Michael Hudson



Michael Hudson, American economist and author of Super Imperialism: The Economic Strategy of American Empire (1972) discusses the rentier economy that accounts for the growing disparity in wealth due to finance capitalism. Giving a history of the the polarisation of the US economy since the 1960s through the present, Hudson discusses how the high costs of education and housing have led to a growing problem of student debt, higher costs of living and increasing austerity. Noting how 80% of bank loans are made for real estate in the US, Hudson expounds upon how loans and exponentially growing debts outstrip profits from the economy proving disastrous for both the government and the people who are paying increasing amounts on housing with little to no money left to spend on goods and services. Hudson contends that finance capitalism is a “self-terminating” oligarchical system leaving workers traumatised, afraid to strike or react to working conditions, while they are pushed towards serfdom as US and Europe are heading towards a debt crisis on par with that of Argentina and Greece.


Introduction: Welcome to Savage Minds. I'm your host, Julian Vigo. Today's show marks the launch of our second season with a very special guest: Michael Hudson. Michael Hudson is a financial analyst and president of the Institute for the Study of long term economic trends. He is a distinguished research professor of economics at the University of Missouri Kansas City, and the professor at the School of Marx studies, Peking University in China. He's also a research fellow at the Levy Institute of Bard College, and he has served as an economic adviser to the US Canadian, Mexican, and Latvian governments. He's also been a consultant to UNITAR, the Institute for Research on Public Policy and the Canadian Science Council, among other organisations. He holds a BA from the University of Chicago and an MA and PhD in economics from New York University. Professor Hudson is the author of Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy (2015), and most recently, J is for junk economics, a guide to reality in an age of deception. His super imperialism, the economic strategy of the American Empire has just been translated into German after its appearance in Chinese, Japanese and Spanish. He sits on the editorial board of lap times quarterly and has written for the Journal of International Affairs, Commonweal, International Economy, Financial Times, and Harper's, and he's a regular contributor to CounterPunch. I welcome Michael Hudson, to Savage Minds.

Julian Vigo: Class analysis in the United States is rather subterfuge amidst all these other narratives of the American dream as it's framed—that being the right to own one's home. In the UK, that became part of the Trojan horse, that Thatcher built to win her election. It was a very smart move. She won that election—she won her elections—by the reforms in the “right to buy” scheme as I'm sure you know. I t was really clever and disastrous for human rights in the country. I've spent quite a bit of my life in the UK and to see that in 1979 was, I believe, 49% of all residential housing was council housing. And when I wrote a piece on this for the Morning Star about eight, nine years ago, that rate was reduced to under 11%. So we're seeing the haves- and have-nots. And this is where your work really struck a chord for me. And let's kick into the show at this point. I have written over the years, about rentier capitalism, a term that is increasingly used to describe economies dominated by rentier, rents and rent-generating assets. And you discuss this quite a bit in your work, more recently, your article from July, “Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover.” And in this article, you discuss how today the finance, insurance and real estate sectors have regained control of government creating a “neo-rentier” economy as you put it, while you note—and I quote you: “The aim of this postindustrial finance capitalism is the opposite of industrial capitalism as known to nineteenth-century economists: it seeks wealth primarily through the extraction of economic rent, not industrial capital formation.” Unquote. I was wondering if we might begin our talk by branching out from this piece you wrote in July. And if you could explain for our listeners why discerning rentier capitalism is essential for understanding the global push to privatise and financialise those sectors that formerly existed in the public domain such as—and we see this everywhere, including in the EU—transportation, health care, prisons, policing, education, the post office, etc.

Michael Hudson: Well, most textbooks depict a sort of happy world that almost seems to exist in the 1950s. And this “happy world” is when wealthy people get money, they build factories and buy machinery and hire workers to produce more goods and services. But that's not what the credits created for today, it's the textbooks that pick the banks that take in people's deposits and lend them out to people who build industrial production, and you'll have a picture of workers with lunchboxes working in. But actually, banks only lend money against assets. And the main assets do not make a profit by employing people to produce things there. They simply are opportunities to extract rent, like real estate 80% of bank loans are made for real estate. And that means they're made against primarily buildings that are in land that are already there. And the effective more and more bank credit is to raise the price of real estate. And in the United States, in the last year, housing prices have gone up 20%. And typically, in America, if you go to a bank and take out a loan, the government is going to guarantee the bank that you will pay the loan up to the point where it absorbs 43% of your income.

So here's a big chunk of American income going to pay simply for housing, those price increases, not because there's more housing, or better housing. But in fact, the housing is built worse and worse every year, by lowering the standards, but simply inflation. There are other forms of rent, other people pay, for instance, 18% of America's GDP is healthcare, much higher than the percentage in any other country for much lower quality of service. So you know, that's sort of taken out of people's budgets. If you're a worker in the United States, right away, you get your paycheque 15%—a little more, maybe 16% now—is deducted for Social Security and medical care for when you're older. They also need up to maybe 30%, for income tax, federal, state and local income tax before you have anything to spend. And then you have to spend for housing, you have to pay for transportation, you have to pay for your own medical insurance contributions, your own pension contributions.

