<html><head></head><body><div style="color:#000; background-color:#fff; font-family:garamond, new york, times, serif;font-size:16px">
<div id="yui_3_16_0_ym19_1_1488728374378_11833" style="margin: 8px 0px; line-height: 130%;" dir="ltr"><span id="yui_3_16_0_ym19_1_1488728374378_11834" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Transcript of 5 interviews, total about 1 hour, The Real News Network:</span></div><div style="margin: 8px 0px; line-height: 130%;"><span lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'><br></span></div><div id="yui_3_16_0_ym19_1_1488728374378_12082" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12083" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: Michael, so your book reminds me of
Raymond Williams' key words, "It was an incredible contribution to
cultural criticism, a criticism of society and cultural studies as a
discipline." And I think it is going to make a phenomenal contribution to
the field of economics, your book, and it would be a reference for people to go
back, especially students to go back, and look at your version of the
definition of these terms and looking at economics from that critical prism.
So, my first question to you is really about this book. Why did you write it?</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11835" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11836" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: Well, I originally wrote it as an
appendix to a book to have been called, "The Fictitious Economy," and
the book was written before the 2008 crisis. And my point was that the way the
economy is described in the press and the way that it's described in University
courses has very little to do with how the economy really works. And in a way,
the press reports and the journalistic reports of the economy are... use a
terminology that is very well crafted euphemisms to conceal how the economy
works. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11837" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11838" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, instead of giving key words to explain what's
positive and how to understand the economy, which I do do, I also discuss all
of the misleading vocabulary, the Orwellian double-think that is used by the
media and by the bank lobbyists and the corporate lobbyists to confuse people
and make them think that poverty is wealth and to make them act against their
own interests by drawing a kind of picture of the economy as if it's a parallel
universe. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11839" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11840" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And this is parallel universe language they use and if
you can make people use a vocabulary and concepts that make it appear as if
when the 1% gets richer, the whole economy is getting richer, or when GDP goes
up, everybody is improving, then the people, the 95% who did not improve their
position from 2008 to 2016 somehow will suffer from the Stockholm syndrome.
They'll think, "Gee, it must be my fault. If the whole economy is growing,
why am I so worse off? It must be my fault. If only we can give more money to
the top 5% or the 1%, it'll all trickle down. We've got to cut taxes and help
them so they can give me a job because as Trump and other people said, Well, I
never met a poor person who gave me a job." </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11841" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11842" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>But the problem is, I've met a lot of rich people and
instead of giving people jobs when they buy a company, they usually get money
to fire people, downsize and outsource. So, the problem is you're not going to
get rich people giving you jobs either. But if people can somehow think in
their mind there's an association with... between wealth at the top and more
employment, and you have to somehow cut the taxes on the wealthy, because it'll
all trickle down, then they have an upside down view of how the economy works. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11843" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11844" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Well, I'd had an appendix to the book and that sort of
took on a life of its own. Everyone said look, you've got to have this
discussion, because if you have a vocabulary that actually describes how the
world and the economy works, then people can go, just one word lead to another
and you build up a more realistic picture of the economy. So, I not only
discuss words and vocabulary, I discuss some of the key individuals and the key
economists who've made contributions that don't appear in the academic curriculum
at all. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11845" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11846" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>There's a reason that the history of economic thought
is not taught anymore in the universities. If people really read what Adam
Smith wrote and John Stewart Mill wrote, they'd see that Adam Smith criticized
the landlords. Said, you've got to tax away. It's a free lunch. Mill said rent
is what landlords make in their sleep, without working. Adam Smith said,
whenever businessmen get together they're going to conspire as to how to get
money from the public at large and how to do a deal and mislead people.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11847" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11848" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>This is not exactly the kind of free enterprise that
people who talk about Adam Smith as if he were a tax cutter, an Austrian
economist or a Neoliberal want to hear. So, it's really a book about reality
economics and I've found to discuss reality economics I'm not going to give
them the language or the methodology that they use. That everything is an
equilibrium and if you think of the economy as always being an equilibrium
somehow you think that if you're poor, or you can't pay your debt, or you have
problems sending your kids to school, that's part of nature. And there isn't an
alternative. And that was what Margaret Thatcher said, "There is no
alternative." But this book is all about of course there's an alternative.
But to make an alternative, you need an alternative way of looking at the
world. And to do that you, as George Orwell said, you need a different
vocabulary.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11849" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11850" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: And speaking of vocabulary and of
course, euphemistic economic concepts, and that's what's so unique about this
book, because it's not just the words, like in Raymond Williams' but it's also
about the theory and the concepts that we are tackling, and you also talked
about businessmen and how they use these terminologies in order to mislead us.
