TABACCO: Congressional Politicians are NOT Stupid! If I can see it, they can see it! But they won’t do anything about it because the Republicans PROTECT the Financial Status of Have-Mores, and Democrats won’t even discuss it unless and until there is a GROUNDSWELL mouthing it. Without the Koch Brothers or other Billionaires, who finance Astroturf “activism” that benefits themselves – not Average Folk who reiterate the “message” generally for PAY, any unfinanced Liberal Agenda must actually originate from the Rank & File.
Why else would POOR REPUBLICANS fight against ”BIG GOVERNMENT” ENTITLEMENTS, when they are the ones, who profit from ENTITLEMENTS! Without Obstruction Payoffs from Have-Mores, their “activism” makes no sense – even POOR REPUBLICANS are NOT THAT STUPID!
Why do so many people, who worked all their lives in New York State, move to Virginia when they retire and collect their Entitlements there? Because those folks are financially astute, and they realize that their “Fixed Incomes” will go further in Virginia than they would in New York State – courtesy of the “one-size-fits-all” Social Security Laws!
If average New Yorkers realize that, why can’t CONGRESS!
TABACCO: The Minimum Wage “INDEX” for 1st quarter of 2013 has low of 90.4 in Oklahoma to high of 154.1 in Hawaii. If you had just retired after working your whole life in Hawaii, why wouldn’t you move to enjoy the financial benefits of a FIXED INCOME in Oklahoma!
Of course you will ask why the Monthly Social Security Retirees from Hawaii should be penalized for moving to another lower Indexed State, and rightfully so, why not pretend to still live in Hawaii while actually moving to Oklahoma to maintain your Social Security benefits at Hawaii’s high level? Nice try, but there is NO SYSTEM ever created that does not have flaws that scofflaws will attempt to exploit.
Your question should be, “Under our current system, isn’t it totally unfair for Hawaii Retirees to make due at the same level as Oklahoma Retirees?”
Encore: Taming Capitalism Run Wild
August 9, 2013
Modern American capitalism is a story of continued inequality and hardship. Even a modest increase in the minimum wage faces opposition from those who seem to show allegiance first and foremost to America’s wealthy and powerful. Yet some aren’t just wringing their hands about our economic crisis; they’re fighting back.
In an encore broadcast, Economist Richard Wolff joins Bill to shine light on the disaster left behind in capitalism’s wake, and to discuss the fight for economic justice, including a fair minimum wage. A Professor of Economics Emeritus at the University of Massachusetts, and currently Visiting Professor in the Graduate Program in International Affairs of the New School, Wolff has written many books on the effects of rampant capitalism, including Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It.
“We have this disparity getting wider and wider between those for whom capitalism continues to deliver the goods by all means, [and] a growing majority in this society facing harder and harder times,” Wolff tells Bill. “And that’s what provokes some of us to say it’s a systemic problem.”
Also on the broadcast, activist and author Saru Jayaraman marches on Washington with restaurant workers struggling to make ends meet, and talks about how we can best support their right to a fair wage. Jayaraman is the co-founder and co-director of the Restaurant Opportunities Centers United, which works to improve pay and working conditions for America’s 10 million-plus restaurant workers. She is also the author of Behind the Kitchen Door, an exposé of the restaurant industry.
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.
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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 taxpayers. 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.
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.
BILL MOYERS: When study after study has exposed the myth that this is a land of opportunity, how does the myth keep getting perpetuated?
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.”
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.
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?
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 learned 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.
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 that 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.
[PLEDGE BREAK – SOFT FEED BEGINS]
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, 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.
[PLEDGE BREAK – END OF SOFT FEED]
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 depositors’ 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 to 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.
Friday, October 18, 2013
Super-Sizing Welfare Costs: Low Wages at McDonald’s, Burger King Cost Taxpayers Billions
New research shows more than half of low-wage workers at fast-food restaurants rely on public assistance to survive – a rate double that of the overall workforce. According to researchers at the University of California, Berkeley, low wages in the fast-food industry cost American taxpayers nearly $7 billion every year – that’s more than the entire annual budget of the Centers for Disease Control and Prevention. A companion report by the National Employment Law Project found McDonald’s alone costs Americans $1.2 billion annually by paying its workers insufficient wages. Last year the top 10 largest fast-food companies alone made more than $7.4 billion in profits.
This is a rush transcript. Copy may not be in its final form.
