The United Nations International Children’s Emergency Fund (UNICEF) reports that, every minute, a child is pushed into hunger in fifteen countries most ravaged by the global food crisis. Twelve of these fifteen countries are in Africa (from Burkina Faso to Sudan), one is in the Caribbean (Haiti), and two are in Asia (Afghanistan and Yemen). Wars without end have degraded the ability of the state institutions in these countries to manage cascading crises of debt and unemployment, inflation and poverty. Joining the two Asian countries are the states that make up the Sahel region of Africa (especially Mali and Niger), where the levels of hunger are now almost out of control. As if the situation were not sufficiently dire, an earthquake struck Afghanistan last week, killing over a thousand people – yet another devastating blow to a society where 93% of the population has slipped into hunger.
Finance and the Economy
Hey, everyone, this is Ben Norton, and you are watching or listening to the Multipolarista podcast. I am always privileged to be joined by one of my favorite guests, Michael Hudson, one of the greatest economists living today. We’re going to be talking about the inflation crisis. This is a crisis around the world, but especially in the United States, where inflation has been at over 8%. And it has caused a lot of political problems. It’s very likely going to cause the defeat, among other factors, of the Democrats in the mid-term elections in November. And we’ve seen that the response of the US government and top economists in the United States is basically to blame inflation on wages, on low levels of unemployment and on working people.
The Taft-Hartley Act was the centerpiece of big business’s counterattack against a labor and people’s movement that had, over the previous decade, won major improvements for working people on factory floors and in the halls of Congress. From 1936 through World War II, the new industrial unions of the Congress of Industrial Organizations (CIO) — UE, the United Auto Workers, the United Steelworkers, and dozens of smaller unions — had successfully organized the mass-production industries that dominated U.S. economy at the time. Like Amazon today, the huge corporations that dominated these industries — General Electric and Westinghouse in electrical manufacturing, the “Big Three” auto companies, and U.S. Steel — were engines of economic inequality. They exploited massive workforces to generate massive profits for a tiny corporate elite.
In the remote rural village of Dauphin, in the Canadian province of Manitoba, economists tried out an unusual experiment. In the 1970s, they persuaded the provincial government to give cash payments to poorer families to see if a guaranteed basic income could improve their outcomes. During the years of this “Mincome” experiment, families received a basic income of 16,000 Canadian dollars (or a top up to that amount). With 10,000 inhabitants, Dauphin was just big enough to be a good data set but not too big as to bankrupt the government. The results were startling, including a significant drop in hospitalizations and an improvement in high school graduation rates. After four years, however, money for the experiment dried up, and this early example of universal basic income (UBI) was nearly forgotten.
I recently moved back to the United States after over a decade abroad. It’s been an interesting re-acclimation which I believe some people call ‘reverse culture shock’. There is so much about this country, my home, that is comfortable and familiar. A shared language, sense of humor, and customs allow me to flow through this society with ease. However, the thing that has stood out more than anything is that nearly everyone I meet seems to be struggling with some form of anxiety or depression. What’s even more jarring is that they all seem to feel like it’s their fault — telling themselves they just need to work harder, meditate, or exercise more to emerge from this crushing darkness. But if everyone is feeling this way, then clearly there must be something bigger at play.
The “Chinese miracle” has become a widely used term in development studies, inspiring developing countries to achieve high levels of prosperity, living standards, and stability over the last decade. The popularity of this term can be explained in large part by the fact that China has enjoyed unprecedented economic success in world history (Zakaria, 2011; Gürcan 2021a), despite enormous historical, demographic, geographical, and geopolitical adversities. China was one of the world’s poorest countries before the socialist revolution in 1949. In the early revolutionary era, China struggled much to overcome its crippling semi-colonial legacy characterized by the medieval conditions of an agricultural economy and the weakness of its industrial base. History aside, China is the largest country by population size, which currently accounts for 22% of the world’s population.
Do you have a good pension? Do you have any pension at all? Back in 1975, most Americans who worked for established employers could say that they do indeed have a decent pension. Back then, what the experts call “defined-benefit” pension plans set the standard. If you worked for a company with one of these plans, you could look forward to receiving — for every month of your retired life — a pension check based on your salary and years of service. These defined-benefit plans gave employers the responsibility for funding their employee retirements. Employers contributed into retirement funds and used the investment returns these funds generated to keep pension checks flowing. If those returns came up short, employers had to fill the shortfall.