So, here we have a businessman in office, as President of the United States,
who is proposing all kinds of economic reforms supposedly in our favor, in
terms of workers. And you know, the big infrastructure projects that he is
proposing that's supposed to elevate and lift people out of poverty and give
them jobs and so on. What is the mythology there?</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11851" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11852" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: Well, you just used the word reform
and when I grew up for a century before, reform meant you unionize labor. You
protect consumers. You regulate the economy so that there's less fraud in
consumers. But reform today is used by the International Monetary Fund in
Greece. They're insisting Greece to reforms. What's the reform? You lower wages
by 10 or 20%. You cut back the pensions by about 50%. You stop paying pensions.
You stop social spending. So, what you've had is an inversion of the
vocabulary. Reform now means the opposite of what it meant early in the
century. It's no longer Social Democratic. It's right wing, anti-labor,
pro-financial reform to basically cutback social spending and leave everything
in a privatized way to the wealthy, to the corporate sector. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11853" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11854" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, reform is the very first word that I'd use that
you have to realize how the meaning has changed as it's used in the press.
Basically, what the right wing has done in this country is take all the
vocabulary that was developed by the left wing and by the labor movement and by
the socialist economists for a century and they've appropriated it and hijacked
it and turned it into meaning the opposite. So, there are 400 words that I deal
with and many of these words show how the meaning has been turned upside down
to get people to have an upside down view of how the economy works.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11855" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11856" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: Alright, there's so much more to
unpack here, but we're going to do this in short segments for social media and
other people that are watching our conversations. And this is a series of
conversations we're going to have about your book and the misleading concepts
in it. So, Michael, let's continue in segment two.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11857" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11858" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'> </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11859" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11860" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: So Michael, now one of the things
that you really try to tackle in this book is, of course, the euphemistic
concepts of economics, and Trumps economic plan has focused on infrastructure
investment, as one of its key plans for the economy. And of course, he says
that this will create a better business climate, and create good jobs. What do
you think of that?</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11861" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11862" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: Well, everybody is in favor of
infrastructure, and if you look, since the very beginning of civilization, with
the Pyramids, and the Temples, and the city walls, most of the capital
investment in every country of the world, even today, is in infrastructure.
That's why the banks, and the corporations, and the rich people, want to
privatize it, because if you privatize it, then this is like conquering a new
country. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11863" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11864" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>You can take into your own hands, for your own profit,
the largest capital investment there is, what used to be in the public domain.
The roads, the railroads, the airline companies, the water and sewer systems,
everything that people need, the schools -- you can somehow privatize, and
instead of providing them to the economy, to make the economy operate at a
lower cost, you can make people pay two or three times as much. You can vastly
increase the cost of the economy, without increasing wages, squeeze the living
standards, and suck up more and more money to the very top of the economic
pyramid. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11865" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11866" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, I do talk about infrastructure in the book, but I
also talk about individuals. And one individual, in the dictionary that I use,
is Simon Patten, who was the first economics professor at the first business
school in the United States, the Wharton School, at the University of
Pennsylvania. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11867" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11868" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And Patten said there are four factors of production.
Classical economics talks about three factors of income -- land, labor and
capital. But there's a fourth factor of production, and that's public
infrastructure. However, the function of public infrastructure, Patten said --
and this is the capitalist saying it, this is the business school -- the
function of public infrastructure, roads, schools, is not to make a profit,
like a private investor would do, but to lower the cost of living, and lower
the cost of business, to make the economy more competitive. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11869" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11870" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, if a country does what the United States did, and
finance a vast public school system, public education system for agricultural
education, low cost roads, low cost transportation, water and sewers, parks,
communications -- if you provide all of this either freely, or at least at a
very subsidized price -- then you're going to undersell economies that don't
socialize the means of production. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11871" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11872" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And that's why, Patten said, socialized economies with
active pubic infrastructure, can undersell other economies. Because imagine if
you're competing with an economy that does what Margaret Thatcher did in
England. Where you privatize the electric company, everybody's electric rates
go up, double and triple. Privatize the roads, privatize the airlines, well,
the private owners are going to want to make -- first of all, they're going to
want to borrow all of the money to invest, and they're going to pay interest on
all of this. And they're, usually the rate of return over and above interest by
the privatizers in the United States, they're 12%. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11873" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11874" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>That's Romney, and other people, who have hedge funds,
that are privatizing. They're going to add all sorts of managerial costs;
interest, profits, and they're going to make a capital gain on the stock. And
all of these payments to the private participants, in what's called a
private-public partnership, all of this is going to vastly increase the cost of
this infrastructure. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11875" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11876" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And you can look at what happened in Indiana, for
