Process
Status Items Highlights Done See section below Claims None Questions None Output None
Highlights
Time 0:09:26
Nixon’s Economic Stance
- In the early 1970s, President Nixon’s economic policies were more aligned with future Democratic approaches than those of future Republicans like Reagan.
- While he advocated for welfare reform, he also proposed a guaranteed minimum income for families with dependent children.
- This demonstrated that the prevailing consensus during the “30 glorious years” of a mixed economy with strong unions and a welfare state still influenced those in power. Transcript: Speaker 1 And Nixon was many things, but on economic policy he was more like a future Clinton than a future Reagan. He called for welfare reform, but he talked like this about his anti-poverty agenda in a speech to the nation in 1969. Speaker 2 What I am proposing is that the federal government build a foundation under the income of every American family with dependent children that cannot care for its own. Speaker 1 And wherever in America that family may live. Which is to say, that establishment consensus of the 30 glorious years, let’s have capitalism but with strong unions and a welfare state, still pretty much held sway among the people In power in the early 70s. This was deeply frustrating to some corporate leaders and folks at business advocacy groups like the United States Chamber of Commerce. One of the chamber’s leaders asked his friend Louis Powell to write an internal memo, a call to action for the organization. Powell delivered. American business plainly is in trouble. The to the wide range of critics has been ineffective and has included appeasement. The time has come, indeed it is long overdue, for the wisdom, ingenuity, and resources of American business to be marshaled against those who would destroy it. In his 34-page memorandum Powell describes what he calls a widespread attack on the free enterprise system.
Time 0:09:56
1970s Political Climate
- In the early 1970s, a mixed economy consensus prevailed in the US.
- This combined capitalist markets with strong labor unions and a welfare state.
- This approach was widely accepted among those in power at the time.
- Despite a Republican president (Nixon), Democrats held Congressional majorities.
- Nixon’s economic policies leaned more towards future Clinton-style approaches than Reagan’s. Transcript: Speaker 1 Which is to say, that establishment consensus of the 30 glorious years, let’s have capitalism but with strong unions and a welfare state, still pretty much held sway among the people In power in
Time 0:11:36
Powell’s Advocacy for Business Political Power
- Lewis Powell advised the U.S. Chamber of Commerce to aggressively cultivate and utilize political power.
- He believed that influencing public opinion would take time and that direct political action was necessary.
- Powell urged businesses to learn from labor and other special interest groups who effectively use political power to advance their agendas. Transcript: Speaker 1 But Powell said, changing public opinion would take time, so the chamber should also push ahead on another front. Speaker 3 Business must learn the lesson, long ago learned by labor and other self-interest groups. Speaker 1 This
Time 0:13:09
Milton Friedman’s Influence
- Milton Friedman became a prominent economic thinker and advisor to presidents and presidential candidates.
- Despite, or perhaps because of, his provocative views, he gained significant popularity.
- Friedman advocated for reduced government regulation, taxation, and overall size, arguing that people weren’t getting their money’s worth from government spending.
- He was associated with the libertarian, pro-market movement supported by wealthy elites like the Koch brothers.
- Friedman, along with Charles Koch and Friedrich von Hayek, were members of the Mont Pelerin Society, a neoliberal organization. Transcript: Speaker 3 You are the counselor to presidents and presidential candidates. Speaker 1 It’s really a wonderful spot to Friedman had become a go-to celebrity economic thinker, despite the fact, or because, he was so provocative. In 1970, he wrote a bombshell article for The New York Times titled, The Social Responsibility of Business is to Increase its Prof Friedman wrote that business leaders who try to defend Free enterprise by insisting that their companies also benefit their employees, the community, or the environment are preaching pure and unadulterated socialism. Here’s Friedman on Donohue arguing that government should regulate less, tax less, and just plain shrink. Right now, to take the simplest measure, the government spending at federal, state, and local levels amounts to over 40 percent of the income of the people of the country. If you go around and ask people, are you getting your money’s worth for that 40 percent of your income which is being spent on your behalf supposedly by government? There are very few people who will say yes, and they are right. We’re not getting our money’s worth. It’s not merely that it’s being wasted. Milton Friedman was a leading spokesman for a libertarian, pro-market movement, led and funded by wealthy elites, most crucially the Koch brothers, Charles and David,
Time 0:13:16
Friedman on Social Responsibility
- Milton Friedman became a prominent economic thinker, despite his provocative views.
