"People Have No Idea What's About To Happen" | Richard Wolff's Last WARNING

Summary

Highlights

• Biden and Trump can't single-handedly dictate inflation control 🤷‍♂️.
• Imposing tariffs alongside deportations could destabilize Mexico significantly 🇲🇽.
• Global dynamics shifting as China gains economic influence, challenging US dominance 🇨🇳.
• US protectionist measures may lead to economic isolation and realignment with China 🛢️.
• Complexity of tariff impacts highlights uncertainty in global markets 🌐.
• Richard Wolff suggests US policies might be a scapegoat for global economic challenges 🏛️.

Key Takeaways

• Presidents can't magically control inflation; economic factors are complex 🤔.
• Tariffs are essentially taxes and can economically destabilize countries, like Mexico 🇲🇽.
• The global shift towards protectionism could isolate the US economically 🌍.
• China is positioned to benefit from US economic isolation by offering market alternatives 🉐.
• Uncertainty in economic policies creates hesitance in corporate investments, risking recessions 📉.
• Global blame may increasingly fall on US policies, per Richard Wolff's analysis ⚠️.

Overview

Chapters

• 00:00 - 00:30: Introduction and Overview The chapter discusses the limitations of presidential power in controlling inflation, emphasizing that inflation is primarily a component of economic forces, not political ones. It explains how presidents, including Mr. Biden, face challenges in influencing economic conditions and often struggle to react adequately to economic changes. The chapter highlights the often reactive rather than proactive nature of politics in the face of economic issues.
• 00:30 - 01:30: Critique of Biden and Trump's Economic Strategies In this chapter, the author critiques the economic strategies of Biden and Trump. They highlight the impracticality of certain expectations set by leaders, comparing them to asking someone to leap over the Empire State Building. It is described as theatrical fakery disguising as serious effort. Additionally, the author criticizes the 'drill, baby, drill' approach, questioning the true costs and implications of such strategies.
• 01:30 - 03:00: Impact of Tariffs and Immigration Policies The chapter discusses the impact of tariffs and immigration policies on inflation and prices. It argues that tariffs, being a form of tax, increase the cost of goods and contribute to rising prices. This concept, while fundamental to economics education in America, appears to be misunderstood by former President Trump and his supporters. Deportation of immigrants and other similar policies are also cited as contributing factors to inflation.
• 03:00 - 04:30: Tariffs, Treaties, and International Relations Chapter explores the complex interplay of tariffs, treaties, and international relations. It highlights the implications of raising tariffs, particularly the impact on consumer prices and the economic conditions of the lower-income population in the United States. The discussion emphasizes the risk of household and corporate debt reaching unprecedented levels, underscoring the potential economic fallout from protectionist trade policies. The focus is on the delicate balance needed in international relations to protect domestic economic interests without exacerbating financial vulnerabilities.
• 04:30 - 07:00: NAFTA and Mexico Relations The chapter titled 'NAFTA and Mexico Relations' discusses the complexity of tariffs and their effects on prices. The speaker addresses a misconception that tariffs alone can lead to deflation, as exemplified by a historical reference to economic conditions in Japan where tariffs seemingly resulted in falling prices, contrary to the typical inflation scenario. The argument is made that tariffs' impacts on pricing are not straightforward and must be considered in conjunction with other economic influences, suggesting that the effects are more nuanced and multifaceted.
• 07:00 - 10:00: Historical Context of Tariffs The chapter 'Historical Context of Tariffs' discusses the responsibilities of leaders, such as Mr. Trump, in explaining the potential impact of tariffs on the global economy. It emphasizes the need for clear communication about offsetting global economic developments that might affect economic stability. The narrative critiques the lack of detailed explanations provided by leaders like Mr. Trump on how tariffs might lead to either positive or negative outcomes, stressing the irrelevance of historical examples without current justification. It also touches on trade agreements like NAFTA initiated by the United States, but does not delve into specific details within this transcript excerpt.