instance, when it built a toll road. The state borrowed money, said we need a
highway, absolutely true. Every state needs highways. And we're going to have a
toll, and needless to say, they set the toll so high, to pay the private
investors so much money, and so that they could pay the bank so much money. And
they could pay the stockholders so much money, that drivers in Indiana didn't
use the toll road. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11877" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11878" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, there's a clause in the private-public partnership
now, that if a state lets a private investor build a toll road, you can't build
any other roads. You have to force people to use the toll road. This is not a
free choice economy. This is, you want to steer everybody in... You want to
make the infrastructure into a monopoly. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11879" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11880" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Well, the whole purpose of public investment for 100
years in the United States was to prevent monopolies. That's why we had
anti-monopoly regulations. That's why America put into effect the anti-monopoly
rules. And that's what made America so much more competitive in the late 19th
century, and the early 20th century. And it was able to undersell European
countries, and other countries that followed the private emphasis of public
partnerships. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11881" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11882" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, the public-private partnership isn't really a partnership
at all. It's, you socialize the losses, and you privatize the profits, and you
turn this infrastructure, instead of society being the benefit of roads,
schools, cable TV systems, communication systems. Instead of providing all of
this technology to society at a low cost, or even freely, to lower, so that
people don't have to earn enough wages to pay all these costs. All of a sudden
you raise all the costs. And what this is doing is, squeezing family budgets. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11883" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11884" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>For instance, by privatizing healthcare, people have
to pay much higher health insurance in America than anyone else. Because you
have to pay the insurance companies, you don't have monopoly rules against the
pharmaceutical companies. You don't even bargain with them, to buy in the
cheapest market. You buy in the most expensive market, because they're your
campaign contributors, and that's what you've promised to do. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11885" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11886" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, this idea of the way that Trump will try to do an
infrastructure is exactly the upside-down way to do it, the wrong way to do it.
It's to make his class rich. And if you're building, say, transportation,
you're going to vastly increase the value of real estate, all along this
transportation. If you build new schools, you make the neighborhood more
desirable for people to go. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11887" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11888" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Normally, the whole idea of classical economics was,
you recapture all of this value that you've created by pubic investment. You
self-finance it by recapturing it as taxes. That wouldn't be the case with
Trump. He's not going to recapture anything. You privatize all the benefits of
the infrastructure, and his aim is make sure that the population at large gets
zero benefit from it. That all the benefit goes to the financiers, and the
corporate owners.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11889" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11890" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: Why are you so apprehensive? I mean,
when you... when Trump talks about the cost of pharmaceuticals, for example, he
says the problem is that we don't negotiate the price with the pharmaceutical
companies, and he's a negotiator. He's a businessman. So, why shouldn't we
believe him?</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11891" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11892" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: We should hold his feet to the fire.
We should say, "Hey, this is what you said. Nice to hear, but is it
rhetoric? When are you going to do this?" And he's going to try to say,
"Oh, Congress won't let me, the Republican Congress." But okay,
"When are you going to run against these candidates, and support
candidates who will support what you're trying to do?" So, he'll say,
"That's not my department." So, nice rhetoric, nice promise, but
we've already had, how many years of broken promises by politicians?</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11893" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11894" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: Yeah. And also as a businessman, and
having run the Trump Empire, it seems almost an antithesis, in terms of his
attitude, and approach to business.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11895" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11896" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: Well, he's made his business in real
estate. And the way that most real estate people make money is by having public
investment to increase the value of their real estate. And in one of our shows,
we talked about the Second Avenue subway in New York, that's increased the
value of property all along the Second Avenue subway line. But they did it by
raising the price on the subway fares. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11897" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11898" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>They did it by raising the taxes in New York City,
same thing in Vancouver, Canada, which we also talked about. They're putting a
value-added tax on, to build transportation that's going to vastly increase
what the landlords own. That's how Trump made his money. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11899" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11900" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, of course he thinks this is a wonderful way to
create wealth. Well, it creates wealth for him, but the wealth that he makes is
wealth that should accrue to the population as a whole, and it didn't. That's
why he got wealthy, and the rest of New Yorkers didn't.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11901" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11902" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'> </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11903" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11904" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11905" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11906" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>All right, Michael, in this book -- and we're now in
segment three -- and we are going to talk about Trump's plan to lower taxes. He
has said that he would reduce corporate taxes from 35% to 15%. The 35% itself
is a bit of a myth, because I don't think there are too many corporations out
there who do pay the 35%. But he's going to reduce the number of tax brackets