- In 1970, he argued that businesses’ sole responsibility is to increase profits.
- He criticized business leaders who claimed their companies benefited employees or communities as preaching socialism.
- He viewed such actions as undermining free enterprise. Transcript: Speaker 1 Friedman had become a go-to celebrity economic thinker, despite the fact, or because, he was so provocative. In 1970, he wrote a bombshell article for The New York Times titled, The Social Responsibility of Business is to Increase its Prof
Time 0:15:06
How to increase support for free markets
- Friedrich von Hayek, a key figure in the neoliberal movement, believed it was unlikely to convince the majority of people to believe in the free market.
- Instead, he suggested focusing on fostering public dislike of government intervention.
- The strategy was to highlight how government overreach restricts individual freedom, becomes controlling, and doesn’t serve the people effectively.
- This approach aimed to indirectly increase support for free markets by emphasizing the negative aspects of government involvement. Transcript: Speaker 1 The market giveth, the market taketh away, blessed be the name of the market. In an interview in 1978, Hayek talked political strategy, how to overcome most people’s skepticism at the time toward laissez-faire economics. Speaker 3 You can never unless expect the majority of the people to regain their belief in the market as such. But I think you can expect to come to dislike government in the fields.
Time 0:16:36
James Buchanan’s Influence
- James McGill Buchanan, a Nobel-winning economist, preferred to operate behind the scenes, unlike Milton Friedman.
- He held radical anti-government views, advocating for private schools and disenfranchising government employees.
- Buchanan, collaborating with Charles Koch, sought to establish a ‘counter-intelligentsia’ to promote libertarian ideas.
- Koch subsequently funded numerous think tanks and lobbying groups, including the Cato Institute, Heritage Foundation, and the Federalist Society, profoundly impacting American politics. Transcript: Speaker 2 So James McGill Buchanan, and if listeners haven’t heard of him, don’t feel bad. I never had when I started and most people have not. He was quite content to be in the shadows, unlike some others like Milton Friedman. Speaker 1 Buchanan held radical anti-government ideas. He thought all schools should be privately run and that workers who get a government paycheck have a conflict of interest and shouldn’t be allowed to vote. Buchanan and Charles Koch met in about 1970, Maclean found. In a memo to like-minded colleagues in 1973, Buchanan echoed the Lewis Powell memo. The libertarian right being badly outnumbered, needed to create, support, and activate an effective counter-intelligentsia. Speaker 2 And he was also quite plain spoken about how to do it. He said they needed to create a gravy train. That’s his language. A gravy train for kind of the care and feeding of this libertarian counter-intelligentsia, which is of course what Charles Koch then began to do. Speaker 1 The Kochs created and funded a striking array of think tanks and lobbying groups. Many are fixtures in American society to this day. Speaker 3 The director of the Center for Study of Science at the Cato Institute… And manager of the Heritage Foundation’s Mies legal center. Nice to see you, sir. Nice for having me. Speaker 2 The Cato Institute, of course, which started
Time 0:17:42
Koch Network Influence
- Charles Koch, inspired by James Buchanan’s idea of a ‘gravy train,’ funded numerous organizations to promote libertarian ideas.
- These include the Cato Institute, Heritage Foundation, Federalist Society, Americans for Prosperity, Mercatus Center, and ALEC.
- These groups have significantly impacted US politics, from shaping Supreme Court appointments to influencing state legislation and even developing plans like ‘Project 2025’ for a second Trump term.
