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. Thats why were your retirement company. Welcome. Theres hardly a sentient grownup in this country who isnt 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 99 of americans, while it rose 11 for the top 1 . Since the worst of the financial crisis, that top 1 has captured the increases in income while the rest of the country has floundered. Stunning, isnt 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 whats happening to the middle class, but the American Dreams really become a nightmare for the poor. Just about everyone has an opinion about the trouble were in. The blame game is at fever pitch in washington, where obstinate republicans and hapless democrats once again play kickthecan 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. Hes now visiting professor at the new School University here in new york city where hes teaching a special course on the financial crash. Welcome, richard wolff. Thank you, bill. 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. 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. yeah, for most everybody. Right. That was the argument. And so, you may not get the most, but itll trickle down to you, all the different ways. The yachts will rise. Thats right. The ocean will lift all the boats. The reality is that for at least 30 years now, that isnt 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 isnt getting the benefit, is in fact facing harder and harder times. And thats what provokes some of us to begin to say, its a systemic problem. So, we put together some recent headlines. The merger of american and u. S. Air, 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 to 6. 2 . Colossal salaries escalating again, many subsidized by tax payers. The Postal Service ending service on saturday. Whats the picture you get from that montage of headlines . Well, for me it is captured by the european word austerity. Were 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, were 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 to 39. 6 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 from 4. 2 to this is so grotesque an inequality, that youre watching a process that is sort of spinning out of control in which those at the top have no limits, dont recognize any constraint on how far they can take it. 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. Thats right. What does that say to you . The peak for the minimum wage in terms of its real purchasing power was 1968. Its 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 its 7. 25 today in terms of what it can buy. So, youve taken the folks at the bottom, the people who work hard, fulltime jobs, and youve made their economic condition worse over a 50year 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 mightve otherwise gotten a job wont get it because the employer doesnt 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 4 an hour, just think how many more people could get a job. But a job under conditions that make life impossible. Who decided that workers at the bottom should fall behind . Well, in the end, its the society of the whole that tolerates it. But it was congresss decision and congresss 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 didnt 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 9 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. Many economists say, we just cant do that because it would be devastating. Well, the truth of the matter is that theres an immense economics literature, im a professional economics person, so ive 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, thats the estimate of the white house, the 15 million American Workers whose wages will go up if we raise the minimum wage, we hav\t 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 cant 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, economists from a wide range of political perspectives, you know what they end up with . Theres not much effect. In other words, the two things net each other out and so there isnt much of a change in the Employment Situation overall. To which my response is, okay, lets assume thats 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 youre closer to a decent minimum life. Are you suggesting then that there is no economic reason why those at the bottom should not share in the gains of Economic Growth . 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 dont have the resources. So, heres an immeasurable question about the minimum wage. How many young people who are born into a minimum wage family, that is its 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 longterm 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. You remind me of something that president obama said in his second inaugural address. We believe that americas 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. Thats eloquent, but hardly true. Thats right. And its painful for some of us to hear that, because it is so obviously untrue. It is so obviously contradicted by the realities, not just those of who work at the minimum wage, but all of those who work at, or even 50 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 dont 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 cant provide even the most basic services and opportunities. We dont have equality of opportunity. Because there is no shortcut. If you want equality of opportunity, youre going to have to create equality of income and wealth much closer to a genuine equality than anything were going in the other direction. And so i agree with you. Its stark if our president talks about something so divergent from the reality. When study after study has exposed the myth that this is a land of opportunity, how does the myth keep getting perpetuated . Well, my wife is a psychotherapist. And so i ask her that question often. And heres 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 its slipping away. And they would like to believe that this president , or any president who says it, might somehow bring it back. When you say that theres no economic argument that people should be kept at the should not share in the gains of Economic Growth, the response is, well, thats what the market bears. Well, you know, in the history of economics, which is my profession, its 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. Its called the market. That way youre absolving everybody from responsibility. It isnt that youre doing this, making that decision in this way, its 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. Thats what advertising is. You try to create the demand, if there isnt 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. Its 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 its the market is another way of saying, its our Economic System that works that way. That is a very dangerous defense move to take. Why . Because it plays into the hands of those like me who are critical of the system. If indeed it isnt this one or that one, it isnt this companys strategy or that products maneuver, but it is the market, the totality of the system, that is producing unconscionable results, multimilliondollar apartments next door to abject poverty, then youre saying that the system is at fault for these results. I agree with that. But im 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. You graduated from harvard. Right. Then stanford. Right. Then yale. Thats it. Was this the economy you were taught at those three elite institutions to celebrate . No. No, this is the economy that i came to understand is the reality. For me and i learned