So there's very, very little that is left over in people's budgets to buy goods and services. Not only have real wages in the United States, gone down now for three decades, but the disposable income that people and families get after they meet their sort of monthly “nut,” what they can spend on goods and services is shrunk even more. So while they're getting squeezed, all this money is paid to rentiers as at the top. And because of the miracle of compound interest, the amount that the 1% of the economy has grows exponentially. Any rate of interest is a doubling time. And even though people know that there's only a 0.1% rate of interest, now for the banks, and for large wall firms, it's about 3% if you want to buy a mortgage. and so this, the 0.1% is lent out to large companies like Blackstone that are now buying up almost all of the housing that comes onto the market in the United States. So in 2008, 69% of homeowners of Americans own their own homes. Now it's fallen by more than 10%. It's fallen to about 51%. All this difference has been basically the financial sector funding a transformation away from home ownership into landlordship—into absentee ownership. And so the if you're part of the 1%, the way that you make money is by buying stocks or bonds, or corporate takeovers, or buying real estate and not building factories. And that's why the factories and the industry have been shifting outside of the United States over to China, and other countries.

So, what we're having is a kind of…I won’t say its post-industrial capitalism, because people thought that the what was going to follow industrial capitalism was going to be socialism. They thought that there will be more and more government spending on providing basic needs that people had. And instead of socialism, and a more, egalitarian distribution of wealth and income, you've had a polarization of wealth and income, you've had the wealthy people making money financially, and by real estate, and by rent seeking, and by creating monopolies, but not by building factories, not by producing goods and services. And that is why the economy's polarizing, and so many people are unhappy with their conditions.

Now, they're going further and further into debt and their student debt. Instead of education here being a public utility that's provided freely, it's become privatised at NYU, it's now $50,000 or $60,000 a year. There is no way in which the United States can compete industrially with other countries when they've loaded down new entrants into the labor force with huge housing costs, student debt, huge taxes have been shifted off the 1% onto the 99%. So in the United States, finance capitalism basically is self-terminating. It leads to a polarised economy, it leads to austerity. And it leaves countries looking like Greece looked after 2015, after its debt crisis, it looks like Argentina is trying to struggle to pay its foreign debts. And that seems to be the future in which the US and Europe are moving towards.

Julian Vigo: I posted on my Facebook wall about this about maybe five weeks ago, that the rentier class, I'm not just including the likes of Blackstone, but the middle class that are multiple home dwellers. I noted that during the lockdown, I was reading through accounts on social media of people who were being threatened by landlords, landlords, who actually had no mortgage to pay. And I had to wonder at that point, what is the input of the rentier class by the landowning class who are not necessarily part of the 1%. These are people who, as some of these people came on my wall and said, “I worked hard to buy my second and third houses!” And I thought, “Well, let me pull out my violins.” One thing that really alerted me during lockdown was the lack of sympathy for renters. And I don't just mean in the US, in fact, I think the US had a kinder response to renting in some sectors such as New York state where there has been—and still—is a massive pushback against any form of relaxation of rent forgiveness, since lockdown in the EU and Italy and France. It's appalling the kind of treatment that renters received here. I spoke to people in Bologna, who were doing a rent strike, but fearful of having their name mentioned. I ended up not being able to run the piece because of that. And there are so many people who don't have money to pay their rent in the EU, in the UK, and yet, we're somehow focusing oftentimes on these meta-critical analyses of the bigger corporations, the 1%. But where does the middle class fit into this, Michael, because I do have to wonder if maybe we should be heading towards the model I hold in my mind and heart is St. Ives in Cornwall, which about eight years ago set a moratorium saying no second homes in this city. Now, they didn't do it because of any allegiance to Marxism or socialism. They did it in part because of that, and because of a left-leaning politics, but mostly because they didn't want to have a ghost town that when the summer was over, you had very few people living in town. What are the answers to the rentier class that is also composed of people who consider themselves hard-working people who just want someone else to pay for their house, as one person on Twitter, put it.

Michael Hudson: This is exactly the problem that is plaguing left wing politics, from Europe to America in the last fifty years.

