matter of time, and 2007
happened to be that time, when you couldn't
do it anymore.
You couldn't borrow anymore because you couldn't
pay it back.
And so you stopped your mortgage or you stopped
your credit card payment or you couldn't make
your car payments.
And this is a situation that explodes the
expectations of a good life.
And I think Americans are stunned.
And they haven't yet kind of gotten their
heads and their arms around the reality they
face.
And so what-- we see people in shock, if you
like.
I mean, I'm stretching the metaphor, but--
BILL MOYERS:
That's all right.
RICHARD WOLFF:
The American dream that they thought they
could access, that they were told they could
access, if they just worked hard or went to
school or both of the-- it's not there.
A whole generation of young people is learning
that in order to get the education, without
which the American dream is not possible,
you have to borrow so much money that your
whole situation is put in a terrible vice.
Then you discover, at the end of your four
years and you have your bachelor's degree,
that the job you had thought you were then
entitled to and the income you thought would
go with it, they're not there.
And yet you have the debt, the effects of
this on our society, not just for the young
people confronting it daily, but for the parents
who helped them, who led them to expect something,
that is producing a kind of stasis, immobility,
shock.
But beware, if my psychiatrist wife is right,
as she usually is, what happens after that
period of stasis, of shock, is a boiling over
of anger, as you kind of confront what has
happened.
And that you were deceived and betrayed in
your expectations, your hopes.
And then the question is, where does that
go?
BILL MOYERS:
I'm struck by the fact that you give a fairly
dire-- not fairly, a dire analysis of what's
happened to us in the last several years.
But at the end of both your book and of your
lecture, you don't wind up cynical or pessimistic.
You--
RICHARD WOLFF:
Not at all.
BILL MOYERS:
You sound like you're saying, "Let's take
to the barricades."
RICHARD WOLFF:
Yeah.
I think there's a wonderful tradition here
in the United States of people feeling that
they have a right, even if they don't exercise
it a lot, to intervene, to control.
There is that democratic impulse.
And I put a lot of stock in the hope that
if this is explained, if the conditions are
presented, that the American people can and
will find ways to push for the kinds of changes
that can get us out of this dilemma.
Even if the political leaders who've inherited
this situation seem stymied and unable to
do so.
BILL MOYERS:
I know you have some alternatives, that you've
given a lot of thought to the critique, but
you've also given a lot of thought to the
correcting of our system.
RICHARD WOLFF:
One of the things that has happened to me
in the last two years is as we've developed
the criticism and people see the process of
how we got here, the most insistent questions
is, "What do we do?
Where do we go?
If regulation isn't the solution and if punishing
this one-- if it is a systemic process, how
can we conceive and talk about an alternative
system?"
BILL MOYERS:
Richard Wolff, I've really enjoyed this conversation.
The DVD is "Capitalism Hits the Fan."
And the book is "Democracy at Work: A Cure
for Capitalism."
Thank you for being with me.
RICHARD WOLFF:
Thank you, Bill, for the opportunity.
BILL MOYERS:
That's it for this week.
I'm Bill Moyers.
See you next time.