- This infrastructure of influence reflects a deliberate strategy to counter opposing viewpoints and implement conservative policies. Transcript: Speaker 1 Kochs created and funded a striking array of think tanks and lobbying groups. Many are fixtures in American society to this day. Speaker 3 The director of the Center for Study of Science at the Cato Institute… And manager of the Heritage Foundation’s Mies legal center. Nice to see you, sir. Nice for having me. Speaker 2 The Cato Institute, of course, which started as the Charles Koch Foundation, the Heritage Society, Charles Koch boasts that he provided seed money to the Federalist Society. We now have a Federalist Society Supreme Court majority. Speaker 1 It’s the Heritage Foundation that produced Project 2025, the extreme authoritarian blueprint for a second Trump presidential term. The list of coke-funded groups goes on. Americans for Prosperity, which provided talking points and financial muscle to the supposedly grassroots tea party movement that arose against the Obama administration. The Mercatus Center, which pushes for government deregulation, and ALEC, the American Legislative Exchange Council, whose members are conservative state lawmakers. They pass hundreds of state laws every year, cutting taxes and environmental regulations and weakening unions. Speaker 3 It’s really a stunning infrastructure. Speaker 2 I at one point try to keep track of it and we’re talking about literally hundreds of organizations. Speaker 1 But it wasn’t just the right-wing public relations drive that led to change five decades ago. Speaker 3 The United States economy ran into headwinds in the 1970s. Speaker 1 There was inflation related to the Vietnam War and oil shocks and that inflation was persistent.
Time 0:32:50
Neoliberal Consensus Consequences
- Under the neoliberal consensus, government regulations were reduced across industries, and labor laws weakened, hindering worker organization.
- Union membership drastically declined from one-third of U.S. workers in 1960 to less than 15% by 2000.
- Large tax cuts primarily benefited high-income earners and corporations.
- This era saw the rise of executives like Jack Welch, who prioritized profit maximization as the sole social responsibility of business. Transcript: Speaker 1 This neoliberal consensus, government regulations were reduced in virtually every industry. Labor laws and their enforcement were weakened, making it harder for workers to organize. In 1960, one-third of U.S. Workers were union members, by 2000 that had dropped by more than half to less than 15 percent. Congress passed enormous tax cuts, the biggest under Republican presidents like Reagan and George W. Bush. Today, I am sending to Congress my plan to provide relief to all income taxpayers, which I believe will help jumpstart the American economy. The lion’s share of those cuts went to people with the highest incomes and corporations. Meanwhile, in the private sector, a new breed of hard-charging corporate executives embraced the ethos championed by Milton Friedman. That the social responsibility of business is to increase its profits.
Time 0:35:17
Foxconn’s Labor Practices
- In 2012, ABC News got a rare look inside a Foxconn plant in China, where iPhones and other electronics are made.
- Workers there earned just over $2 an hour and worked 60 hours a week.
- This contrasted sharply with US electronics workers who earned over $23 an hour and worked 41 hours a week.
- The report mentioned 18 Foxconn workers who had died by suicide, prompting the installation of safety nets. Transcript: Speaker 3 Foxconn attracts a lot of business by having workers close to the assembly line. They spend 12 hours a day in the factory with two one-hour meal breaks to march single file to a massive canteen for meat and rice. Speaker 1 In this ABC News report from 2012, reporter Bill Weir got a rare look inside a gigantic Foxconn plant in China. The Taiwan-based company makes iPhones and other products for Apple, Intel, and other electronics makers. While the average worker building electronics in the U.S. Speaker 3 Today makes over 2 an hour and strive for a 60-hour work week. Speaker 1 The report included a mention of the 18 Foxconn workers who had recently died after jumping off company buildings. Speaker 3 The suicide nets are still in place, just in case. Speaker 1 Estimates say just between 2000 and 2010, U.S. Closed a staggering 57,000 manufacturing plants in the US and cut almost 6 million jobs.
Time 0:37:19
Financialization of the Economy
- The destruction of American jobs and decline in job quality were accelerated by financialization.
- Financialization, according to Marjorie Kelly, involves excessive financial wealth concentrated in a small number of hands.
- It’s a significant yet often overlooked problem.
- The ‘real economy’ consists of businesses producing goods and services, with money circulating through purchases and wages.