Julian Vigo: Exactly. It's astounding because there was a lot of debate on Twitter around last summer, when one woman wrote, I just did the math, I'm almost 29 years old, and I paid and she listed the amount in rent, I have just bought my landlord a second house. And people are adding it up that we are back to understanding. And I think in terms of the medieval period, remember in high school in the US when you study history, and you learn about feudalism, and the serfs coming in from far afield having to tend to the Masters terrain. And I think, are we heading back to a kind of feudalism under a new name? Because what's dividing those who can afford rents and those who can, it's not only your eligibility to receive a bank loan in this climate, which is quite toxic in London. I know many architects, lawyers, physicians who cannot get bank loans. Ironically, the bar is being raised so high that more and more people in London are moving on to the canal system—they're renting or buying narrowboats. The same is happening in other parts of the world where people are being barred out of home ownership for one reason or another and at the same time, there's a class of people often who got loans in a period when it was quite easy in the 80s and early 90s, let's say and they hold a certain control over who's paying—43% of income of Americans goes on housing. And as you know, in New York City that can be even higher. How can we arrive at a society where there's more equality between these haves and have-nots? Because it seems that the middle class is playing a role in this. They're trying to come off as being the hard-working schmoes, who have just earned their right to own their second or third homes, and then the others who will never have a foot on that ladder, especially given the crash?

Michael Hudson: Well, I think you've put your finger on it. Most people think of economies being all about industry. But as you've just pointed out, for most people, the economy is real estate. And if you want to understand how modern economies work, you really should begin by looking at real estate, which is symbiotic with with banking, because as you pointed out that in a house is worth whatever a bank will lend. And in order to buy a house, unless you have an enormous amount of savings, which hardly anyone has, you'll borrow from a bank and buy the house. And the idea is to use the rent to pay the interest to the bank. And then you end up hoping late hoping with a capital gain, which is really land price gain. You borrow from the bank hoping that the Federal Reserve and the central bank or the Bank of England is going to inflate the economy and inflate asset prices and bank credit is going to push prices further and further up. As the rich get richer, they recycle the money in the banks and banks lend it to real estate. So, the more the economy is polarised between the 1% and the 99%, the more expensive houses get the more absentee landlords are able to buy the houses and outbid the homebuyers, who as you pointed out, can't get loans because they're already loaned up. If they can't get loans in England to buy a house, it's because they already owe so much money for other things. In America, it would be because they own student debt or because they own other bank loans, and they're all loaned up. So the key is people are being squeezed more than anywhere else on housing. In America, it rents care too and on related sort of monopoly goods that yield rent. Now the problem is why isn't this at the centre of politics?

Is it because— and it's ironic that although most people in every country, Europe and America, are still homeowners, or so they only own their own home—they would like to be rentiers in miniature? They would like to live like the billionaires live off the rents. They would like to be able to have enough money without working to get a free lunch and the economy of getting a free lunch. And so somehow, they don't vote for what's good for the wage earners. They vote for…well, if I were to get richer, then I would want to own a house and I would want to get rent. So I'm going to vote in favour of the landlord class. I'm going to vote in favour of banks lending money to increase housing prices because I'd like to borrow money from a bank to get on this treadmill, that's going to be an automatic free lunch. Now, I not only get rent, but I'll get the rising price of the houses as prices continue to rise. So somehow, the idea of class interest, they don't think of themselves as wage earners, they think of themselves as somehow would-be rentiers in miniature without realising that you can't do it in miniature. You really have to have an enormous amount of money to be successful rentier.

So no class consciousness means that the large real estate owners, the big corporations like Blackstone that own huge amounts can sort of trot out a strapped, homeowner and individual, and they will sort of hide behind it and say, “Look at this, poor family, they use their money to buy a house, the sort of rise in the world, and now the tenants have COVID, and they can't pay the rent. Let's not bail out these, these landlords.” So even though they're not getting rent, we have to aid them. And think of them as little people, but they're not little people. They're a trillion dollar, money managers. They're huge companies that are taking over. And people somehow personify the billionaires and the trillion dollar real estate management companies as being small people just like themselves. There's a confusion about the economic identity.

Julian Vigo: Well, certainly in the United States, we are known to have what's called the “American dream.” And it's, it's quite interesting when you start to analyse what that dream has morphed into, from the 1960s to the present, and I even think through popular culture. Remember Alexis, in Dynasty, this was the go-to model for success. So we've got this idea that the super rich are Dallas and Dynasty in the 80s. But 20 years after that, we were facing economic downfalls. We had American graduates having to go to graduate school because they couldn't get a job as anything but a barista. And the model of getting scholarships or fellowships, any kind of bursary to do the Masters and PhD. When I was doing my graduate work, I was lucky enough to have this, but that was quickly disappearing. A lot of my colleagues didn't have it. And I imagine when you went to school, most of your colleagues had it. And today, and in recent years, when I was teaching in academia, most of my students doing advanced degrees had zero funding. So, we've got on the one hand, the student debt, hamster wheel rolling, we have what is, to me one of the biggest human rights issues of the domestic sphere in countries like the US or Great Britain, frankly, everywhere is the ability to live without having to be exploited for the payment of rent. And then we have this class of people, whether they're Blackstone, and huge corporations, making billions, or the middle class saying, “But I'm just living out the American dream.” How do we square the “American dream,” and an era where class consciousness is more invisible than ever has it been?

