Economist Michael Hudson sits down with Sharmini Peries
to talk about the elections and his new book 'J is for
Posted December 11, 2016
SHARMINI PERIES, TRNN: Its the Real News Network. Im
Sharmini Peries coming to you from Baltimore.
Come January 20th Donald Trump is placed to take power
in Washington D.C., and theres one thing that everyone
is wondering about is what kind of economic policies
will he implement that we should really worry about it.
Well theres been one economist, Michael Hudson, whos
been thinking hard and taking a close look on the
economics profession and how it misleads the general
public in favor of the top 1%.
Michael Hudson joins us today to talk about his most
recent book, J is for Junk Economics: A Survivors Guide
to Economic Vocabulary in an Age of Deception. Michael
is a is a distinguished Research Professor of Economics
at the University of Missouri, Kansas City Thanks
Michael for joining us.
MICHAEL HUDSON: Good to be back in Baltimore.
PERIES: So Michael, your new book, J is for Junk
Economics actually is a sequel if I may say, to this
book which is Killing the Host: How Financial Parasites
and Debt Bondage Destroy the Global Economy. So give us
a sense of your impetus for the new book.
HUDSON: Well, Killing the Host was basically a
historical narrative of how the financial sector rose to
power and how it sought to take over government and
resist the tendency to democratization by really
restoring a financial oligarchy and rolling back in
Europe what were the 1848 revolutions. The revolutions
to sort of free economies from landlords, from
monopolies and from the banks. By the late 19th century
there was a counter move in economics and that move
redefined the idea of free markets. Adam Smith and John
Stewart Mill and even Marx wrote about free markets.
They meant a market free of the idle rich. The idle
landlords who collected land rent on a hereditary basis
without working, with financers and the bankers who then
insisted that governments create monopolies to give them
the whole idea of industrial capitalism was to get free
of all these unnecessary costs. You dont need a landlord
class to collect rent. You dont need monopoly rent.
Around the late 19th century the landlords fought back
and they claimed theres no such thing as unearned
The whole essence of classical economics was to say
theres a difference between value and price. Value is
what it really costs what it really costs to produce
goods and services. All that costs can be expressed in
terms of what it costs to hire labor and keep it alive.
Everything thats not a real cost is just a privilege.
Its just a legal right to put up a toll booth and
So Killing the Host was how this fight was waged
politically and essentially whats happened since
Margaret Thatcher and Ronald Reagan introduced
neoliberalism that was followed up by the Clintons, by
Tony Blair and England, really by Europe today, well J
is for Junk Economics is sort of two things. It
describes how the economic vocabulary has been turned
around in an Orwellian way to mean just the opposite of
what words used to mean. A free market now means a
market free for the landlords to charge whatever they
want. Free for the monopolists to charge whatever they
want. Free of any regulation.
The whole intent is to create what is called a
methodology. I know thats technical word but to create a
way of looking at the economy of making national income
statistics that make it appear as if Goldman Sachs is
productive. As if Donald Trump is productive. To make it
appear that people who take money from the rest of the
economy without working, without really providing any
service or actually contributing to GMP and to economic
growth. So Im trying to show that what people think is
scientific economics, it makes it appear as if poverty
is natural. That makes it appear that Goldman Sachs and
Donald Trump are job creators instead of job destroyers,
So I talk about the vocabulary. Its an A to Z vocabulary
that goes over all of the concepts you need to pierce
through this Orwellian rhetoric that passes for
mainstream economics today. Mainstream economics is
pretty much turned into junk economics and its idea is
that rent is perfectly natural to be paid. That a well
rund economy should have no government at all but should
shift all the economic planning to Wall Street to city
of London or Paris or other financial centers. Let
finance do the planning because theyre the most
productive people in the world that government is just a
Now this is just the opposite of what was believe 100
years ago. I think I said before in this program that
the first business school economics professor, the
Horton School of Economics at the University of
Pennsylvania in the 19th century was Simon Patton and he
defined public infrastructure, the public option roads
as a 4th factor of production. The biggest capital
investment in every country is what governments spend on
roads, water and sewer, basic infrastructure,
communications, telephone, natural resources, and of
course land. All these things are being privatized now
and the job under government ownership under a public
option like public health in Europe, the whole idea is
to lower the cost of living, lower the cost of doing
business so you make the economy more competitive.
Well under Thatcherism or Clintonism or whatever you
want to call it, the idea is to turn the sidewalks over
to the monopolists financed by Wall Street, to all of a
sudden begin charging and the result is to make America
a high cost economy. So, that when people like Donald
Trump come in and say were going to make America great
again, what he means is competitive again. But how can
you make it competitive if you make Americans pay so
much more in healthcare, as much in healthcare as an
Asian would earn in an entire year. If you gave
Americans all of their food and clothing and everything
they buy and self for nothing, they still couldn't
compete because of all of the costs that other countries
pay for through the government; government healthcare,
government spending, government roads.
This was the dream of America in the 19th century. Its
what made America the most competitive country in the
world. Enabled it to undersell others. Its what made
Germany competitive. Its what made Japan competitive and
all of this is being undone now as if this whole world
that existed before 1980, before Margaret Thatcher,
before Ronald Reagan, even before Bill Clinton, didnt
really exist. Theres been an expurgation of all of the
tools of thought, all of the vocabulary that you use to
distinguish between profits that are actually earned on
capital investment, hiring people and economic rent
which is just a toll booth to extort money over and
above the actual cost of production.
PERIES: Now you said something really important, which
is that people at least in this election cycle started
to believe that Donald Trump was a job creator rather
than a job destroyer. What did you mean by that and how
have you led down the garden path?