things at all these institutions, its 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 dont have that in other disciplines. There arent two history departments or two anthropology departments, or two philo so, what is this . I looked into this. Its 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 ive been at, the Economics Department is in one set of buildings, and across the campus in another is the business school. And theres actually tension in the university about who teaches the basic courses to students that theyre required to take and so on. Heres 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 its a stable, equilibrium that meets peoples needs in an optimal way. These kinds of words are used. But thats useless to people who want to learn how to run a business, because its 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 youll have to make decisions if youre going to run a business. Over there, you learn about how beautiful it all is when you think abstractly about its basic principles. The invisible hand. Yeah. The market. All of that. So for me, i began to realize, okay, im an economist. Im 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. After harvard . After stanford . And after yale . It actually happened while i was there. I was already there were a few people as heretics. Yes, they do. A few. 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 theres mama, papa, two children. And one of the children thinks its 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, lets see what they have to say. And that for me opened an immense door of critical insights that i found invaluable, and ive never forgiven my teachers for not having exposed me to that. But so few have done that. As you know, as youve written, as you have said, weve not had much of a debate in this country for, i dont 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 . 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 1930s, again in the 1960s, 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 its 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 thats your question, that we dont do that for our Economic System . For 50 years, when capitalism is raised, you have two allowable responses celebration, cheerleading. Okay, thats 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, youre either told that youre ignorant and dont understand things, or with more dark implications, youre somehow disloyal. Youre somehow a person who doesnt like america or something. 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 youre doing today. 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 were living the results. You know, if i were of the silence . Of yes. Of the lack of debate. Were living in an Economic System that isnt working. So, i guess im a little bit like one of those folks in the 12step programs. Before you can solve a problem, youve got to admit youve got one. And before were going to fix an Economic System thats 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 thats 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. 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 countrys interest at heart. If thats not greed, what is it . Well, i think it isnt greed. Its and let me explain why. Yes, im 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 dont 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 thats what i try to do. And my understanding, and ive looked at this in great is that thats correct. Theyre not telling a story. Theyre doing. Theyre following the rules. They do the things that advance their interests and they avoid the things that would damage their interests. Thats what theyre hired to do as executives or as leaders of their institutions. And thats what they do to the best of their ability. So, for example, im not enthused about arresting these people or punishing them in this or that way. And the reason is simple, if we get i wont mention any names, but if we get some banker, and we haul him up in front of a court, and we find out hes done something thats 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 dont change the system, were 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 theyre doing what this system tells them to do. And if we dont change the system, substituting a new crop will not solve our problem. When we talked the other day our conversation will continue in a moment, but first, this is pledge time on Public Television and were taking a short break so you can show your support for the programming you see right here on this station. For those of you still with us, heres 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 nonexistent, 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. Roc united the organization she cofounded, 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 were done. Saru jayaramans new book behind the kitchen door is an insiders expose of what its really like to work at the lowest rungs of the restaurant industry. 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 its 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. Theyve 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 companys supposed to make up the difference between 2 13 and 7. 25. But time and time again, that doesnt happen. And when a slow night happens, and you dont earn anything, or very little in tips, you often cant pay the rent. And i guarantee you in every restaurant in america theres at least one person whos on the verge of homelessness or being evicted or going through some kind of instability. Its 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 cant afford to put food on their own families tables. The other key issue that we find that workers face is the lack of paid sick days and healthcare benefits. Twothirds of all workers report cooking, preparing, and serving food when theyre 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 thats the first thing i would say to a Small Business owner is, look, there are tons of people who are already doing it. Were here to help you, theyre here to help you try this new way of doing business. Were workers united, we cant be defeated. Were workers united, we cant be defeated. 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. 86,000 customers of yours have signed a petition calling on you to pay a minimum of at least 5 an hour to your workers, because 2. 13 is just not enough to live on. So, here you go. Thank you. Thank you. Announcer we now return to moyers and company. Youre also not enthused about regulation, which is what so many liberals and others are calling for now. Is there some parallel reason for that . 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 didnt 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 lowerlevel 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 were 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. Were in a terrible crisis now. So, all the previous promises about all the previous regulations didnt work. And they didnt work for two reasons. Yeah, why . Either the regulations that were passed were then undone, or they were evaded. And thats 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 depositors 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 glasssteagall 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 well make a wall between them. Okay. The bill was passed. For the banks, this was trouble. This was a problem. They didnt 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 dont 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 glasssteagall act, and president bill clinton signed the repeal. It was a bipartisan repeal. Right. Its a joke. That allowed the banks to make risky bets with their depositors money. Eight years later, our Financial System collapsed. Its like a joke. Dont you learn over and over again that the regulations are simply another problem from the businesses youre 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. You probably saw the recent story that facebook, which made more than 1 billion in profits last year, didnt 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 betweenq 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 . 