Michael Hudson: I think the only way you can explain that is to show how different life was back in the 1960s, 1950s. When I went to school, and the college, NYU cost $500 a semester, instead of 50,000, that the price of college has gone up 100 times since I went to college—100 times. I rented a house in a block from NYU at $35 a month on Sullivan Street. And now that same small apartment would go for 100 times that much, $3,500 a month, which is a little below the average rent in Manhattan these days. So, you've had these enormous increases in the cost of getting an education, they cost of rent, and in a society where housing was a public utility, and education was a public utility, education would be provided freely. If the economy wanted to keep down housing prices, as they do in China for instance, then you would be able to work if the kind of wages that Americans are paid today and be able to save. The ideal of China or countries that want to compete industrially is to lower the cost of living so that you don't have to pay a very high wages to cover the inflated cost of housing, the cost of education.

If you privatise education in America, and if you increase the housing prices, then either you're going to have to pay labor, much higher rates that will price it out of world markets, at least for industrial goods, or you'll have to squeeze budgets. So yes, people can pay for housing, and education, but they're not going to buy the goods and services they produce. And that's one of the reasons why America is not producing industrial manufacturers. It's importing it all abroad. So the result of this finance capitalism that we have the result of the rent squeeze, that you depict, and the result of voters not realising that this is economic suicide for them is that the economy is shrinking and leaving people basically out in the street. And of course, all of this is exacerbated by the COVID crisis right now. Where, right now you have, especially in New York City, many people are laid off, as in Europe, they're not getting an income. Well, if your job has been closed down as a result of COVID, in Germany, for instance, you're still given something like 80% of your normal salary, because they realise that they have to keep you solvent and living. In the United States, there's been a moratorium on rents, they realise that, well, if you've lost your job, you can't pay the rent. There's a moratorium on evictions, there's a moratorium on bank foreclosures on landlords that can't pay their mortgage to the bank, because their tenants are not paying rent. All of that is going to expire in February, that’s just in a few months.  So they're saying, “OK, in New York City, 50,000 tenants are going to be thrown out onto the street, thousands of homes are going to be foreclosed on.” All over the country, millions of Americans are going to be subject now to be evicted. You can see all of the Wall Street companies are raising private capital funds to say, “We're going to be waiting for all this housing to come onto the market. We're going to be waiting for all of these renovations to take place. We're going to swoop in and pick it up.” This is going to be the big grab bag that is going to shape the whole coming generation and do to America really what Margaret Thatcher did to England when she got rid of—when she shifted from housing, the council housing that you mentioned, was about half the population now dow to about 1/10 of the population today.

Julian Vigo: This is what I wonder is not being circulated within the media more frequently. We know that major media is not...[laughts] They like to call themselves left-of-centre but they're neoliberal which I don't look at anything in the liberal, the neoliberal sphere, as “left.” I look at it as a sort of strain of conservatism, frankly. But when you were speaking about paying $35 a month for an apartment on Sullivan Street, get me a time machine! What year was that? Michael?

Michael Hudson: That was 1962.

Julian Vigo: 1962 And roughly, the minimum wage in New York was just over $1 an hour if I'm not mistaken.

Michael Hudson: I don't remember. I was making I think my first job on Wall Street was 50 to $100. A year $100 a week.

Julian Vigo: So yes, I looked it up because I was curious when you said 100 times certainly we see that. If the tuition at New York when and New York University when I left was $50,000 a year you were paying $500 a semester. This is incredible inflation.

Michael Hudson: And I took out a student loan from the state because I wanted to buy economic books. I was studying the history of economic thought and so I borrowed, you know, I was able to take out a loan that I repaid in three years as I sort of moved up the ladder and got better paying jobs. But that was the Golden Age, the 1960s because in that generation there was the baby boom that just came online. There were jobs for everybody. There was a labor shortage. And everybody was trying to hire—anyone could get a job. I got to New York and I had $15 in my pocket in 1960. I'd shared a ride with someone, [I] didn't know what to do. We stayed in a sort of fleabag hotel on Bleecker Street that was torn down by the time you got there. But I,  took a walk around and who should I run into that Gerde's Folk City, but a friend of mine had stayed at my house in Chicago once and he let me stay at his apartment for a few weeks till I can look around, find a place to live and got the place for $35 a month,