JUAN GONZÁLEZ: A Big Mac costs only a couple dollars, but it comes with a $7 billion side of welfare. New research shows more than half of low-wage workers at fast-food restaurants rely on public assistance to survive—a rate double that of the overall workforce. According to researchers at the University of California, Berkeley, low wages in the fast-food industry cost American taxpayers nearly $7 billion every year. That’s more than the entire annual budget of the Centers for Disease Control and Prevention. A companion report by the National Employment Law Project found McDonald’s alone costs American taxpayers $1.2 billion annually by paying its workers insufficient wages. Last year, the top 10 largest fast-food companies alone made more than $7.4 billion in profits.
AMYGOODMAN: While CEOs are raking in record profits, in August fast-food workers went on strike in 60 U.S. cities in the largest protest of an almost year-long campaign to raise service-sector wages at restaurants, including McDonald’s and Burger King. The striking workers say they want to unionize without retaliation in order to collectively bargain for a $15-an-hour “living wage,” more than twice the federal minimum of $7.25. Longtime fast-food worker Shantel Walker went on strike in New York City.
SHANTELWALKER: The truth, I’ve been in fast food since 1999, on and off, and it’s 2013. I had a couple other jobs in between. But for the most part, no matter what job I get, it always starts back at $7.25. That’s—like they say, that’s state minimum wage. So, it doesn’t matter where you work. That’s the whole irony of this whole situation. It’s not just fast food. It’s people in factories. It’s people in warehouses. It’s people all over. They’re not making money. Some people can’t even pay their rent. Some people have—some people live in shelters. I know some people that don’t even have homes to live in. They live in shelters, and they work every day. That’s what you call the working poor.
AMYGOODMAN: Well, for more, we go to Washington, D.C., where we’re joined by Jack Temple, policy analyst at the National Employment Law Project, author of this new report, “Super-Sizing Public Costs: How Low Wages at Top Fast-Food Chains Leave Taxpayers Footing the Bill.”
Jack Temple, welcome to Democracy Now! Lay out your major findings.
JACKTEMPLE: Thanks so much.
You know, I think this report is an important contribution to what we’ve seen over the last year. You know, we know that the fast-food industry pays low wages. But what this report clarifies is that whether or not you work in the fast-food industry, whether or not you eat fast food, the low-wage business model in the fast-food industry is costing you money. The low-wage business model, which forces workers in the industry to rely on public assistance in order to afford food or healthcare or housing or other basic necessities, is draining the economy of resources. And so, this is an industry that’s really a race to the bottom. And it’s not just spelling economic hardship for workers in the industry; it’s spelling, yeah, weak economic growth and really dragging down the economy across the board.
JUAN GONZÁLEZ: Jack, I wanted to ask you about some of the arguments that are used in terms of defending this practice. One is that many of these restaurants, especially McDonald’s and Burger Kings, are franchises, where basically every restaurant is a small business, in effect, and that these jobs are entry-level jobs that naturally would pay low wages, because the people would move on to other jobs.
JACKTEMPLE: Mm-hmm. Well, the facts refute both of those arguments, actually, so let’s just take them both in turn.
For all the talk about small businesses in this industry, as you mentioned in the opening, you know, McDonald’s made $5.5 billion last year. This is an industry that’s making hundreds of billions of dollars every year. And the corporate level really does exercise a lot of control over franchisees. You know, the food tastes the same in any McDonald’s you walk into. The napkins look the same. Whenever there’s a new menu item, all the franchisees have to comply. They have to buy new equipment, when it’s needed. It’s not really fair for the company to say that they can dictate the terms of basically every facet of the arrangement between the corporation and the franchisee, but all of the sudden they have no control over wages. They determine the costs. They determine the requirements that franchisees have to comply by. And, in effect, they absolutely control the wages. And so, the corporations are really on the hook for wages in this industry. And, you know, the only thing more outrageous than that is the fact that they have substantial profits at the same time.
And regarding the question about entry-level workers, the data really show that this is an industry that is significantly older and more experienced than maybe what popular impression might suggest. So, 70 percent of all fast-food workers are adults over the age of 20. And 30 percent, nearly a third, of those workers are actually supporting children at home. And so, these low wages are being used to support adults that are trying to make ends meet, support families that are trying to make ends meet. And that’s why you see the public cost of this industry so high. These wages just aren’t cutting it for workers, and they’re requiring public assistance in order to make ends meet.
AMYGOODMAN: How much do these franchises make annually? How much do the CEOs make? How much do the workers make? And talk about justifying the disparity.
