Economic Update: How Deficits and Debts Rip Us Off

Summary

In this episode of 'Economic Update,' host Richard Wolff discusses the global issue of national debt and deficits, explaining how governments borrow money to fund public services when tax revenue falls short. Wolff argues that this practice disproportionately benefits corporations and the wealthy, who lend to the government instead of paying taxes, effectively shifting the burden onto the general population. He criticizes the system as a 'disguised tax' and a 'scam,' highlighting the political influence of the rich and the need for a more equitable economic structure.

Takeaways

• 📚 The host, Richard Wolff, introduces a new book 'Understanding Capitalism' as a culmination of his years of teaching and hosting the show.
• 💡 The program aims to clarify the often misunderstood topic of national debt and deficits, explaining why countries borrow and who benefits from it.
• 🏦 Governments raise funds primarily through taxation but often find themselves needing to borrow when their expenditures exceed their tax revenue.
• 💼 When governments borrow, they issue IOUs in the form of government securities, bonds, or bills, promising to pay back with interest.
• 🔢 The national debt is the accumulated total of all past deficits minus any repayments, representing the money owed by the government to its lenders.
• 💰 The national debt is portrayed as beneficial for corporations and the wealthy but a hidden tax on the general public.
• 🌎 Wars are cited as a significant cause of government borrowing, as they are expensive and often unpopular, leading to a preference for borrowing over taxation.
• 🤝 Corporations and wealthy individuals are the primary lenders to the government, effectively receiving tax breaks in exchange for lending money.
• 💡 The script suggests that tax evasion by corporations and the rich is a significant driver of government borrowing and national debt.
• 🏷️ The host criticizes the use of lotteries and tariffs as alternative forms of taxation that primarily affect the less affluent, further benefiting corporations and the rich.
• 🚫 The script concludes with a call to action, urging the audience not to be fooled by the complexities of deficits and national debt and to understand the underlying issues.

Q & A

What is the main focus of the 'Economic Update' program presented by Richard Wolff?

The 'Economic Update' program, hosted by Richard Wolff, focuses on the economic dimensions of our lives and those of our children, providing insights into various economic issues and concepts.

What is the new book 'Understanding Capitalism' by Richard Wolff a part of?

'Understanding Capitalism' is the final piece of a trilogy by Richard Wolff, which also includes 'Understanding Marxism' and 'Understanding Socialism', summarizing and compiling the problems, myths, and crises of capitalism.

What is the primary reason governments borrow money according to the script?

Governments borrow money primarily because they have more demands for spending than they can raise through taxes, leading to a deficit which they finance through borrowing.

What is the term used to describe the amount a government borrows in a fiscal year?

The term used to describe the amount a government borrows in a fiscal year is 'deficit', which is the difference between government spending and tax revenue.

What is the difference between a government deficit and national debt?

A government deficit is the amount by which government spending exceeds tax revenue in a given year, while national debt is the total amount of money that the government has borrowed over time and has yet to pay back.

Why do governments issue IOUs when they borrow money?

Governments issue IOUs, in the form of government securities, bills, or bonds, as a promise to repay the borrowed money with interest to the lenders.

What is the role of taxes in the context of government spending and borrowing?

Taxes are the primary means by which governments raise money to fund their activities. When tax revenue is insufficient to cover spending, governments borrow the difference, leading to deficits and national debt.

How does the script describe the relationship between government borrowing and corporations or the rich?

The script describes a situation where corporations and the rich benefit from tax evasion by lending money to the government instead of paying taxes, which then becomes a burden on the general public through deficits and national debt.

What are some of the myths or misconceptions about national debt that the script aims to clarify?

The script aims to clarify that national debt is not just a result of excessive government spending but is also a consequence of tax evasion by corporations and the rich, who lend money to the government instead of paying their fair share of taxes.

What is the script's stance on the use of lotteries and tariffs as forms of indirect taxation?

The script criticizes the use of lotteries and tariffs as forms of indirect taxation that primarily affect the poor and middle class, while benefiting the government and corporations without them having to pay their fair share of taxes.

What is the script's final message regarding the responsibility of the public in addressing the issue of national debt?

The script's final message is a call to the public to understand and address the core issue of tax evasion by corporations and the rich, which contributes to national debt, and to not allow this scam to continue without challenging it.