• 10:00 - 14:30: Protectionism and Its Global Impact During Trump's presidency, a treaty was renegotiated and signed to commit the United States against imposing tariffs. However, a decision by the president to impose tariffs contradicts this treaty. The justification provided is met with skepticism, suggesting that such explanations are unlikely to be accepted outside the United States.
• 14:30 - 17:00: Investment and Economic Uncertainty The chapter titled 'Investment and Economic Uncertainty' discusses the implications and original intent of NAFTA (North American Free Trade Agreement). It highlights how NAFTA was designed to allow products from Canada and Mexico to enter the United States without tariffs, and vice versa, facilitating trade between these countries. The chapter also touches on Mr. Trump's unilateral actions or threats to break these agreements, which could lead to increased economic uncertainty and impact investments.
• 17:00 - 20:00: Potential Recession and Tariff Consequences The chapter discusses the potential recession and the consequences of tariffs imposed by the US government. It highlights the issues related to international treaties and obligations, and how these tariffs could affect international relations and domestic economies. Additionally, the chapter touches on the drug problem affecting both the US and Mexico, and critiques the President of the United States for using divisive rhetoric rather than addressing the root causes of these issues.
• 20:00 - 24:30: Global Economic Reorientation The chapter discusses the political and economic climate involving a hypothetical scenario where the Republican party, led by Mr. Trump, takes significant control. It emphasizes the importance of evaluating the roles and responsibilities of different political entities in shaping the future, and suggests that it is insufficient to blame only one side of the story. The narrative calls for a collective reflection among Americans on the broader implications of such political moves.
• 24:30 - 24:00: Conclusion and Future Speculations The chapter dives into the theme of taxation, especially focusing on tariffs, which are positioned as taxes on imports. It introduces the concept of tariffs as integral to U.S. policy, tracing its origins back to import duties. The chapter critiques a political party's shift in stance on taxation, presenting a narrative on its deviation from prior tax policies including those on income, wealth, sales, and property.

"People Have No Idea What's About To Happen" | Richard Wolff's Last WARNING Transcription

• 00:00 - 00:30 He is not in control of what happens to prices. Mr. Biden wasn't. No president who has ever confronted an inflation has been able in some kind of magical way by issuing an order to stop it. It misunderstands the relationship between economics and politics. One is the driver. That's the economy. And the other one reacts as best they can, usually in a limp way, trying to make some adjustment. and if they're lucky, they can get away with it. So baldly
• 00:30 - 01:00 saying he's instructed his associates to do the impossible. It strikes me as a charming. It's like instructing them to go and practice so they can leap over the Empire State Building. All the practice in the world not going to help you do that, you silly person. It's a kind of theatrical fakery that passes for heavy concentration. And let me drive something else home. Drill, baby, drill. Really? You know the costs of that? You think that an explosion of
• 01:00 - 01:30 drilling is going to stop the inflation? No, it isn't. There's lots of factors that are pushing prices up. Not the least of them is deporting immigrants, imposing tariffs. Tariffs are a tax. They raise the price of what those taxes are applied to. This is a basic law of economics taught in every classroom across America, but apparently beyond the capacity of Mr. Trump and the people applauding and you really have to use
• 01:30 - 02:00 metaphors, I will not dare employ to capture what's going on here. If at the same time that we impose tariffs that raise prices and we have a collapse of the poor people in this country's economic circumstances, in other words, they cannot service household debt which is at a record level in this country or corporations cannot service their debt which is also at a record level in the history of the United States here. One
• 02:00 - 02:30 of the responses would be something that happened a few years ago in Japan, depression. In other words, the opposite of an inflation, you have a deflate, a falling prices. That could happen. And then someone would say, "See, when you impose tariffs, prices go down." No. No. But if you do tariffs at the same time that other major influence on prices occur, well, then they can go any which way. That doesn't deal with the normal. All I'm telling you is that if you have a big program of tariffs, you is now
• 02:30 - 03:00 become incumbent on Mr. Trump, if he's going to do that, to tell us how and why we should expect offsetting developments in the world economy that could bring us down. Giving us examples of when it went one way or the other is irrelevant. He has to do that and he hasn't done that. There's absolutely nothing that we should expect in this kind of situation. At the instigation of the United States, we have a treaty called NAFTA. Under Mr.