as well, he says, from seven to three. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11907" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11908" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And your myth number 11, which is progressive income
taxes should be abolished in favor of flat tax, is a myth, just one tax rate
for everyone. Does this make any sense to you? </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11909" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11910" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: It certainly makes sense, if you're a
member of the 1%, and you want to avoid paying taxes, and you want the taxes to
be paid by the 99%, makes perfect sense for them. That's their dream. And if
you want to see where Trump is moving, you want to look at what the United
States neo-liberals did in advising Russia after 1991, when it said we're going
to create an ideal economy. Russia was under the impression that the
neo-liberal advisors were going to make Russia as rich as the United States,
but what they really did was create a kleptocracy that was virtually tax-free. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11911" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11912" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>On the flat tax, where you... the more you compress
the tax rates, the more you untax where the income's really made, at the top of
the pyramid, most of the income is made by the top 5%, or 10%. And if you
compress the tax rates, then basically, you shift the tax burden much more onto
the lower tax brackets. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11913" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11914" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: How does that happen? </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11915" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11916" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: Well, because the vast majority of
taxes are paid by the 10 per... I'll give an example. Since... between 2008 and
2016, all of the growth in the American economy, all of the growth in income,
was earned just by the wealthiest 5% of the population. So, they got all the
growth. And 95% of the population didn't grow. Well, if you can get a flat tax
or a lower tax, what Trump is suggesting, then this rich 5% that already got
all the growth, will be able to make even more money, and the 95% will be even
poorer than they were before, relative to the very top. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11917" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11918" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Now, Trump's idea is, well, if we cut the taxes on the
wealthiest brackets, it'll all trickle down. But it doesn't trickle down,
because what do the 5%, or the 1% use their money for? They lend more money to
the economy at large, they load it down with debt. They make their money by
lending to the bottom 95%, or the bottom 99%. And when you give them more
money, it enables them to buy even more control of government, even more
control of the election campaigns. They're not going to spend this money back
into the economy. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11919" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11920" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>They're going to spend the money, basically, on buying
more corporate shares, buying more bonds, spending the money abroad, buying
foreign bonds in foreign companies. They're not going to spend it on the
domestic economy. So, you're going to have just the income that the average
wage earner gets, sucked up. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11921" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11922" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>They'll get a little more of the lower taxes, but the
plan to finance all of these tax cuts is, you're going to cut back the social
services, or you're going to privatize the economy, so the workers and the
wage-earners, are going to have to spend much more of the income that they get
a little bit of a tax break on. Much more on the cost of public services,
education, healthcare, and everything else, while the economy basically is
deregulated, they'll pay more money for the monopolies; pay more money to the
banks. And it's going to be a redistribution of wealth upward, not downward. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11923" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11924" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: Now, the seven categories of tax
brackets we have now, hasn't really been progressive in any sense, in the sense
of... it might be more than what Trump is proposing, but it really has not
taxed the wealthy enough. Even the Warren Buffetts of the world are saying,
"You know, I pay less taxes than my secretary." How does that figure
in in terms of your book, and mythologies that we are... forced to buy into?</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11925" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11926" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: Well, one... the main mythology people
think of is, the rich people get wealthy by earning money. But that's not how
rich people get money. Almost all of the gains of the rich people since 1945
have been capital gains. They've been the increased value of real estate; the
stock market has gone up 10%, just since Trump was elected, huge capital gain.
Nobody's earned any more. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11927" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11928" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>But the stock market has gone up. Since 2008, you've
had the largest bond market rally in history, as the Federal Reserve flooded
the economy with, essentially quantitative easing, to drive down bond rates...
interest rates. When you drive down the interest rates, there's a huge boom in
the stock market. So, capital gains, is how the wealthy are really making the
money. They're not treated as income. That's treated as something else. And in
real estate, you never have to pay a capital gains tax. It's a zero, decade
after decade, century after century. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11929" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11930" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Because if you sell a property, and you make a capital
gain, but you buy a new property, it's not taxed. If you're a wealthy person
with a trust fund, and you sell stocks, and you make your 10% gains, since
Donald Trump, but then you buy other stocks, you can avoid taxation. And if you
decide to hold your wealth offshore, in a Panamanian fund, like the Russian
kleptocrats do, and more and more Americans do, you don't have to pay any tax
at all, because it's not American income, it's unearned income. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11931" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11932" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>That's why Apple Computer and Microsoft... that's why
the big information technology companies have so much money abroad. They make
it in Ireland. They have one office, that could be a postal drop box in
Ireland, and they say that they make all their money there, don't make a penny
in America. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11933" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11934" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>The oil industry, the biggest industry, next to real
estate is oil, gas, natural resources. Doesn't make a penny. They don't have an
income tax. Rich people actually don't earn anything at all, because if you
earn a profit, you have to pay a tax on it. So, it's all about what accountants
declare as profit, and this is something that's not taught in academic schools.