- Financial assets include stocks, bonds, real estate, and debt, and these have grown disproportionately compared to the real economy. Transcript: Speaker 1 The destruction of American jobs over the last few decades and the erosion in their quality were accelerated by another big shift encouraged by neoliberal policies, what experts Call financialization. It’s a vague, technical-sounding word, but Marjorie Kelly is a former business journalist turned economic reformer and author. She’s a distinguished senior fellow at the Democracy Collaborative. Speaker 2 Financialization, I call it the problem we’re not talking about yet. It is as big as climate change and yet it’s far more invisible. Speaker 1 Wait, as big as climate change? Speaker 2 And what it means is there’s too much financial wealth in the system in too few hands. Speaker 1 Let’s unpack this. What does Marjorie mean by financial wealth or financial assets and how can there be too much of them? On one hand she says there’s the real economy. Businesses produce goods and services, people hand over money to buy that stuff, and much of that money flows back around in the paychecks of workers. And traditionally, some of the company’s profits also recirculate as investments in more production and more hiring. On the other hand, financial assets, stocks and bonds, real estate, and debt.
Time 0:37:19
Financialization of the Economy
- The decline of American jobs and their quality was worsened by the financialization of the economy.
- This was encouraged by neoliberal policies.
- Marjorie Kelly, a business journalist and economic reformer, discusses this topic. Transcript: Speaker 1 The destruction of American jobs over the last few decades and the erosion in their quality were accelerated by another big shift encouraged by neoliberal policies, what experts Call financialization. It’s a vague, technical-sounding
Time 0:38:05
Financialization: The Invisible Problem
- Marjorie Kelly argues that financialization, the excessive accumulation of financial wealth in few hands, is a major societal issue, comparable to climate change, but less discussed.
- This wealth doesn’t appear from nowhere; it is extracted from people, the planet, and society.
- Kelly emphasizes the importance of questioning the origin of billionaires’ wealth, challenging the trickle-down theory and arguing the flow operates in reverse. Transcript: Speaker 2 What it means is there’s too much financial wealth in the system in too few hands. Speaker 1 Let’s unpack this. What does Marjorie mean by financial wealth or financial assets and how can there be too much of them? On one hand she says there’s the real economy. Businesses produce goods and services, people hand over money to buy that stuff, and much of that money flows back around in the paychecks of workers. And traditionally, some of the company’s profits also recirculate as investments in more production and more hiring. On the other hand, financial assets, stocks and bonds, real estate, and debt. Your debts and mine are assets on someone else’s ledger. In recent decades, these financial assets have ballooned in comparison with the real economy. In the 1950s, when Marjorie Kelly was a small kid, total financial assets in the U.S. Were roughly equal to the nation’s gross domestic product. Now, they’re five times GDP. Who owns these assets? Overwhelmingly, rich folks. Speaker 2 People know that billionaires have all the wealth, and there’s a lot of talk about how much wealth is going to billionaires. But what we don’t talk enough about is, where does that wealth come from? That wealth comes from extracting from everyone else, from people and planet and society.
Time 0:41:46
Corporations as Financial Playthings
- Oren Cass argues that over the last 40 years, corporations have shifted from being locally rooted entities with owners and managers accountable to their communities, workers, and customers to becoming financial playthings.
- This transformation is attributed to the rise of technology and sophisticated financial practices, such as leveraged buyouts.
- Cass highlights how these corporations prioritize profit maximization above all other obligations. Transcript: Speaker 1 He says, one damaging result of the last 40 years is a change in the nature and the purpose of the typical corporation. Speaker 3 A corporation, even hundreds of years after Adam Smith, would typically be something bound to a particular place with identifiable owners and managers who were legally but also personally Accountable to their communities, to their workers, to their suppliers, to their customers, and who certainly were doing what they were doing because they wanted to generate a profit. But also in most cases had considerations in mind beyond purely profit. Certainly, most people would have said that they had obligations that went beyond purely profit. As technology and the ever more sophisticated role of finance has moved into the corporation, the corporation a legal entity has become from the perspective of its owners and its managers A, in a sense, a financial plaything. Speaker 1 A plaything for banks and investment funds and for private equity firms doing leveraged buyouts.
Time 0:44:00
Modern “Investment” Is Just Asset Flipping
- Modern investment banking often doesn’t involve deploying capital for new ventures like it used to.
- Instead, it focuses on acquiring existing assets and manipulating them to generate slightly more capital.