Julian Vigo: When there was that debate on Twitter—there were many debates actually about renting on Twitter—and there were a few landlords who took to Twitter angry that they learned that their renters had received subsidies in various countries to pay their rent. And instead of paying their rent, the people use this to up and buy a downpayment on a home. And they got very upset. And there was a bit of shadow on Friday there with people saying, “Well, it's exactly what you've done.” And I find this quite fascinating, because I've always said that the age of COVID has made a huge Xray of our society economically speaking. And it's also telling to me that in countries that I would assume to be more socialist leaning, if not socialist absolutely, in the EU, we saw very few movements against rent. Very few people or groups were calling for a moratorium on rent. It's ironic, but it was in the US where we saw more moratoria happen. What is happening where—and this reaches to larger issues, even outside of your specialty of economics and finance—but why on earth has it come to be that the left is looking a lot more like the right? And, don't shoot me, but you know, I've been watching some of Tucker Carlson over the past few years, someone who I could not stand after 9/11. And he has had more concern and more investigations of the poor and the working class than MSBC or Rachel Maddow in the biggest of hissy fits. What is going on politically that the valences of economic concern are shifting—and radically so?

Michael Hudson: Well, the political situation in America is very different from every other country. In the Democratic Party, in order to run for a position, you have to spend most of your time raising money, and the party will support whatever candidates can raise the most money. And whoever raises the largest amount of money gets to be head of a congressional committee dealing with whatever it is their campaign donors give. So basically, the nomination of candidates in the United States, certainly in the Democratic Party, is based on how much money you can raise to finance your election campaign, because you're supposed to turn half of what you raised over to the party apparatus. Well, if you have to run for an office, and someone explained to me in in the sixties, if I wanted to go into politics, I had to find someone to back up my campaign. And they said, “Well, you have to go to the oil industry or the tobacco industry.” And you go to these people and say, “Will you back my campaign?” And they say, Well, sure, what's your position going to be on on smoking on oil and the the tax position on oil, go to the real estate interest, because all local politics and basically real estate promotion projects run by the local landlords and you go to the real estate people and you say, “Okay, I'm going to make sure that we have public improvements that will make your land more valuable, but you won't have to pay taxes on them.” So, if you have people running for office, proportional to the money they can make by the special interests, that means that all the politicians here are representing the special interests that pay them and their job as politicians is to deliver a constituency to their campaign contributors. And so the campaign contributors are going to say, “Well, here's somebody who could make it appear as if they're supporting their particular constituency.” And so ever since the 60s, certainly in America, the parties divided Americans into Irish Americans, Italian Americans, black Americans, Hispanic Americans. They will have all sorts of identity politics that they will run politicians on. But there's one identity that they don't have—and that's the identity of being a wage earner. That's the common identity that all these hyphenated Americans have in common. They all have to work for a living and get wages, they're all subject to, they have to get housing, they have to get more and more bank credit, if they want to buy housing so that all of the added income they get is paid to the banks as mortgage interest to get a home that used to be much less expensive for them. So basically, all of the increase in national income ends up being paid to the campaign contributors, the real estate contributors, the oil industry, the tobacco industry, the pharmaceuticals industry, that back the politicians. And essentially, you have politics for sale in the United States. So we're really not in a democracy anymore—we're in an oligarchy. And people don't realise that without changing this, this consciousness, you're not going to have anything like the left-wing party.

And so you have most Americans out wanting to be friendly with other Americans, you know, why can't everybody just compromise and be in the centre? Well, there's no such thing as a centrist. Because you'll have an economy that's polarising, you have the 1% getting richer and richer and richer by getting the 99% further and further in debt. So the 99% are getting poorer and poor after paying their debts. And to be in the centre to say, and to be say, only changes should be marginal, that means—a centrist is someone who lets this continue. With that we're not going to make a structural change, that's radical, we're not going to change the dynamic that is polarising the economy, between creditors at the top and debtors is at the bottom, between landlords at the top and renters at the bottom between monopolists and the top and the consumers who have to pay monopoly prices for pharmaceuticals, for cable TV, for almost everything they get. And none of this is taught in the economics courses. Because you take an  economics course, they say, “There's no such thing as unearned income. Everybody earns whatever they can get.” And the American consciousness is shaped by this failure to distinguish between earned income and unearned income and a failure to see that dynamic is impoverishing them. It's like the proverbial frog that's been boiled slowly in water. So, with this false consciousness people have—if only they can save enough and borrow from a bank—they can become a rentier in Miniature. They're just tricked into a false dream.

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Julian Vigo: I don't know if you saw the movie called Queen of Versailles. It was about this very bizarre effort to construct a very ugly Las Vegas-style type of Versailles by a couple that was economically failing. And it spoke to me a lot about the failings of the quote unquote, “American dream.” And I don't mean that dream, per se. I mean, the aspiration to have the dream, because that is, as you just pointed out, unearned income, that is the elephant in the room. And it almost seems to be the elephant maybe to keep using that metaphor, that the blind Sufi tale: everyone's feeling a different part of it, but no one is naming it. And I find this really shocking, that we can't speak of unearned income and look at the differences as to which country's tax inheritance and which do not—this idea that one is entitled to wealth. Meanwhile, a lot of US institutions are academically, now formally, being captured by the identity lobbies and there are many lobbies out there—it's a gift to them. They don't have to work on the minimum wage, they don't have to work on public housing, they don't have to work on housing.