</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11935" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11936" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>In the textbooks that people who are in economics,
they're not taught how do you avoid paying any income tax at all. But that's
what an army of tax lawyers, of corporate tax accountants do. And Trump's idea,
basically, is to claim that he's shifting the taxes, and making them more
democratic for the people, but it actually is a vast sucking of income and
wealth upward. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11937" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11938" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: And let's talk about loopholes in the
context of taxes. I mean, when I earlier said that the 35% that is currently in
place, is hardly paid by the corporations, and you are making reference to
that. But give us some examples of these loopholes, and of course, the issue is
also how to address these loopholes, and if you have any solutions for that. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11939" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11940" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: The very worst loophole, is what
Donald Trump has talked about, and he said it's the tax deductibility of
interest. He said if you let building owners, or if you let corporate raiders,
borrow the money to buy a company, and then instead of paying dividends to the
stockholders, you'll load the company you take over, with so much debt, you're
going to pay bondholders. But you don't have to pay... you can deduct the
interest from your tax liability. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11941" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11942" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, if you pay interest to bondholders, and let's say
the corporate interest rate is, what it was when the process began in the
1980s, 50%, you can pay twice as much of your corporate cash flow to
bondholders, as you could pay to stockholders, but in the process you load down
corporations with debt. That's what's happened today, is debt leveraging. Now,
Trump has said he wants to remove the tax deductibility of interest. That's the
single most important loophole there is, and if he could do that, that's fine. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11943" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11944" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>But I suspect that Trump knows that it's not the
President that decides the tax policy. It's Congress. And he knows that the
Republicans who he helped bring into power, in Congress, and in the Senate, the
last thing they're going to do, is close the very biggest tax loophole in the
United States. That is the whole basis for the corporate raider movement, for
the corporate takeover movement, for the financialization of industry, for the
real estate sector, for the oil and gas sector. The last... you're going to
have every lobbyist in the country watering down this loophole. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11945" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11946" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So, Trump is making a promise that sounds absolutely
great. It's a promise that cannot be done politically, under Congress as it's
now set up. Yet he knows it won't be done. It's an easy promise to make, and he
can then go to the people and say, "Oh, I wanted to help you folks.
Congress wouldn't let me."</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11947" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11948" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'> </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11949" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11950" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>PERIES: It's The Real News Network. I'm Sharmini
Peries coming to you from Baltimore. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11951" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11952" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>I am speaking with Michael Hudson in our studio in Baltimore
about his new book, "J Is For Junk Economics: A Guide to Reality in the
Age of Deception".</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11953" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11954" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Thank you again for joining me.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11955" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11956" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: Good to be here. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11957" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11958" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: So, Michael, one of the concepts that
you deal with is really about balancing the budget, the whole mythology
surrounding that. Which is your myth number 17 where you say, "Government
budget deficits are bad. Balanced budgets are good. And budget surpluses are
even better." What's wrong with this? </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11959" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11960" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: The popular press acts as if somehow
the government balance sheet, the governments act like a family. And just as
families have to balance the budgets, governments have to. But this is a false
analogy because if you spend more than you earn, you can't write an I.O.U. and
then this I.O.U. everybody else can spend as if there's money. You have to, at
some point, pay the I.O.U., usually with interest, to the bank. But that's not
the case with the government. When a government runs a budget deficit it can do
so in the way that Abraham Lincoln funded the Civil War, you print the money.
And you print the money to pump money into the economy, if you spend it into
the economy. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11961" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11962" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Almost every year until the 1990s, the United States,
like every other country in the world, increases the foreign debt by running a
budget deficit, by spending money into the economy for infrastructure, for
schooling, for roads and this is what enables the economy to grow. This stopped
under the Clinton administration in the 1990s. At the end of the administration
he fell for this neo-liberal theory that you should balance the budget and he
actually ran a budget surplus. So the government stopped spending money into
the economy. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11963" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11964" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>The result was the economy had to depend on somebody
creating the money. If the government doesn't who creates the spending power?