HUDSON: I didnt mean that they actually believed that he
is a job creator. He wanted to convince them that he was
a job creator. And its true, he did create a lot of
jobs. Probably not as many jobs as were lost by people
gambling at his resorts. I teach at Kansas City and the
just had a study of why do people go bankrupt in Kansas
City. Well they have a ship that goes in the river that
goes in the river that people can go and gamble on. Most
of the people who gamble find themselves they cant
afford to pay their rent. They lost their jobs. They
think theres only one way Im going to be able to pay the
rent and not be out in the street. Ive got to pay 100 to
1 payoff. If I dont, its that or nothing.
So for them its actually rational, Im probably going to
lose but the only way that I can keep my head above
water is to win the lottery and apparently they end up
losing the lottery. So Donald Trumps idea is if he can
convince the working class that you can all be a
millionaire, youre all going to win the lottery. Wouldnt
you like to be nice to be millionaires for the time that
you win the lottery?
Thats the game. Nice trick if you can pull it off. But I
think its a myth and its a myth that people want to,
that leaders who represent Wall Street and the elites
and the real estate interests want to promote in the
hopes that somehow people will think of themselves, well
I could be a big capitalist. Theyre a little bit for
Donald Trumps father goes million, I can do all that but
they really cant do that because the odds are stacked
against them and a good economic theory would show how
the odds are stacked against people, why people are
getting poorer and poorer since 2008. For the last 8
years, the entire Obama administration has been one
downturn for the 95% of the population. All the growth
has been at the top. Weve got to show them that.
PERIES: Yet when we heard President Obama speaking at
various rallies to support Clintons candidacy, in terms
of his own legacy, all he talked about was how much
better off we are in terms of what he inherited in 2008.
Which is true.
HUDSON: No that was the kiss of death. That was what
lost the election for Hillary. Imagine Hillary going to
the country and saying, just think of how much better
off you are than you were 8 years ago. Well imagine the
people wait a minute, Im not better off, Im worse off.
My real wages have gone down. If youre 95 out of 100
Americans, your real wages have gone down. You're being
squeezed by healthcare. Your housing costs are going up.
All of your costs are going up and your wages are not
going down and your working conditions are getting
worst. I think the voters thought I'm not better off at
all. What is this?
And their feeling was one of revolt. They said they cant
fool me anymore, no matter what the opposite is, weve
got to throw them out. Even if we cant vote for someone
good, at least we can keep throwing out the bad guys and
maybe like on a roulette wheel, a winning numbers going
to come up some day. Unfortunately thats not how it
PERIES: And so lets talk about the kind of mythologies
that are being sold to the people like the one I was
just talking about in terms of President Obama and the
campaign trail telling. People that theyre better off,
than they are. How are they being sold these mythologies
and what are some of the terminologies that you cover in
your book that leads people to believe what theyre being
HUDSON: Well one way that he convinces them theyre
better off, he says GDP, gross domestic product is going
up. Its true. For the economy, gross domestic product
actually has gone up since 2008. The problem is, its
only gone up for 5% of the population. But its gone up
for so much for Wall Street, so much for 5% of the
population that its larger than the decline of the 95%.
Now I dont know if Ive talked about this on the show
before but I was just in Germany at an archeological
conference and we were talking about the Roman empire
turning into feudalism and people said theres been a new
economic approach, new economic archeology. There really
wasnt a Dark Age. Because it turns out weve found so
much luxury trade among the very rich, the landowners
despite the fact the population was all being turned
into serfs, the rich were doing quite fine. We find nice
pottery, there was certainly many at the top of the
pyramid. So much money that maybe there was actual
growth. So they call the transition to serfdom and just
peonage for the population, actual growth because so
much wealth was squeezed out at the top.
Now is that really growth or not? If President Obama and
Hillary could convince people that GDP is going up and
you havent shared in it, somethings wrong with you. This
is blame the victim. Shes blaming the victims for not
participating in this growth that was enjoyed by Goldman
Sachs and Wall Street and Chase Manhattan and the other
bankers that were not thrown in jail. Most people didnt
want to think of themselves as the victim and they
thought that Donald Trumps appeal was pretending that
they werent victims and that he was going to do
something about them apart from making himself rich.
PERIES: Right and why is it that you blame the Obama
period for this because he actually did inherit terrible
economy in a depression.
HUDSON: Yes the reason he's so much worse than President
Bush or even President Clinton is this was a potential
turning point. When you look at who are the great
presidents in history, you really think whos a president
during a great war or during a turning point. Obama
promised hope and change. But that was all demagogue. He
didnt have any hope and change. The hope was for Wall
Street. He delivered his constituency to his Wall Street
backers and instead of making a change, he turned the
economy over to Wall Street. He turned the treasury over
to Robert Rubin and his Wall Street gang who supported
Bill Clinton, the most corrupt bank in the country,
CitiGroup, that Sheila Bair wanted to close down and
turn into a public option. He turned over the Justice
Department to Wall Street factotums like Eric Holder who
refused to put any of the crooked bankers in jail.
So basically, he made it appear as if he was
representing the people where he slammed down hard on
them. Just as he slammed down on them in his work in
PERIES: Alright Michael, lets continue this discussion
on your new book in our next segment.
Michael Hudson is a Distinguished Research Professor
of Economics at the University of Missouri, Kansas City.
He is the author of The Bubble and Beyond and Finance
Capitalism and its Discontents. His most recent book is
titled Killing the Host: How Financial Parasites and
Debt Bondage Destroy the Global Economy.
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