Elizabeth Woodruff drained her retirement account and took on three jobs after she and her husband were sued for nearly $10,000 by the New York hospital where his infected leg was amputated. Ariane Buck, a young father in Arizona who sells health insurance, couldn’t make an appointment with his doctor for a dangerous intestinal infection because the office said he had outstanding bills. Allyson Ward and her husband loaded up credit cards, borrowed from relatives, and delayed repaying student loans after the premature birth of their twins left them with $80,000 in debt. Ward, a nurse practitioner, took on extra nursing shifts, working days and nights. “I wanted to be a mom,” she said. “But we had to have the money.”
San José, California - On Friday, June 10, the Bureau of Labor Statistics reported that prices for workers’ families, the so-called Consumer Price Index-Wage or CPI-W rose by 9.3% as compared to prices a year ago. This rate of inflation is near a 40-year high, only exceeded by the 9.4% increase in March. The last time that prices rose so quickly was in November of 1981. The headline number that the corporate media reported was a smaller 8.6%. This was the number for the CPI-Urban or CPI-U that includes households with managers and professionals as well as wage workers. The CPI-W inflation is higher than the CPI-U because the CPI-W puts more weight on the prices of food and transportation that have been bedeviling working families. Food prices are up more than 10% over the past year while gasoline is up almost 50%.
Larry Fink, the CEO of the world’s largest asset manager, recently wrote in his letter to shareholders that globalization as we know it is over. The war in Ukraine, he argues, marks a turning point in the world economy—though the momentum of globalization had been slowing for many years. Fink’s pronouncement caused a stir among the international capitalist class. The Financial Times featured an editorial opining that ‘global capital has, for the past 40 years or so, flown too far ahead of national economies, creating stresses and inequalities within many nations.’ FT journalists, of course, have been some of the greatest cheerleaders of this process, which made the conclusion all the more striking. But before we decide whether globalization is over, it’s worth considering what it actually amounts to. I
The most valuable companies in the stock market today can be found in the technology sector. The first publicly traded company in history to reach a $1 trillion valuation was Apple in 2018. While it took the company more than 40 years to reach that milestone, less than four years later its valuation has increased by a further two trillion, reaching another record breaking $3 trillion. The “trillion dollar club” has also since expanded to include three more companies - all of them in the technology sector. However, the markets appear to be falling out of love with the big tech . Earlier in 2022 Facebook lost $230bn in value in the biggest one-day stock plunge in history. It has since been overshadowed by several similar collapses that have (as of today) erased more than $2.6 trillion from the value of the five largest tech companies since the start of the year.
We’ve had quite a show up in the Alps this week, the first in-person gathering of the world’s mega rich since Covid hit. The occasion? The annual World Economic Forum at the Swiss resort of Davos, an ever-so-sober gathering that has an assortment of global deep thinkers sharing their wisdom with deep pockets ever eager for policy ideas that don’t involve sharing their wealth. Also on hand, in person and remotely: a collection of the world’s most stalwart egalitarians, advocates ranging from activists with the Patriotic Millionaires to analysts at the anti-poverty powerhouse Oxfam. These analysts, on the eve of Davos, released gripping new data on how billionaires in food and energy have been swelling their fortunes — at consumer expense.
The chairman of the US Federal Reserve, Jerome Powell, said his goal is “to get wages down.” In a press conference on May 4, Powell announced that the Fed would be raising interest rates by half a percentage and implementing policies aimed at reducing inflation in the United States, which is at its highest level in 40 years. According to a transcript of the presser published by the Wall Street Journal, Powell blamed this inflation crisis, which is global, not on the proxy war in Ukraine and Western sanctions on Russia, but rather on US workers supposedly making too much money. “Employers are having difficulties filling job openings, and wages are rising at the fastest pace in many years,” Powell complained. The Fed’s proposed solution: bring down wages.
The current war is dividing the world into two parts. There’s going to be a US dollar area of the US, Europe and its satellites. And there’ll be a multipolarity; there’ll be a group of Russia, China together and basically they will be making their proposal of a different way of organising the world economic affairs to Africa, Latin America and other Asian countries. And other Asian countries, Latin America and the global south will see that it can get a better deal with Russia and China than it can get with the United States. PS: On the flip side of that coin, one could argue that the existing situation, world order, has only been cemented by this war. You see NATO more aligned than ever, you see Europe more aligned than ever. You see Finland and Sweden on the brink, perhaps, of joining NATO.