Well, the answer was the banks. That Clinton did exactly what he was told to do
by the Secretary of the Treasury, Robert Rubin, and said, "Let the banks
create all the money and charge interest instead of the government creating
money just by spending it like the greenbacks were spent." The advantage
of the government creating money is you don't have to pay interest and it's
self-financing. The people talked about, look at how large the government debt is
and yet this is debt that never has to be repaid. Adam Smith wrote that no
government has ever paid its debt. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11965" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11966" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Now, I think it's easier for most Americans to
understand this by looking at Europe instead of the United States. Europe,
under the Eurozone, central banks are not allowed to create money. And as a
result the economies of Europe are all shrinking into austerity. Greece is the
most notorious example. Here you have unemployment among youth up to 50%. You
have the economy suffering in the last five years for the worst depression
since the 1930s. And yet the government is not able to spend the money to
create public rebuilding of the economy and the banks won't let them do it
because they're trying, basically the idea of the neo-liberals who are trying
to prevent the government from spending money is to say, "Well, if the
government can't run a deficit then it can't spend money on roads and
infrastructure and schools, they'll have to privatize it." </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11967" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11968" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And if we can privatize the economy then we can turn
the whole public sector into a monopoly. We can treat what used to be the
government sector as a new financial monopoly. And instead of giving free
schooling we can make people pay $50,000 to get a college education or $50,000
to get a grade school education, as you have to if you go to New York private
schools. We can turn the roads into toll roads. We can charge people for water
and we can charge for what used to be given for free under the old style of
Roosevelt capitalism and social democracy. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11969" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11970" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So what this idea that the government should not
create money is, governments shouldn't act as governments. The government
should be Wall Street. Instead of governments planning on how to allocate
resources to help the economy grow, Wall Street should be the allocator of
resources and we'll starve the government. And that's what the Republicans
said. We want to starve the government to a point where it can be drowned in
the bath tub. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11971" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11972" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And if you don't have a government who is going to
govern? Obviously the people with the money. It will be Wall Street, it will be
the corporate sector and this claim for a balanced budget is saying, "We
don't want the government to fund public infrastructure we want it to be privatized
in a way that will generate profits for the owners, interest rates for the bond
holders and the banks that fund it, management fees and most of all capital
gains for the stockholders and we will jack up the prices for public
services." The reason why all of the European countries, all of the United
States and North American countries ran budget deficits for so many years is
because they want to keep this infrastructure in the public domain, they don't
want it to be privatized. Because the kind of things that government spends
money on, roads, railroads, schools, water are exactly the kind of things that
people absolutely need and they're the last things that you want to be
privatized. Because if they're privatized instead of the government spending on
it, then they can be monopolized. And all of these public spending programs are
really for natural monopolies. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11973" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11974" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And the whole idea of a well-run economy is to prevent
a natural monopoly. Well, this was not done in Russia and you just have to look
at the disaster of Russia under the neo-liberals, since 1991, the huge
immigration rates, the shortening life spans, the rise in disease rates, rise
in drug use, you can see how demoralizing a country is if you can just stop the
government from spending money into the economy, causing austerity, lowering
living standards and really putting the class war into business. So what Trump
is suggesting is putting the class war into business, financially, with an
exclamation point. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11975" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11976" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: You talked about the implications of
cutting government spending and, in fact, your myth number 18 deals with this.
You say that cutbacks in public spending will bring the government budget into
balance, restoring stability. And you just demonstrated through the Russian
example that this is quite misleading and, in fact, it has the opposite effect
and destabilizes the population. So this policy Trump seems to endorse the
cutback in public spending -- give us some examples of how this could affect
society, specifically.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11977" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11978" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: Well, you used the word
"stability" and this is a kind of slogan to prevent thought. And
that's what George Orwell said, he didn't use the word "junk
economics" but he said that's what a double-think is. The function is to
prevent thought. Stability is very much akin to the great moderation. Remember
how economists running up to the 2008 crisis said, "This is a great
moderation." And what made it moderate? </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11979" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11980" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Well, Alan Greenspan went before the Senate Committee
and gave a long talk on what is it that's made America so stable? Well, we now
know it was the most unstable decade in a century. It was a decade of financial
fraud, it was a decade where economic inequality between wealth and the rest of
the economy widened. And Greenspan said, "What's stable is the workers
haven't gone on strike. The workers are so deeply in debt they owe so much
money that they're one paycheck away from missing an electric utility payment
and they're afraid to strike. They're afraid even to protest against living
conditions. They're afraid to ask that their wages be increased to reflect the
productivity. What's stable is we, the rich people, my constituency, the five
percent or the one percent get all of the income and the people get
nothing." That is stability according to Alan Greenspan. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11981" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11982" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So when you use words like stability or all of these
euphemisms that are used are there to make people think that somehow it's
stable is the economy is slowly and slowly squeezed and that's basically what
happened in the great moderation. It was the great squeeze of everything and it
was squeezed, again, because the government was cutting back spending on social
programs at this time. It was dismantling the whole new deal array of consumer
protection agencies, which also Trump wants to get rid of. The first thing he
wanted to get rid of, for example, he said, is Elizabeth Warren's Consumer
Financial Protection Agency. And he said, "The problem is this, it's
trying to prevent fraud and that's limiting choice. Just like we let people go
to McDonald's and buy junk food and buy junk sodas and get obese, we have to
let them have the free choice to put their pension funds in Wall Street
companies that are going to cheat them." </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11983" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11984" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Now, these companies have had to pay tens of billions
of dollars for financial fraud and that's bad because they've had to pay it.