• 03:00 - 03:30 Trump's first presidency, that treaty was renegotiated, signed again by Mr. Trump, which expressly commits the United States not to impose tariffs. That's what the treaty is for. This is a decision made by the president to impose tariffs. And the reason given fentel, you got to be kidding. No one in their right mind would believe that except perhaps here in the United States because they dare not ask the question.
• 03:30 - 04:00 was coming into this country when NAFTA was passed and when the next conduit was passed, everybody in their right mind knew because it was in the financial press what NAFTA was was to give access to the United States to products coming from Canada and Mexico without paying a tariff and vice versa. Goods from America going to Mexico. That's what the thing was for. Mr. Trump is unilaterally breaking or threatening to break a
• 04:00 - 04:30 treaty obligation and giving as his reasons something that makes absolutely no sense at all. And by the way, it will come whether these tariffs are imposed or not is because the United States is a buyer at incredible wealth of all of these drugs. As the recent the president of Mexico recently said, the drug problem exists on both sides of the border. All we have is the cheap shot of a president in the US who finds it
• 04:30 - 05:00 convenient to blame one half of the story and pretend the other one isn't guilty. This is not going to cut it. Now, let's imagine, however, that he goes through with it. Let's imagine that the Republican party is in sufficient control to make it happen. I have only two things to say. One, all Americans should join me in taking a step back and realizing what Mr. Trump is proposing. The Republican party for at least the last century has presented itself to the
• 05:00 - 05:30 American people. Vote for us because we cut taxes, we want to reduce government, blah blah blah. A program of massive tariffs is attacks on imports. Just like we have a tax on income, a tax on wealth, a tax on sales, a tax on property, we have a tax on imports. We've had it from the beginning of the United States. used to be called import duties. Now it's called tariffs. But this is a party that has abandoned tax
• 05:30 - 06:00 cuts and now puts forward tax increases. But because it is a theatrical party and is afraid to confront the reality, it finds it terribly exciting to refer to tariffs as if they weren't taxes. And as you know, Mr. Trump is fond of talking about tariffs as if they are being imposed on China, which of course they can't be. The only imposition of tariffs on China that can be done is by the government in China, not here. Anyway,
• 06:00 - 06:30 here's the second point. Mexico is an economy with a lot of problems, a poor country, certainly relative to the United States. The United States is now its largest purchaser of Mexican exports, a result in part of the NAFTA agreements. Okay. If you deport millions, which he's promised to do, into Mexico as you impose tariffs, which he's now promised to do, on Mexico, you're hitting Mexican economy with a one, two, three punch. I would like
• 06:30 - 07:00 everyone to understand. Number one, millions of Mexicans or Central Americans now working in the United States send money back to Mexico. It's called remittances. It's a very important income to the Mexican economy that will either disappear or be sharply reduced in a relatively short amount of time. That's a major economic blow. If you hit them with tariffs, it will shut off a significant portion of their
• 07:00 - 07:30 exports because those will become too expensive in the United States because the cost of production in Mexico will have added to it the tariff importers have to pay Uncle Sam. That will hurt exports from Mexico and the US is its number one market. Third and final, if you do these two things, you will depress employment in Mexico. People who can't keep their jobs because their employer cannot sell exports in the United States, which means Mexico will
• 07:30 - 08:00 have no remittances, millions of people arriving looking for work at a time of shooting up unemployment. You know what that is? A recipe to fundamentally destabilize an economy. We're going to have on our southern border an enormously dysfunctional catastrophe. It is a staple of American history. Unfortunately, it's also a staple of European history and Asian history and African history. It's called the infant
• 08:00 - 08:30 industry argument. It's been around for two centuries, if not more, and it says the following. If you're a country that's behind other countries in its economic development, which the United States in the 19th century was, but you're now having the ability to at least start to have an industrial foundation, you might then say that your industries were in their infancy. Well, then the argument was you need
• 08:30 - 09:00 protection from the more advanced industrial powers which for the United States in the 19th century was above all Britain of which it had been a colony until not that long before and to a second degree Germany and by the way infant industry argument if you look at the most developed arguments for it is German the German economy list l is famously associated with the most sophisticated arguments you'll be squashed in your infancy because the more developed having the market to
