"What's Coming Is WORSE Than A Recession..." | Richard Wolff's Last WARNING

Please don't shoot the messenger just because you don't like the message. I am not responsible for the conditions that we face as a nation today, but I am not going to sugarcoat what the situation is. My guess is you already know it in your hearts and in the backs of your minds, if not in the front. So I thought it might be useful if we took stock of where we are, and by taking stock I mean economics, above all else. That's a core part of our situation, about which Americans are extraordinarily poorly informed. I do believe we are at a major transition point in the history of the United States, and probably of the whole world. I know that sounds grandiose, and I don't normally talk in grandiose terms, but the situation calls for it. And as I say, I'm not going to shrink away from why I think this. So let me begin by telling you why I think it's such an important moment in our history. For most of the last 50 years, roughly since 1970, the dominant economic reality of the global economy and of the United States, as the major player and shaper of that global economy in the last 50 years, that period can be characterized by many names, but the one that economists use is the phrase neoliberal globalization. And here's what it means. That in an era that we remember with names like Ronald Reagan and Margaret Thatcher, we turned away from the legacy of the New Deal. We turned away, as did many other countries, from the notion that a catastrophe like the Great Depression of the 1930s required that government play a major role in keeping capitalism tolerable for the mass of people. Remember what we did in the 1930s. We established social security that had never existed before in the United States. We established a minimum wage that had never existed before in the United States. We established unemployment insurance that had never existed before in the United States. And the government hired and paid 15 million people who were unemployed, and nothing like that had ever happened in the United States either. The government was called in to do all these things, in the words of one clever thinker, to give capitalism a human face. And it was paid for, because it was very expensive, as you can imagine. To give every elderly American a social security check every month for the rest of their lives. To give unemployed people a check every week for a year or two. To hire 15 million people. And the money that paid for all of that were heavy taxes placed on corporations and the rich. It's an important reminder for those of you who do not think that here in the United States we can ever tax corporations and the rich. It's an important reminder, of course we can, because we already did. As the remembrance, oh and footnote, the politician who had the courage to tax corporations and the rich, Franklin Roosevelt, was re-elected president three consecutive times. He has been, and is to this moment, the most successful popular president in the history of the United States, starting with George Washington. So not only can you tax corporations and the rich, but when we had a president who was forced from below to do it, he became the most popular politician we've ever had. In the period starting 1970, as the memory of the New Deal, as it was called, faded, Reagan and Thatcher undertook to roll the New Deal back. It had already begun before that, but it really gathered steam. And the mantra was the reverse of the New Deal. Instead of calling the government in to give capitalism a human face, people stumbled over one another, led by the Republicans, but tragically followed by the Democrats, to roll the government back, to get the government out of the economy, to go back to a capitalism which, if I may be allowed to continue the metaphor, lacks a human face, as the songs we just heard today document. And over the last 50 years, the government not only didn't regulate the way it once did, didn't intervene the way it once did, but it blessed the decision of corporate America to go where the profits were the greatest, which is what capitalism normally does. And where were profits the greatest? Answer. China. Starting in the 1970s, we had a mammoth exodus, and not like the one in the Bible. No, this was an exodus of American corporate leaders. They had graduated from business school where they had been taught, parentheses, I have taught in business schools myself, I know the curriculum. They were taught, if you want to succeed in business, go to where the wages are low and the market is expanding. The place where the wages were low and the market was expanding the most was in the land called the People's Republic of China. And American corporations, British and French and German and Italian and Japanese, they all went to China, where they were welcomed, where they were celebrated. And over the last 40 to 50 years, the Chinese economy grew. About half the economy there is capitalists, private companies working pretty much the way they do here. The other half of the Chinese economy, government-owned and operated enterprises, working the way they once did in places like the Soviet Union. China is a hybrid between the U.S. and the Soviet Union, different from both because it's a mixed situation. And it turns out that under the leadership of the Chinese Mao Zedong and the ones that have come since him, it turns out this hybrid organization can grow faster than any other economic system the world has ever seen. For the last 30 years, China has grown its economy, its GDP, its gross domestic product between six and nine percent per year. During that time, the United States' GDP