And we want to dismantle all of the penalties against financial fraud, against
cheating consumers. Because that's reducing the amount of money that rich
people can get and rich people are what's driving the economy. Well, they're
driving the economy by fraud. I mean, that's the kicker in all of this. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11985" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11986" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So in dismantling the government spending on The
Consumer Financial Protection Agency, The Public News Agencies, The Endowment
for the Art, you're stripping the economy away and making the American economy
just like what Margaret Thatcher did in England, you strip it away and make it
a much less dynamic, much less lively place and, above all, a much poorer
economy. And that is the aim of all of these reforms which mean undoing all
what reforms used to mean for the last century. So all of these words and the
vocabulary that are used in the press all dovetail into each other into a
fictitious economy so that people think they're living in a parallel universe and
are unable to use the vocabulary and the economic concepts to explain just why
the economy is so unfair and why they're getting squeezed so badly and how it
doesn't have to be this way. They don't have to be squeezed. But that requires
an alternative program and an alternative program means recapturing the
language to explain what it is you're trying to do.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11987" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11988" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'> </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11989" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11990" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: So, Michael, on page 260 of your book
you deal with the issue of social security and it's a myth that social security
should be pre-funded by its beneficiaries. Progressive economic taxes should be
abolished in favor of a flat tax. Just one tax rate for everyone you say. We
talked about this earlier but let's apply what this actually means when it
comes to Social Security.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11991" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11992" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: The mythology is to try to convince
people that after all, if they're the beneficiaries of social security, it
should be pre-funded. Well, that's like saying that you're the beneficiary of
an education, you have to pay for the schooling. You're the beneficiary of
healthcare, you have to pay for that. You're the beneficiary of America's
military spending, that keeps us from being invaded next week by Russia, you
have to spend for all that. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11993" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11994" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>Where do you draw the line? Nobody really anticipated
in the 19th century that people would have to pay for their own retirement.
This was viewed as an obligation of society and you had the first pension
social security program in Germany under Bismarck. And the whole idea is social
security is a public obligation. There are certain rights of citizens and the
rights should be after your working life you deserve a retirement. And you have
to be able to afford this retirement and not have to beg in the street for
money. So the wool that's been pulled over people's eyes is to imagine that
because they're the beneficiaries of social security they have to actually pay
for it. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11995" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11996" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And this was Alan Greenspan, a trick that he pulled
basically in the 1980s when he was head of the Greenspan Commission. He said,
"Let's achieve what we need to do in America. We need to traumatize the
workers. We need to squeeze them so much that they will never have the courage
to strike. Never have the courage to ask for better working conditions. Let's
really squeeze them and the best way to do it is to very sharply increase their
taxation. But we won't call it a tax. Of course it's a tax, but we will say
it's not a tax, it's your contribution to your social security." And now
this is 15.4% of everybody's pay check. It comes right off the top. What
Greenspan did was say, "Let's make the wage earners, as a whole, pay this
FICA cut out of their pay check every month, let's lend it to the government
and now with all of this huge surplus that we're squeezing out of the wage
earners there's a cut-off point now." The cut-off is around 120,000. Rich
people don't have to pay for the social security funding, only the wage earner
class has to. This is lent to the government to actually enable the government
to say, "We have so much extra money in our budget pouring in from social
security that now we can afford to cut taxes on the rich."</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11997" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_11998" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So the sharp increase in social security tax for the
wage earners went hand-in-hand with the sharp reduction in the taxes on real
estate, on finance and on the ... TA(?) part of society. The people who live on
economic rent, not by working, not by producing goods and services but by
making more money on their real estate, on their stocks and bonds in their
sleep. And that's how the five percent have basically been able to make their
money. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_11999" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12000" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So the whole idea that social security has to be
funded by the beneficiaries has all been a setup for them to claim now, we
can't afford to pay any of the money because the budget doesn't have enough
money. Social security's running a budget and after running a surplus since
1933, for 70 years, now we have to begin paying it out, that's the deficit,
that's the disaster, we have to begin cutting back social security. What Donald
Trump is saying we want wage earners to have to starve in the street after they
retire. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12001" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12002" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>The federal reserve has just published statistics
saying the average American families, 55 and 60 years old, only has about
$14,000 worth of savings. This isn't enough. The whole idea is there's been a
vast looting of pension funds, very largely by Wall Street and that's why the
investment banks have had to pay tens of billions of dollars of penalties for
cheating the pension funds. The current rate of return risk-free is 0.1% on
government bonds so the pension funds don't have enough money to pay pensions.