They can just worry about, “Do we have enough pronoun badges printed out?” And I find this really daunting as someone who is firmly of the left and who has seen some kind of recognition have this problem bizarrely, from the right. We seem to have a blind spot where we're more caught up in how people see us, rather than the material reality upon which unearned and earned income is based. Why is it that today people are living far worse than their grandparents and parents especially?

Michael Hudson: Well, I think we've been talking about that, because they have to pay expenses as their parents and grandparents didn't have to pay, they have to pay much higher rent. Everybody used to be able to afford to buy a house, that was the definition of “middle class” in America was to be a homeowner. And when I was growing up in the 50s and 60s, everybody on the salary they were getting could afford to buy their house. And that's why so many people bought the houses with working class sell rates. As I told you, I was getting $100 a week. At least if you were quiet you could do it. If you were black, you couldn't do it. The blacks were redlined. But the white people could buy the houses. And that's why today, the white population has so much more wealth than the black population, because the white families would leave the house to the children and housing prices have gone up 100 times. And because they've gone up 100 times, this is endowed with a whole white hereditary class of kids whose family own their own homes, send them to schools. But America was redlined. Now Chicago was redlined, blacks were redlined. In New York City, the banks would not lend money to black neighbourhoods or to black borrowers. I was at Chase Manhattan and they made it very clear: they will not make a loan to a mortgage if they're black people living in my block. And they told me that when I was on Second Street and Avenue B. I won't repeat the epithet racist epithets they used. But what has caused the racial disparity today is what we've been talking about: the fact that whites could buy their own homes, blacks could not.

And the reason I'm bringing this up is that if—we're working toward a society where white people are now going to be reduced to the position that black people are in today: of not having their own homes, of not being able to get bank credit. One friend of mine at the Hudson Institute, a black economist, wanted to—we were thinking of cowriting a book, The Blackening of America. The state of, well, the future of the whites, is to become blacks if you don't solve this situation. And I've been unable to convince many black leaders about reparations—that the reparations, very hard to get reparations for slavery, which was to their grandparents, their reparations are due to the blacks today who do not have housing, their own homes, because of the redlining that they have been experiencing right down to today.

So, you have this, you do have a separation in this country. But this is not the kind of hyphenated politics that the politicians talk about. Not even the black politicians, the fact that if you're going to hyphenated American, how did this hyphenisation affect the real opportunities for real estate, for homeownership, for education, and all of these other things. I think maybe if people begin to think as to how there is a convergence of what was diverging before—now you're having the middle class pushed down into its real identity which was a dependent wage-earning class all along—you're going to have a change of consciousness. But we're still not to that. People don't realise this difference.

And at the top of the pyramid, at New York University, for instance, where we both went to school, I have professor friends there and there was recently an argument about getting more salaries for professors, because they're hiring adjunct professors at very low prices instead of appointing them full time. And one professor turned to my friend and said, “They’re treating us like wage earners.” And my friend said, “Yes, you are a wage earner. You’re dependent on the wage you get from New York University.” And he said, “But I’m a professor,” as if somehow being a professor doesn't mean that you're not a wage earner, you're not dependent on salary, you're not being exploited by your employer who's in it to make money at your expense.

Julian Vigo: Oh, absolutely. We've got the push from NYU in the 1990s by adjunct professors to get health insurance, and to have a certain modicum of earnings that would allow them to pay rent in an extremely expensive city. I find it amazing how many of my students at the time had no idea how much I was being exploited at the time, I was at lunch after the graduation of two of my students, they invited me to lunch, and they were having a discussion about how well we must be paid. And I laughed. I didn't go into the details of my salary. But later in later years, they came to understand from other sources, how exploitation functions within the university where they were paying almost quarter of a million to go to school, and graduate school, and so forth. So it's quite shocking that even though we have the internet and all the information is there, anyone can see precisely how much NYU or Columbia cost today, or how much the cost of living is, as opposed to 1961, for instance, that people are still not putting together that when you have housing, that is like income. For most of us, if housing is affordable, the way one lives, the efficiency to live, the ease, the mental health, and physical health improves. And it's fascinating to me that during lockdown, people were told, just to bite the bullet, stay inside, and how many publications, how much of the media went out to discover the many people being locked down in extremely small hovels? Multiple families living in three bedroom houses, even smaller. And I just kept thinking throughout these past 20 months or so that the media has become complicit in everything you've discussed, we've seen an extra tack added on where the media is another arm of industry and the 1% they are able sell lockdown stories: stars singing, Spaniards singing, accordionists from Neapolitan balconies, everyone's happy. But that was a lie. And that was a lie being sold conveniently.