grew between two and three percent a year. It doesn't take rocket science to understand that if you can manage that difference, if China can grow two to three times faster than the United States for 30 years, it can do what it has now done. Namely, it's caught up. Today, the United States has a competitor economically. We haven't had one for a century. World War II eliminated the potential competitors economically of the United States. Britain, France, Italy, Germany, and Japan all destroyed by that war. Russia, too. Russia never was an economic competitor. It isn't now, either. The GDP of the United States right now is about 25 trillion dollars. The GDP of Russia about now is three, maybe four trillion. No contest. It never was. It's part of why the entire Cold War will have to be revisited so Americans can finally learn what the truth about all of this is. Well, here we are. And what has happened has been that the United States now faces, for the first time in a century, an economic competitor. Big, powerful, highly developed, and able to out-compete the United States across the board. From the lowest to the highest technology, which either side is capable of. And the United States has not yet come to terms with this situation. The American people are engaged in what my psychotherapist wife explains to me is called denial. The pretense, mostly to It's best understood when glimpsing a toddler confronted by a scary barking dog and the toddler puts his or her hands in front of her eyes, comforted by the thought that if you can't see the dog, it isn't there. But we all know you grow up and at a certain point, not many years later, you come to understand you can put your hand there, but it doesn't make the dog disappear. China's going nowhere. China is growing. By the way, lest you think any of this is in the past, let me give you right now what the rate of growth of economic output is for 2024. These, I'm about to give you, are the estimates of the IMF, the International Monetary Fund, which monitors all of this. Economic growth for the United States 2024, 2.8 percent. Right on target with what it's been on and off for a long time. The economic growth of People's Republic of China this year will be 4.8 percent, nearly double. And the economic growth of India will be 7 percent. The next time you hear an American politician or you read in an American newspaper how the American economy is doing better than anyone in the world, please remember the word denial. That kind of statement, which I encounter almost every day, is the exact equivalent of a toddler putting fingers in front of her eyes or nose in hoping that the scary dog will go away. Not only have the Chinese outgrown us, but they have built an alliance with other countries that are recognizing that what was true for the last 75 years, a global economy dominated by the United States as the country that came out of World War II, with no bombs that fell on it other than Pearl Harbor, and less damage than any other developed country. The Chinese have built an alliance called the BRICS, B-R-I-C-S. You don't hear as much about it as you ought to. It started a few years ago, Brazil, Russia, India, China, and South Africa, five countries. A year and a half ago, six more joined. And three weeks ago, 13 more joined. The BRICS together is more than half the population of this planet. The United States is four and a half percent, not 50 percent, of this planet. The total output of goods and services in the BRICS is significantly larger already than the total output of the United States and its major allies known as the G7. The United States, Canada, Japan, Britain, France, Germany, and Italy. So now every country in the world, every company in the world, is reassessing and redesigning its strategy for the future. And what do I mean? They're redesigning because the dominant player in the world of the last 70 years, the United States, isn't the dominant player anymore. There is a bigger player, richer player, in the BRICS. Which means if you're going to build a railroad in your country, you don't just go to Washington, or London, or Paris. You may go to them, but you're going to ask them what offer they can make, and then you're going to compare it to what you can get from Beijing, New Delhi, and Sao Paulo. And in case after case, the choice is made to go with the BRICS, not the West. So what do I mean? I mean to tell you all that if you ask me to tell you what is the biggest reality we now have to face, it's the end of the American empire. What we inherited from the British, because they had the last empire before this one, is now over, and there is zero chance it's coming back. It ought to have been a central issue in the presidential election we've had. Instead, the two candidates and their parties worked overtime to practice denial. No such a thing. The war in Ukraine, just to take one of countless examples, will show you how costly this denial is. When the war begins in February of 2022, President Biden told us, along with all of his officials, Russia would be brought to its knees. The Russian currency, the ruble, would collapse. The entire West would side with Ukraine against the Russian invasion, and would defeat the Russians. None of that happened. Every part of that prediction proved false. Why? Because the way Russia was to be brought to its knees was by denying the market for Russian oil and gas, whose export the Russians depend on. It's a major industry for them, and they exported all of that energy to Western Europe. When the Western Europeans, under pressure from the United States, closed their markets to Russia, the expectation was that Russia would