• 09:00 - 09:30 themselves cuz you're not there yet will lower the price which you cannot achieve and so they'll kill you. And if you want to live and you want to grow and you want to be an industrial base, you have to protect yourself until you're of a size comparable to the old guys and then they can't do anything that you can't match. That's an argument for a tariff protection. The United States has used them on and off. Absolutely. There's nothing new revolutionary that Mr. Trump
• 09:30 - 10:00 would sign it. But let me underscore what he's not telling you. We have for the previous half century been the number one country favoring free trade because we could excel because we were the old guys. We could squash the infants who had to protect themselves, which they did around the world, mostly by tariffs. In most cases, the United States wouldn't let them have tariffs, threatened damage to them if they did.
• 10:00 - 10:30 The one country in the world that had something better than a tariff protection was the People's Republic of China. They had the Communist Party and the whole ideological geopolitical barrier that prevented them from having to worry. They could develop their own market because of the size of their country that could mushroom quickly relative to what the West had. So they were able without tariffs to protect themselves. But you can be sure that if
• 10:30 - 11:00 the richest country of the world, which used to be the protector of free trade, can't make it anymore in a free trade world that it helped to create will now lead the march back to tariffs, back to protectionism. And to answer your question, absolutely. The number one question in Europe today among the giants there, Germany, Britain, France, Italy, is whether and how to follow the United States. And they're not at all
• 11:00 - 11:30 unaware that when countries become protectionists turning inward, they become unreliable allies in global politics because they're out for number one. Now they always were, but number one's interests were a global free trade environment. Now number one isn't. And you have the irony that Mr. Xi Jinping in China is talking about free trade and open dialogue. He's the champion of free trade because the United States cannot
• 11:30 - 12:00 play that role. But that's because our economy is in trouble and declining, not because we are strong and powerful. The latter is make believe. Mr. Trump is already in a terribly contradictory position which he is very careful never to acknowledge and I suspect cuz he doesn't even see it. He doesn't want to see it. But let me do it for him. Uncertainty is the enemy of stock markets everywhere. And it's not the enemy out of some ideological matter.
• 12:00 - 12:30 Uncertainty means that if you're a company, you cannot make your normal business decisions. when you had an era of free trade more or less and by the way tariffs have been in existence against the United States and by the United States for the last 50 years without interruption but there was a general commitment to minimize them the so-cal GAT a general agreement on
• 12:30 - 13:00 tariffs and trade this was an agreement let's keep them to a minimum let's have the world trade organization supervise that they're kept to a minimum, but they've always been there. But here's what they were. They were kind of fixed. I think I gave you the example last time. The United States put a tariff on foreign pickup trucks. And so pickup trucks in the United States were protected by a 25% tariff, that's a lot,
• 13:00 - 13:30 against the Europeans. That's why Americans quote unquote fell in love with the pickup truck. No love involved. It was advertising because the car companies made much more money off a pickup truck than they did off a regular car. The tariff on regular cars was I think 2% and the tariff on the pickup truck was 25%. Air goal it became necessary to associate male egos particularly with pickup trucks and we had a romance of the pickup truck imagining that this had nothing to do
• 13:30 - 14:00 with capitalism which of course is the specialty of capitalism as a functioning system. So everybody at least knew for 50 years there's a 25% all the car companies adjusted if you come to the United States you can make a Toyota pickup truck cuz you don't have the thing you don't have the tariff but you can't do it in Japan you can't do it in Europe et you can make a plan you can't make a plan now because you do not know
• 14:00 - 14:30 what tariff will be negotiated up down postponed delayed cancelled It's impossible. Already both Mitsubishi and Nissan told Mexico the plans they had to build multi-billion dollar car part factories down there are off. They're not going to move into Mexico because the premise was you could then ship those parts into Texas across the border. No tariff. Then it's profitable.