I regularly post stories from CNN, where their recent yacht story—they love yachts—their recent yacht story from about five or six days ago was how the super-rich are “saving” the world's ecology. And it was a paid advertisement of a very expensive yacht that uses nuclear power, what you and I hope: that all the rich people are running around with little mini nuclear reactors on the seas. And I keep thinking: what has happened that you mentioned campaign financing? Remember what happened to Hillary Clinton when she suggested campaign finance reform? That went over like a lead balloon. And then we've got CNN, Forbes, all these major publications that run paid sponsored news articles as news. It's all paid for, they legally have to see it as but you have to find the fine print. And we're being sold the 1% as the class that's going to save the planet with this very bizarre looking yacht with a big ball on it. And another another CNN article about yacht owners was about how it's hard for them to pay for maintenance or something and  we're pulling out our tiny violins.

And I keep wondering, why is the media pushing on this? We can see where MSNBC and CNN and USA today are heading in a lot of their coverage over class issues. They would much rather cover Felicity Huffman, and all those other stars’ children's cheating to get into a California University scandal which is itself its own scandal, of course. That gets so covered, but you rarely see class issues in any of these publications unless it refers to the favelas of Brazil or the shanty towns of Delhi. So, we're sold: poverty isn't here, it's over there. And over here, mask mandates, lock up, shut your doors stay inside do your part clap for the cares and class has been cleared. Cut out. Even in the UK, where class consciousness has a much more deeply ingrained fermentation, let's say within the culture, it's gone. Now the BBC. Similarly, nightly videos at the initial part of lockdown with people clapping for the cares. Little was said about the salaries that some of these carriers were getting, I don't mean just junior doctors there, but the people who are cleaning the hallways. So, our attention has been pushed by the media away from class, not just the politicians doing the dirty work, or not just the nasty finance campaign funding that is well known in the US. What are some of the responses to this, Michael, that we might advance some solutions here? Because my worry, as a person living on this planet is enough is enough: Why can't we just try a new system? Is it that the fall of the Berlin Wall left a permanent divide in terms of what we can experiment with? Or is there something else at play?

Michael Hudson: Well, recently, Ukraine passed a law about oligarchs, and they define an oligarchy as not only owning a big company, but also owning one of the big media outlets. And the oligarchy in every country owns the media. So, of course, CNN, and The New York Times and The Washington Post, are owned by the billionaire class representing the real estate interests and the rentier interests. They're essentially the indoctrination agencies. And so of course, in the media, what you get is a combination of a fantasy world and SchadenfreudeSchadenfreude, when something goes wrong with people you don't like, like the scandal. But apart from that, it's promoting a fantasy, about a kind of parallel universe about how a nice world would work, if everybody earned the money that they had, and the wealth they had by being productive and helping society. All of a sudden, that's reversed and [they] say, “Well, they made a lot of fortune, they must have made it by being productive and helping society.” So, everybody deserves the celebrity, deserves the wealth they have. And if you don't have wealth, you're undeserving and you haven't made a productivity contribution. And all you need is to be more educated, managerial and intelligent, and you can do it. And it doesn't have anything to do with intelligence. As soon as you inherit a lot of money, your intelligence, your IQ drops 10%. As soon as you don't have to work for a living and just clip coupons, you write us down another 30%. The stupidest people I've met in my life are millionaires who don't want to think about how they get their money. They just, they're just greedy. And I was told 50 years ago, “You don't need to go to business school to learn how to do business. All you need is greed.” So what are all these business schools for? All they're doing is saying greed is good and giving you a patter talk to say, “Well, yeah, sure, I'm greedy. But that's why I'm productive.” And somehow they conflate all of these ideas.

So, you have the media, and the educational system, all sort of combined into a fantasy, a fantasy world that is to displace your own consciousness about what's happening right around you. The idea of the media is that you don't look at your own position, you imagine other people's position in another world and see that you're somehow left out. So, you can say that the working class in America are very much like the teenage girls using Facebook, who use it and they have a bad self image once they use Facebook and think everybody else is doing better. That's the story in Congress this week. Well, you can say that the whole wage earning class once they actually see how awful the situation is they think, “Well, gee, other people are getting rich. Other people have yard spots, why don't I have my own house? Why am I struggling?” And they think that they're only struggling alone, and that everybody else is somehow surviving when other people are struggling just the way they are. That's what we call losing class consciousness.

Julian Vigo: Yes, well, we're back to Crystal and Alexis wrestling and Dynasty’s fountain. Everyone wants to be like them. Everyone wants a car. You know, I'll never forget when I lived in Mexico City. One of the first things I learned when you jumped into one of those taxis were Volkswagen beetles,  Mexicans would call their driver “Jaime.” And I said to them, why are you guys calling the taxi drivers here “Jaime”? And they said, “We get it from you.” And I said, “What do you mean you get it from us? We don't call our taxi drivers Jaime.”And then I thought and I paused, I said,  “James!” Remember the Grey Poupon commercials? That's what we do—we have James as the driver in a lot of these films that we produced in the 1970s and 80s. And the idea became co-opted within Mexico as if everyone has a British driver named James.