collapse. Instead, Russia went to its allies in the BRICS, above all China and India, and arranged to sell to them the oil and gas they no longer sold to the Europeans. As a result, Russia is growing faster this year than the United States, and it has grown at a faster rate than the United States throughout the war. You couldn't be more mistaken than this. That's what it means if you deny a reality. What we know about the history of every other empire that also grew, was powerful, and then died, was that the ride up as you're growing is a lot more fun and pleasant than the ride down when you're dying. The ride up was the 20th century, which many of you, like me, lived through. We now have to figure out how we descend when our empire is dying. What the United States is doing is typical. Denial has always been there. You can travel to Britain today and encounter no small number of people who still imagine that the British Empire is still there. Witness the inauguration ceremonies for King Charles, who's the king of nobody. What is this? Here's how it works in the United States. People who are rich and powerful are offloading the costs of a declining empire off of themselves. They don't want to which I understand, but if the economy is going down, which it is, and the people at the top are keeping theirs, which they are, then the rest of us, the middle class, the lower classes, the poor, we're going to be taking it on the chin more and more. And let me give you just a few of the examples. The inflation we just went through, that's a way of lowering the standard of living of large numbers of people, which they felt acutely as they went and paid six bucks for a dozen eggs or everything else. They know they're suffering. My guess? No chance for Mr. Trump without that inflation. It gave him the victory and it cost Kamala Harris the loss. But it's not the only thing. Let me give you other examples which an economist stares at with astonishment. The minimum wage at the federal level in the United States right now is $7.25 per hour, a sum of money on which nobody can live. When was the last time it was raised? 2009. That's 15 years ago. In every one of those 15 years, inflation raised the prices here in the United States of food, clothing, shelter, and everything else. Some years it went up a lot. Some years it went up only a little. But it went up. And what did we do to the people to whom we paid the lowest salary, $7.25? We didn't raise it. Republicans didn't raise it. Democrats didn't raise it. You know what that is? That's cruel and unusual punishment given to people whose crime is that they're poorly paid in the first place. What kind of a country does that? A declining empire whose rich and powerful are busy offloading the costs of that decline onto everybody else. Here's another sign. Our real wages have been stagnant for 30 to 40 years. In other words, if you measure, as we do in economics, the average wage in dollars paid to American workers, and you adjust that to the prices they have to pay when they spend their wages, it's been going up somewhere around one half of one percent a year. That's called stagnation. That means your wage isn't going anywhere. By the way, in contrast, the average real wages in the People's Republic of China have quadrupled over the same 30 years. If you want to understand why the government in China is secure, why it is powerful, why economic growth there is celebrated, I just gave you the statistic. Their average wage quadrupled. The average wage in the United States went nowhere. That's not even close, friends. And if you didn't know that, since everything I'm telling you is easily verifiable in a thousand government statistics, then you understand what I mean by denial. We are therefore experiencing in this country an extraordinary deepening of inequality. At the end of World War II, the United States was less unequal than European countries. Today, we are more unequal than every European country. How did that happen? Well, on the one hand, when corporations went to China and took advantage of low wages and a growing market, it made a fortune for those corporations, and therefore for the top 10 percent of Americans who own shares. Just a footnote, the top 10 percent richest Americans own 80 percent of the stocks and bonds. They did well. The rest of us, we are experiencing a declining empire, which those at the top don't want you to think about. They're managing it quite well. We cannot. That inequality, together with the inflation, gives you Mr. Trump's victory, and the bitterness and divisiveness that is suffusing this economy. And still, nobody willing to face these realities or to speak about them. Let me conclude by telling you that this is important to understand not only as our past, and not even only as our present, but also in our future. This denial, this refusal to face the realities of the economy we have, and that is shaping our lives and even more those of our children, promises us frightening near future. Mr. Trump won the election because he positioned himself with dramatic gestures, the sort favored by Madison Avenue advertisers, and the two gestures were, I am the great protector. Mr. Trump understood, far better than the Democrats, that people feel attacked, undermined, frightened, scared, worried for themselves and their children as well they should be. They glimpse, fearfully, where things are going. They want to be protected from it all. So he put himself forward as the great protector. And his two images were walls, the image of a protector. He's going to put a steel wall at the southern border to protect us against the invasion of the immigrants. And then