So the idea is that what people thought there was going to be available for
their retirement, all of a sudden isn't. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12003" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12004" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>There are so many corporate pension funds that are
going bankrupt that the Pension Fund Guarantee Corporation doesn't have enough
money to bail it out. It's in deficit. And if you're going to be a corporate
raider, if you're going to be a Governor Romney or whatever and you take over a
company, you do what Sam Zell did with the Chicago Tribune, you loot the
pension funds, you empty it out to pay the bond-holders that have lent you the
money to buy out the company and you say, "I'm sorry there is nothing
there. It's wiped out." Half of the employee stock ownership programs have
gone bankrupt. That was already a critique made in the 1950s and the 1960s. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12005" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12006" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>In Chile, the Chicago boys, who really developed this
program, University of Chicago economists, made it possible for the Chilean who
privatized and who privatized the social security system, to set aside a
pension fund managed by the company, mostly they invested in its own stock. The
company would then set up an affiliate that would actually own the company
under an umbrella then leave the company with the pension fund to go bankrupt
having already emptied out all of the pension fund and a loan to be a corporate
shell. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12007" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12008" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So it's all a shell game basically for this. And
there's no social security problem whatsoever. Of course, the government has
enough money to pay social security. That's what the tax system is all about.
But if you do what Donald Trump does and you say we're not going to tax the
rich and if you do what Alan Greenspan did and we're not going to make rich
people even contribute to the social security system, then, of course, it's
going to show a deficit. It's supposed to show a deficit when people retired.
It was always intended to show a deficit but now that the government actually
isn't using social security surpluses to make the pretense that you can afford
in the budget to cut taxes on the rich, now they're baiting and switching. So
it's basically part of the shell game and explaining that myth is partly what I
tried to do in my book.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12009" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12010" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>SHARMINI PERIES: And if the rich people don't have to
contribute to the social security base, are they able to draw on it?</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12011" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12012" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>MICHAEL HUDSON: They will draw social security up to
the given wage that they didn't pay social security on, which is up to $120,000
these days. So yes, they will get the little bit but all of the real wealth,
the people that make more than $120,000, all that is completely exempt from the
social security system. What they have done are the rich people who run the
corporations give themselves golden parachutes. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12013" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12014" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And even for the companies that have engaged in
massive financial fraud, the large banks, City Bank, Western Union -- all of
these have golden parachutes. They still are getting enormous pensions for the
rest of their lives. And they're talking as if, well, the pensions are in
deficit, corporate pensions, but that's because the corporate pensions, for the
leading officers, are quite different from the pensions to the blue-collar
workers and the wage earners as a whole, so again, there's a whole kind of
fictitious economic statistics that are used in the dictionary is
mathy-ness(?). The idea that if you can put a number on something it's somehow
is scientific and the number you put on is realistic when it really is the
product of corporate accountants and lobbyists reclassifying income in a way
that it doesn't appear to be income.</span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12015" style="margin: 8px 0px; line-height: 130%;"><span id="yui_3_16_0_ym19_1_1488728374378_12016" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>And somehow taking money out and giving it to the
richest 5% and making it appear as if all this deficit is the problem of the
95%, that's blame the victim economics. And you could say that's the way that
the economic accounts are being presented by congress to the American people is
a blame the victim economics. That it's your fault social security's going
bankrupt and it's all a mythology of saying we should not treat retirement as a
public obligation just as we should not treat healthcare as a public
obligation. We should have the highest healthcare costs in the world so that
out of your pay check, which is not increasing, you're going to have to pay
more and more for FICA withholding for social security, more and more for
healthcare for the pharmaceutical monopoly and the health insurance monopoly.
More and more to use public services for transportation to get to work because
the state is not funding that anymore because we've cut taxes on the rich and
so we don't have the money to do it. And you're going to privatize the roads so
now you're going to have to pay to use the road to drive to work if you don't
have public transportation. </span></div>
<div id="yui_3_16_0_ym19_1_1488728374378_12017" style="margin: 8px 0px; line-height: 130%;" dir="ltr"><span id="yui_3_16_0_ym19_1_1488728374378_12018" lang="EN-GB" style='margin: 0px; line-height: 130%; font-family: "Tahoma",sans-serif; font-size: 13pt;'>So you're turning the economy really into what used to
be called feudalism. Except we don't have serfdom, people can live wherever
they want, but they all have to pay to this new sort of hereditary financial
real estate public enterprise class that is transforming the economy.</span></div>
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