JACKTEMPLE: Yeah, so, that’s a perfect contrast for you. So, at the seven largest publicly traded fast-food companies in the U.S., the CEOs at those companies made a combined total of $53 million in annual compensation last year. At McDonald’s, just for example, the CEO, Don Thompson, made $13.7 million alone last year. Meanwhile, the median hourly wage for a fast-food worker is $8.69 an hour. It’s one of the lowest wages in the economy today for the occupation. So you see the stunning disparity between what the workers are making in this industry and what the CEOs are making.
AMYGOODMAN: The demographic of the workers?
JACKTEMPLE: Yeah, I mean, you know, these are workers, as I mentioned, that are significantly older than we expect. The median age of the fast-food worker is nearly 29 years old. Many are supporting children. So, you know, this is a workforce that actually isn’t all that different than what we’re seeing across the economy now. Low-wage jobs have made up the majority of job growth throughout the post-recession recovery. And we’ve seen over the last several decades a real shift in the economy away from the manufacturing jobs, the industrial jobs, that once supported the middle class throughout the beginning and the middle of the 20th century, to a service economy in retail and restaurants. These are the industries that are beginning to define the core of the American economy today. And that’s a problem because these are the industries that are driving low wages for a lot of Americans.
JUAN GONZÁLEZ: Not only are they defining the core of the economy, the bulk of the jobs created since the Great Recession of 2008 have been in these kinds of low-wage jobs. Can you talk about what that means for the future of our economy?
JACKTEMPLE: Yeah, I think it means two things. The first point, it means, at the very least, more Americans are going to be finding themselves stuck in low-wage jobs. The more low-wage jobs dominate the economy, the more Americans are going to find themselves relying on low-wage jobs to make ends meet. And the data bear that out. So, the Bureau of Labor Statistics does projections for job growth over the next decade and finds that six of the 10 largest growth occupations over the next decade are going to be low-wage occupations. And so, this is an economic trend that’s been going on for the last three decades and is projected to continue. We know that if we don’t take active steps to raise wages, the economy is not going to be doing it on its own.
I think the other—obviously, the real cost of this is, even if you’re not someone that ends up relying on low-wage jobs, you know, as we show in this report, the low-wage economy, low-wage industry, is costing all of us, though. The more workers have to rely on public assistance in order to make ends meet, that’s more money drained out of the economy and going to support massively profitable industries and companies.
AMYGOODMAN: In August, New York City Councilmember Letitia James expressed support for striking fast-food workers and talked about the feminization of poverty.
COUNCILMEMBERLETITIAJAMES: Most of the individuals who work in fast-food restaurants, which is one of the growing—fastest-growing industries in the City of New York; it’s a race to the bottom. A significant number of them in retail and in the fast-food restaurants are women of color who look like me. And so, there is a feminization of poverty. It’s a term, which describes most women who live below the poverty level who are struggling to make ends meet.
AMYGOODMAN: That’s New York City Councilmember Letitia James, who’s running for public advocate here in New York. If—Jack Temple, the issue of this particularly affecting women, that welfare is a women’s issue, and what you think the public should do about this?
JACKTEMPLE: Well, you know, I mean, I think we hear that argument a lot, you know, when we’re talking about public assistance, generally, or talking about the American safety net. I think, you know, what the trends show, at least, is that what we might have been able to argue affects only a small amount of the population is beginning to affect workers across the board, across the economy. You know, it’s going to be the case where we’re not able to talk about specific demographics or specific qualities. This low-wage job growth is going to begin to affect all of us, the more the current trends continue.
And so, I think, you know, as you mentioned in the beginning of the segment, a lot of opponents or a lot of the company spokespersons will argue that these low-wage jobs are exclusively teens or exclusively, you know, workers that are starting out or entry-level workers, and that provides a springboard for more opportunity. But the fact of the matter is, these low-wage jobs are beginning to affect all Americans across the board. If they’re not relying on low-wage jobs already, then their tax dollars are supporting low-wage companies. And so, it’s beginning to be a core—an aspect of the core of the American economy.
AMYGOODMAN: And finally, five seconds: the argument the companies make, “Then we’ll have to pick up the costs of the food, and that will particularly hurt poorer people.”
JACKTEMPLE: Well, companies have a ton of resources. We’re talking, again, about a multibillion-dollar—
AMYGOODMAN: Five seconds.
JACKTEMPLE: —multibillion-dollar industry here. There’s just no reason to suspect that companies can’t afford higher wages.
AMYGOODMAN: Jack Temple, we want to thank you for being with us, with the National Employment Law Project. We’ll link to your report, “Super-Sizing Public Costs.”
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