• 14:30 - 15:00 With a tariff, it's not profitable. with half a tariff if they negotiate that. Well, maybe a smaller PL. This is impossible. No corporate CEO wants to make an investment, by the way, that will take years to complete and billions of dollars to pay for only to arrive at the end with a situation utterly different from what you have now. You can't do that. And by the way, many of these plans decisions have to be made
• 15:00 - 15:30 now. They won't come online until after Mr. Trump isn't president anymore unless he gets another term for himself. So even if you like Trump, you can't function. All right? That means you have to remember how capitalism works. Capitalism is a system in which the money we get, we then spend. And the reason we spend it is why other people get it. And the reason we get our income is because other people spend on whatever it is we help to produce. The money goes around and around to keep us
• 15:30 - 16:00 all working. Breakdown happens if someone who earns an income doesn't turn around and spend it because then whoever dependent for their income on that spending doesn't get an income. All right. The working class is not a problem. It can't keep any money. The few workers who keep money save it put it in the bank and that lends it to the credit card workingclass people who spend more than they earn. So it nets out. There is no savings by the working class. But the business, the
• 16:00 - 16:30 corporations, you know, the corporate, they're the ones who earn profits and they sit around deciding whether to invest them or not. When there's uncertainty, they don't invest. And that means money that needed to go in to keep income going isn't. Capitalism means that the 97% of us who are not employers are held hostage to the investment decisions of the 3% who are. And what's
• 16:30 - 17:00 going on is messing around with those 3%'s calculations and they wait. And when they wait, we have a recession. That's what a recession is. When they wait, Mr. Trump is making them wait. He doesn't want a recession. That's not a good thing for him that he will get blamed for that the way presidents always do. It's actually unfair because they don't have that much power one way or the other anyway. But this is very dangerous for him and I'm sure I'm sure
• 17:00 - 17:30 his advisors are telling him this. What he's going to do, who knows? Here's an irony for those who want to understand. Tariffs are going to raise prices. There's no question about that. But you know what could cancel the price increase? a real doozy of a recession because when recessions happen, businesses know that they're not going to be able to sell what they produced at the old price with a recession. So, they dare not raise it. You could have offsetting. And so, we won't have the kind of price increases otherwise we
• 17:30 - 18:00 will. Who know? No one knows. And anyone who tells you that, don't talk to them anymore. No one knows how this is going to play it out. But there again, notice the image which keeps coming to me. Mr. Trump, and maybe that's what we ought to talk about, is facing fundamental economic problems. Whatever his megalomania, he's trying to solve some problem. The people around him, true, they're throwing Hail Mary passes. They're hoping that somehow all of this
• 18:00 - 18:30 will come back and come down and we will all gasp as the player he hoped for actually gets that ball after it's bounced around other people's hands for a while. That's what we're looking at. We are all being held hostage to a system that works like that, which is what the problem in the end really is. Every government in the world, good ones, bad ones, corrupt ones, wonderful ones, every one of them now has an opportunity they didn't have before last
• 18:30 - 19:00 week. Whatever economic problems that country has, and every country has them. Whatever blame might have been attached to the leaders of that country for the economic problems they have, those leaders can now blame on Mr. Trump. That is not good for the United States. You become a whipping boy. You become the blame object. Whether or not that's a reasonable argument, it'll be every politician's dream. We could have done