- This practice is often referred to as asset flipping and is exemplified by the private equity industry.
- Private equity firms acquire companies, often through leveraged buyouts, with the goal of increasing profitability or selling off assets for short-term gains.
- This can have detrimental consequences, as illustrated by the Toys R Us bankruptcy, a high-profile casualty of a private equity deal. Transcript: Speaker 3 And of course, that’s not what investment banks or Wall Street for the most part do today. They collect capital and use it to buy up piles of existing assets in the assumption that they can convert those assets into simply, you know, slightly more capital than they started With. And so most of what we call investment isn’t actually investment at all. It’s turning piles of assets around in circles. Speaker 1 An important and hugely damaging example of this, according to many critics, the private equity industry, which boomed starting in the 1980s thanks to changes in regulations and The tax code. Today, the biggest private equity firms, Carlisle, KKR, BlackRock, are effectively some of the nation’s largest employers through the companies they own, even though most people Have never heard of them. These firms gather money from rich individuals and institutional investors, like pension funds, mutual funds, and university endowments. The firms then go in search of companies they believe could be more profitable than they are, or that they can squeeze for short-term profits by selling off their assets. Private equity takes control of these companies, often through leveraged buyouts, meaning they use the money they’ve raised to leverage the borrowing
Time 0:44:05
Modern “Investment” Is Not Investment
- Much of what’s called “investment” today isn’t actually investment.
- Instead of deploying capital to create new things, like dams or railways, it’s used to buy existing assets.
- The goal is to convert those assets into slightly more capital than initially invested, essentially just shuffling assets around. Transcript: Speaker 3 They collect capital and use it to buy up piles of existing assets in the assumption that they can convert those assets into simply, you know, slightly more capital than they started With. And so most of what we call investment isn’t actually investment at all. It’s turning piles of assets around in circles.
Time 0:46:44
Private Equity’s Shift to Social Industries
- Private equity firms are increasingly investing in social industries like elder care and veterinary services.
- These industries traditionally prioritized a balance of profit and social obligations.
- Private equity aims to convert the embedded social value into profit for investors, potentially at the expense of customer care and community benefit. Transcript: Speaker 3 Always fascinated by which industries private equity tends to be getting into these days. So, you know, once upon a time, private equity would go get into the corrugated metal roofing industry or whatever, right? They were out there finding all these obscure undervalued bargains. More and more what you see private equity getting into are these very intensively social industries, elder care, you know, veterinary services. And every time I see another example of this kind of thing, what I see as happening is that they essentially found industries that are not profit maximizing. We’re part of the premise of operating this industry is you do need to turn a profit, but you also have some real obligations to your customers, to the community that go beyond just maximizing Your profit. And the private equity firm is saying, well, what if we just converted that into profit? What if we took all of the embedded social value that the community is benefiting from, and instead extracted it and gave it to rich people? Speaker 1 Under private equity
Time 0:51:36
Inequality Underestimation
- Research indicates that people significantly underestimate the extent of wealth inequality in the US.
- For example, the top 0.1% of Americans (over 100,000 families) possess about one-fifth of the nation’s wealth.
- Meanwhile, the bottom 90% (nearly 300 million people) own approximately one-fourth of the total wealth.
- This stark disparity, highlighted by politicians like Bernie Sanders and Elizabeth Warren, demonstrates a substantial wealth gap. Transcript: Speaker 1 Fact, there’s research showing that people seriously underestimate the level of inequality in the United States. We’ve mentioned some numbers on inequality here, but it’s so important. I think we should just share a few more of these mind-boggling statistics. In Episode One, we heard what Bernie Sanders said, speaking during his 2016 presidential campaign. Something profoundly wrong in our country when the top one tenth of one percent, not one percent, one tenth of one percent owns almost as much wealth as the bottom 90 percent. That is immoral. Speaker 2 But he wasn’t. The nonpartisan fact-checking organization PolitiFact looked into that exact claim when Elizabeth Warren made it and found it mostly true. That’s right. Speaker 1 The source of that claim by Warren and Sanders was a pair of economists at Stanford and UC Berkeley. Estimated that the richest 0.1% of Americans, 100,000 plus families, owned one-fifth of the nation’s wealth. And the bottom 90% of us, almost
Time 0:51:55
Wealth Inequality
- The top 0.1% of Americans own nearly as much wealth as the bottom 90%.