he's going to put another wall, a tariff wall, to protect us against the evil Chinese. Very powerful images, very successful. But in terms of economics, total incoherent nonsense. It's impossible and it's a bad joke. And the whole world is watching. And while it's watching this bad joke unfold, the gap between the United States and the G7, on one hand, and the People's Republic of China and the BRICS, on the other, deepens. The United States's effort to stop, block, undercut China have failed. Been doing it now for 15 years. Started big time under Obama. It done work. And so the question is, what? Do you keep doing it? When the United States's people wanted to become independent of George III, the dominant king of the great British empire, it ended up in a war. The war of 1774, 5, and 6. Our independence war. And to the surprise of everybody, the British lost. In 1812, they tried again and they lost again. After that, the British decided, okay, we'll have to work out an arrangement. And the United States' arrangement was, you're independent, you can take Latin America. That was the Monroe Doctrine that happened a few years after that. And Britain took the rest. Asia-Africa was theirs. They avoided a war after that for a century. What will the United States do? Continue its denial of what's going on? Threaten, as they have, China with war, despite the fact that China has nuclear weapons, and the Russians do too, and they are now allied, in good part, because of the United States? Or are we going to sit down and work something out? Are we going to tell the American people, honestly, our empire is declining? The next one looks to be Chinese. Or if it isn't Chinese, it's going to be a multinational replacement for the kind of dominance that the Persians, or the Dutch, or the British, or the Americans operated. The world is changing very fundamentally. We are living, as I said a half hour ago, at a time of enormously profound change. And our job as Americans is to stop behaving childishly in this game of thinking that the problems I've barely sketched don't have to be worried about, because we can continue to act as if we were in charge in the way we were in the 1960s and 70s. We aren't. Nothing like that. The war in Ukraine is lost, for those of you who don't keep track. It's over, except for signing the documents. Russia won, Ukraine and the West lost. The war in Gaza isolates the United States. Indeed, what historians will say, when they look back on this time, will be that the United States undertook to isolate and neutralize the dangers after World War II. First in the Soviet Union, then in China, then in the global socialist world, nowadays in what are euphemistically called authoritarian societies. But the end result of the plan to isolate the rest of the world going through these efforts was to isolate the United States itself. We and Israel are standing all alone in that part of the world. And the Europeans, whose world is collapsed, they're economically a basket case. And you know why, what the major reason is, that Europe is gone as a player? Because they relied on two things. Exporting to China, which the Chinese don't need, and cheap energy from Russia, which they have turned away from. So the energy costs make European production uncompetitive, they have to pay too much for energy, and they can't sell in China the way they once did. They're done. Germany, which used to be the engine of European growth, is now the laggard dragging it down. It really is extraordinary, folks, that what you have thought about and assumed is now over. And it takes courage, but also a sense of realism, to say now we are going to talk honestly about our situation and try to find a livable way forward. The alternative, well, I don't want to spell it out, you can figure it out for yourself, but I hope you will not hold against me that I have told you how this situation really is, rather than comforting you with more denial. I like to remind people, for the last 30 years, the average annual rate of growth of the American GDP has been about two and a half to three percent per year. Over that same period, the average growth in the GDP of the People's Republic of China has been six to nine percent. That's why the Chinese are what they are now. If you can keep up a differential like that for 30 years, the gap between any two countries disappears. The United States had one or another policy in effect to try to slow down the Chinese and to speed up the Americans, because they saw that in their national interest, Republicans and Democrats alike. It did not work. And their decision now to hype it up more by adding tariff war and trade war, I don't see, it makes no sense to me. The bricks are too big. They can all trade with one another. They can kiss the United States goodbye. It's almost as if, if I were crude in my humor, I'd say the United States is now rushing, but it's too little and it's too late. You waited too long. And here's the irony, which you will enjoy, and I hope your audience does. So eager were the Western capitalist enterprises to make a profit killing off of going to China, because the wages were so much lower, because China had the fastest growing market. And every entrepreneur who's ever gone to business school, or I have taught in my life, was taught in my classes, like the classes of my colleagues, if you want to succeed in business, you go to where the wages are low and the market is growing. For the last 20 years, China has been the number one country where those things were true. And so the capitalists went there and helped build the Chinese economy, which they now recognize is an enormous danger for them.