• 19:00 - 19:30 this except for Mr. Trump and his tariffs. We could have done that except for Mr. Trump. We had to do the other because of Mr. Trump. Oh, you know, this is going to become a mantra we're going to live with for years ahead. By the way, there's smart people on Wall Street who know this and who understand that is a big fat risk Mr. Trump is taking on behalf of the United States. That may have to be paid off bitterly and dearly in the years ahead. You know, it's like
• 19:30 - 20:00 taking out a huge loan for a risky project. You're going to have to pay the interest for many years. Whether that project delivers is an open qu you're taking a big risk and you may not be around 5 or 10 years from now, but they're going to be calling in that loan and then they'll be held to pay to say the least. This is going precisely nowhere. And I'll explain you why. Every country in the world is now aware that the United States government is able and
• 20:00 - 20:30 willing to hit them with tariffs. Whether or not they now go up or down, even if they were to be erased tomorrow, the same president on the same country with the same economic problems may do it next week, next month, next year. That's the uncertainty I'm talking about. And therefore, every company in the world, including American companies, by the way, not just foreign capitalists around the world, countries, here's what they're going to do slowly but steadily, they're going to reduce their dependence
• 20:30 - 21:00 on the United States. Whether they buy from us or sell to us or borrow here or whatever their activity is, they're not going to want to be subject to this uncertainty. And so they're going to move. They're going to look for a market they don't have to worry it'll be hit. Well, there's one dominant option in the world if you're not going to deal with the United States, and that's China. That's where the wealth is. China can be
• 21:00 - 21:30 very bravado because it's going to pick up a wealth of export opportunities, import opportunities, investment opportunity, lending opportunities. And the United States has so alienated Europe, even though it's a much secondary part of the world economy now, they're still very rich. And the Chinese are busy working their rear ends off, cutting deals with the Europeans, whose anger at the United States makes them uniquely likely to cut a deal with the
• 21:30 - 22:00 Chinese, especially the Germans. So you're going to see a rearrangement of the world, but no one knows how that looks at the end. It could very well be that the United States becomes terribly isolated. Really becomes an outlier in a world where the vast majority of the people, that's already true, the vast majority of the people are economically focused somewhere else. We've never had
• 22:00 - 22:30 that before. Europe and America have been the core of the colonial world when that was there and the postc colonial world they kept on being the economic center. Now by their own act they are cutting themselves off. China and the bricks together are 60% of the world's people. The United States is 42% of the world's people. Don't ever forget those numbers. You will make catastrophic mistakes. If you do, this
• 22:30 - 23:00 could end up in a situation where, and I'm talking a few years, not a lifetime, 5 years, 3 years. We could have a reaction in this country as what I've just described begins to show itself. I mean, that'll take time. Won't happen in a week or a month. But as this begins to show itself, my guess is you're going to see the business community go, "Oh my god, was this a mistake?" and then work overtime to try to undo as much of the damage as they can. Will that happen? I
• 23:00 - 23:30 don't know. I can't predict the future. But I can tell you for sure that when Mr. Trump says, "Take your medicine is a little problem here." That is total BS. That's exactly as valuable as a few years ago during the pandemic when the inflation then started and the Federal Reserve, Mr. Powell, assured us it would be, and I loved his word, transitory. Yeah. It turned out to be and he rued the day that he used that word. They won't use that ever again because of its bad association. When Mr.
• 23:30 - 24:00 Trump tells you what the results of this tariff program are, don't listen. He doesn't know. I don't know either, but he doesn't know. And he's the one taking the enormous risk. If anything, the megalomania is beginning to show itself as I'm the age that I am. How much have I got to lose? I may go out, but I'll go out with a bang, you know. [Music]