Now, what we have turned into from this serialised, filmic version of ourselves to the present is dystopic. Again, you talked about the percentage of rent that people are paying in the US, the way in which people are living quite worse than their parents. And this is related to student debt, bank debt, credit card debt, we've had scandals directly related to the housing market. We saw that when there were people to be bailed out, they had to be of the wealthy class and companies to be bailed out. There was no bailout for the poor, of course. I was in London during the Occupy Wall Street. In London, it was “occupy the London Stock Exchange” (Occupy LSX) right outside of not even the London Stock Exchange. It was outside of St. Paul's Cathedral. And there was a tent city, and people were fighting ideological warfare from within their tents. There wasn't much organising on the ground. It was disassembled months later. But I wonder why Americans, even with what is called Obamacare, are still not pushing for further measures, why Hillary Clinton's push for or suggestion merely of finance reform within the campaigning system, all of this has sort of been pushed aside.

Are there actors who are able to advance these issues within our current political system in the United States? Or will it take people getting on the streets protesting, to get housing lowered to maybe have national rent controls, not just of the form that we have in New York, which, before I got to New York in the late 80s, everyone was telling me how great rent control was. Now it's all but disappeared? What is the answer? Is it the expropriation of houses? Is it the Cornwall style, no owning more than one house type of moratorium on homeownership? What are the solutions to this, Michael?

Michael Hudson: There is no practical solution that I can suggest. Because the, you're not going to have universal medical care, as long as you have the pharmaceuticals. funding the campaign's of the leading politicians, as long as you have a political system that is funded by campaign contributors, you're going to have the wealthiest classes, and decide who gets nominated and who gets promoted. So, I don't see any line of reform, given the dysfunctional political system that the United States is in. If this were Europe, we could have a third party. And if we had an actual third party, the democratic party would sort of be like the social democratic parties in Europe, it would fall about 8% of the electorate, and a third party would completely take over. But in America, it's a two-party system, which is really one party with different constituencies for each wing of that party, and that one party, the same campaign contributors funds, both the Republicans and the Democrats. So it's possible that you can think of America as a failed state, as a failed economy. I don't see any means of practical going forward, just as you're seeing in the Congress today, when they're unwilling to pass an infrastructure act, there's a paralysis of change. I don't see any way in which a structural change can take place. And if you're having the dynamics that are polarising, only a structural change can reverse this trend. And nobody that I know, no politician that I know, sees any way of the trends being reversed.

Julian Vigo: The funny thing is that scandal, quote-unquote, scandal over Ocasio Cortez's dress at the Met Gala was quite performative to me. It's typical that the media does. “Tax the rich,” as she sits at a function that I believe cost $35,000 to enter. And she socialised the entire night even if she allegedly did not pay either for her dress nor for the entrance. And I'm thinking, isn't this part of the problem: that we have so much of our socio-cultural discourse wrapped up in politics in the same way that Clinton's suggestion that campaign finance reform disappeared quite quickly? Is there any hope of getting campaign finance reform passed in the States?

Michael Hudson: No. Because if you had campaign finance reform, that's how the wealthy people control politics. If you didn't, if you didn't have the wealthy, wealthy people deciding who gets nominated, you would have people get nominated by who wanted to do what the public ones, Bernie Sanders says, “Look, most of them are all the polls show that what democracy, if this were a democracy, we would have socialised medicine, we'd have public health care, we would have free education, we would have progressive taxation.” And yet no party is representing what the bulk of people have. So by definition, we're not a democracy. We're an oligarchy, and the oligarchy controls. I mean, you could say that the media play the role today that the church and religion played in the past to divert attention away from worldly issues towards other worldly issues. That's part of the problem.

But not only the pharmaceutical industries are against public health care, but the whole corporate sector, the employer sector, are against socialised medicine, because right now workers are dependent for their health insurance on their employers. That means Alan Greenspan, the Federal Reserve Chairman said, this is causing a traumatised workers syndrome, the workers are afraid to quit, they're afraid to go on strike. They're afraid of getting fired because if they get fired, first of all, if they're a homeowner they lose their home because they can't pay their mortgage, but most importantly, they lose their health care. And if they get sick, it wipes them out. And they go broke and they lose their home and all the assets.

Making workers depend on the employer, instead of on the government means you're locked into their job. They have to work for a living for an employer, just in order to survive in terms of health care alone. So the idea of the system is to degrade a dependent, wage-earning class and keeping privatising health care, privatising education, and moving towards absentee landlordship is the way to traumatise and keep a population on the road to serfdom.