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 its 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 theyre based. 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, brake, a brake on private power and greed. And its clear that that brake doesnt work anymore. That its not slowing down the growth of power to the capitalist class. Right. And i think its 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 dont, then the system itself will become our problem. And you dont want that. And many of us in the Union Movement dont 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 dont, 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 is almost unimaginable today. A president , who in the depths of the depression, creates the Social Security system, giving every american whos 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 cant or wont do it. So, in the midst of a terrible depression, when every level of government says, theres no money, mr. Roosevelt proved there is the money. Its 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 its always amazing to me how Many Americans kind of never got that part dont know it. But when i do that, and they say, well, thats 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 president ial terms. So it wasnt the end of his political career, it made him the most powerful, popular president weve ever had. There must be a lesson here somewhere. 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. Right. And yet, richard, it still took the war to create the spending that pulled us out of the depression, right . Right. Because they were always large groups of corporations and the rich who were angry at all of this, like they are today, who didnt want to pay higher taxes, much higher than corporations pay today, who didnt want to pay high personal income tax rates, much higher than they are today. But they had to. People dont remember, in 1943, president roosevelt proposed a top income tax bracket of 100 . Yeah. 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 . Thats maximum income. The president of the United States, with massive popular support. And when the republicans said, no, we cant do that. They fought. And the compromise was a 94 top rate. Compared to the 39 , and. 6 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 theyre 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 dont have that problem. They dont have a cio. They dont have socialists and communists, the way they do in europe. But i think its a pyrrhic victory, because what youre 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, thats wishful thinking. Theyre 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 is 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 its producing its own undoing, and doesnt imagine it because it focuses so much on making more money in a normal way of business, that it somehow occludes from itself. It doesnt see the larger social conditions and what its behavior is doing to them. For a moment, wasnt there kind of quirky or eccentric symbiosis between the tea party and occupy wall street . That, because in their own different ways, they were reacting to the colossus that was coming apart all around them. And upending their lives . Absolutely. I think in country after country going through this crisis, youre seeing more or less the same thing. An upsurge of right wing, agony and hostility and opposition to whats happening in this capitalist system and a left wing one. The 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 countrys much easier, much more socially acceptable to form, and theres 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 dont think weve 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 cant deliver the kind of society and results that people want. And i think were 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, but a severe crisis. But there is no agitation here. People seem not to know what to do here. Right. 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 cant quite believe that its 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 couldnt 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 dont go up, per worker, per hour . Which they havent 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. Heres a statistic. The oecd, leading agency gathering data on the worlds developed economies, 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. Thats what you do if the wages per worker dont 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, everybodys physically exhausted. The stresses in your family become more powerful. Whats happened to American Families is a wellknown result over the last 30 years. But the other interesting thing, to hold onto the American Dream that americans did when their wages didnt go up anymore, was to borrow money like its going out of style. You cannot keep borrowing more and more if your underlying wage is not going up. Because in the end, its the wage that enables you to pay off what youve borrowed. And it was only a matter of time, and 2007 happened to be that time, when you couldnt do it anymore. You couldnt borrow anymore because you couldnt pay it back. And so, you stopped your mortgage or you stopped your credit card payment or you couldnt 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 havent 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, im stretching the metaphor, but thats all right. 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 its 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 bachelors degree, that the job you had thought you were then entitled to and the income you thought would go with it, theyre 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 . Im struck by the fact that you give a fairly dire not fairly, a dire analysis of whats happened to us in the last several years. But at the end of both your book and of your lecture, you dont wind up cynical or pessimistic. You not at all. You sound like youre saying, lets take to the barricades. Yeah. I think theres a wonderful tradition here in the United States of people feeling that they have a right, even if they dont 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 whove inherited this situation seem stymied and unable to do so. I know you have some alternatives, that youve given a lot of thought to the critique, but youve also given a lot of thought to the correcting of our system. One of the things that has happened to me in the last two years is as weve developed the criticism and people see the process of how we got here, the most insistent question is, what do we do . Where do we go . If regulation isnt the solution and if punishing this one if it is a systemic process, how can we conceive and talk about an alternative system . Richard wolff, ive 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. Thank you, bill, for the opportunity. Thats it for this week. Im bill moyers. See you next time. 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. 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