- This disparity was highlighted by Bernie Sanders and Elizabeth Warren during their presidential campaigns and verified by fact-checkers.
- Globally, the wealth of the world’s billionaires roughly equals that of the poorest 60% of the population, a figure that worsened during the pandemic. Transcript: Speaker 1 In Episode One, we heard what Bernie Sanders said, speaking during his 2016 presidential campaign. Something profoundly wrong in our country when the top one tenth of one percent, not one percent, one tenth of one percent owns almost as much wealth as the bottom 90 percent. That is immoral. Speaker 2 But he wasn’t. The nonpartisan fact-checking organization PolitiFact looked into that exact claim when Elizabeth Warren made it and found it mostly true. That’s right. Speaker 1 The source of that claim by Warren and Sanders was a pair of economists at Stanford and UC Berkeley. Estimated that the richest 0.1% of Americans, 100,000 plus families, owned one-fifth of the nation’s wealth. And the bottom 90% of us, almost 300 million people, owned more, but not that much more, about one-fourth of the total. So 25% compared to 20%. So when Warren or Sanders said the 0.1% own almost as much as the bottom 90%, close enough. Speaker 2 One more way to slice it? Let’s take a global view. In 2020, the world’s billionaires, that’s roughly 2,100 people, had as much wealth as the poorest 60% of humanity, 4.5 billion people. And that was true, according to Oxfam International, before the 10 richest people on Earth doubled their wealth during the pandemic.
Time 0:53:53
Wealth Disparity
- While the overall economy has grown, the distribution of wealth has become increasingly skewed towards the rich.
- Instead of higher wages for workers, a larger share of wealth generated by increased productivity is being converted into assets held by the wealthy through profits and stock appreciation.
- Tax cuts over the past 40 years, particularly on high incomes and investments (the primary income source for the very rich), have exacerbated wealth disparity.
- A 2020 RAND Corporation study estimated that if income distribution had remained consistent with the mid-40s to 1970s, the bottom 90% would have accumulated 1,100 per worker monthly. Transcript: Speaker 2 Yes, and here’s what folks like Marjorie Kelly are saying. The overall size of the economy has continued to grow at a pretty steady clip. The pie keeps getting bigger. But as workers and companies get more and more productive, with the help of technology, a huge share of the wealth is being siphoned off and turned into assets held by the rich. Speaker 1 What does this really mean? Instead of going into the bank accounts of millions of regular working people through higher pay, it’s showing up instead as profit on the corporate ledger, raises the value of stocks In the portfolios of the mostly wealthy people who own most of the stocks. And at the same time, rich folks get to keep more of their wealth, thanks to the big tax cuts over the last 40 years, especially cuts on the highest incomes and on investment income, which Is the main source of income for the very wealthiest people. Speaker 2 Okay, listen to this. In a study published in 2020 by the RAND Corporation, a pair of economists set out to measure how much more wealth people in the bottom 90% of the US population would have accumulated Over the last 40 years if things had been distributed the old way, the way they were during those post-war decades from the 40s to the 70s. Their estimate? 50 trillion dollars.
Time 0:53:53
Wealth Siphoning
- Despite economic growth and increased productivity, wealth distribution is highly skewed.
- Instead of higher wages for workers, profits boost corporate value and stock portfolios, primarily benefiting the wealthy.
- Tax cuts over the past four decades have further exacerbated wealth concentration among the rich.
- The rich are getting richer while worker wages stagnate, even though overall productivity and profits increase. Transcript: Speaker 2 Yes, and here’s what folks like Marjorie Kelly are saying. The overall size of the economy has continued to grow at a pretty steady clip. The pie keeps getting bigger. But as workers and companies get more and more productive, with the help of technology, a huge share of the wealth is being siphoned off and turned into assets held by the rich. Speaker 1 What does this really mean? Instead of going into the bank accounts of millions of regular working people through higher pay,