Transcription – 2025.05.01 – Dialogue Works
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, May 1st, 2025, and our friends Richard Wolff and Michael Hudson are here. Welcome back.
RICHARD WOLFF: Glad to be here.
NIMA ALKHORSHID: Richard, what’s the importance of today? And you mentioned before coming on live, and I think you have something to say for all of us.
RICHARD WOLFF: Yes. Well, May Day, the 1st of May each year, has traditionally been for many, many, many years, a day devoted to celebrating the rights and the struggles, and the losses and the gains of the working class around the world.
In many countries, there will be parades and demonstrations in the major cities and beyond in which labor unions, political parties associated with the working class show their strength, make their demands, celebrate their achievements. It’s a working day, working-class holiday, if you like.
It began back in 1886, if my memory is correct, here in the United States, in Chicago, in particular, when there was a major struggle and a demonstration, classic struggle of the working class. In that case, demanding an eight-hour workday rather than the ten or twelve hours that had become the norm.
Because capitalism, as Marx explained so beautifully in Volume One of Capital, has a very great interest in making the length of the working day as long as physically and emotionally possible. He did the analysis to show why that is a profit-maximizing activity on the part of the ruling class.
And there were workers pushed back, and workers struggled. And it took them a long time. You know, there’s a century in England called the struggle for the ten-hour day to get it down to ten. Well, this struggle in Chicago wanted to get it down further to eight.
And in the course of that demonstration, somebody (it was never really shown who), started shooting. And the police started shooting. And when the dust cleared, several people had been shot. And there was an attempt by the local authorities to blame “anarchists.” That was the term of denunciation in those days.
And the so-called anarchists were arrested and tried and found guilty – some of them – and executed. And it became a holiday to memorialize both the struggle and the repression and the sacrifices that had been made.
And the real irony of the story is that even though it begins in a moment of intense class struggle of the United States, the post-World War II Cold War made it necessary for the United States Congress to not allow to change the date at which you celebrate workers from May 1st to the first Monday in September, what we call Labor Day here in the United States, on a different date.
And it has been largely neglected, more and more over recent years. For example, when I was young, there was always a parade wherever I happened to live on Labor Day. Nowadays, in most of the cities of this country, nothing happens on Labor Day.
The movement here, the labor movement, even the organized labor movement, doesn’t have the personnel, the time, the space, the money to carry on that particular tradition. So it tells you something about the United States, relative to the rest of the world, to know a little bit about the May 1st holiday, both here and abroad.
NIMA ALKHORSHID: Michael, do you want to add something?
MICHAEL HUDSON: I have nothing to add to that. Of course, when I grew up, many of my friends would go on demonstrations on May Day, but that was in the late 1940s and early 1950s. And it’s just sort of evaporated now.
NIMA ALKHORSHID: Jumping into what’s going on right now, and the new deal, the mineral deal between the United States and Ukraine. What is the way that Donald Trump sees the situation with Ukraine?
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DONALD TRUMP: The real number is about $350 billion. That’s unthinkable. And we had no security. We had no nothing. We were just pouring money there, unsecured money, putting it in banks, and anybody could have taken it out. You know, anybody over there. It was their decision. I’ve never seen anything like it.
Europe, on the other hand, which it’s obviously that whole situation is much more important to Europe because we have an ocean in between. But Europe gave about $100 billion. It’s a lot of money. It’s a big sacrifice they made also. But they gave much less than we did. And their money is secured, totally secured by deposits in banks. The deposits are largely Russian deposits. That’s what Europe did. But their money is secured. So they gave $100 billion totally secured.
We gave money like it’s throwing it out the window. And it was done by Biden. And this is Biden’s war. This isn’t Trump’s war. I’m trying to get out. And more than the money, they’re losing about 5,000 young Russian and Ukrainian soldiers a week, mostly. There’s some people also being killed in towns where missiles should not have been shot, small cities and towns. But we are trying to save the lives of about 5,000 (young, mostly soldiers) that are losing their lives a week.
I see satellite photos. Probably one of his satellites, come to think of it. But I see satellite photos every week of fields with arms and heads and legs scattered all over. It’s a violent, violent, horrible situation. And more important than the money, I want to save the lives of people from other countries that are dying so stupidly, so needlessly. And they’re dying.
But I said, what are we doing? How did we get into this war? It would have never happened if I were president.
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NIMA ALKHORSHID: Richard, what do you want to say?
RICHARD WOLFF: Well, I’m always blown away by watching that man, I must say. It’s rather stunning. He clearly makes all of this up as he goes along. Unlike the rest of us, he doesn’t seem to be constrained by checking whether the fact is the fact, whether what he heard from this one or that one is consistent with what other, you know. None of those things that worry the rest of us seem to annoy this fellow.
You know, we put in $350 billion. Detail: Most of that money was spent by the United States government on United States corporations and individuals. That’s where most of that money always goes. It goes to large corporations who have nice contracts with the Defense Department and who pick up the money. It’s American money funding the American economy by means of the war over there. It’s not money somehow gone.
And then to say that Europeans spent only 100 billion, which is secured. It’s secured by the deposits of Russia that are illegal. The Europeans, by the way, have not in fact touched them because legally they have been told by their own lawyers that they can’t do that. They have to attach the interest earned on that deposit, but not the deposits themselves. And so, it’s not correct to say they’re “secured.” They’re very insecure.
And then finally, he’s making a deal because he’s so upset by death?
Well, a few miles away, I can show him much more horrific pictures of dead people and dead children in Gaza. Doesn’t seem to bother him at all. But the ones in Ukraine, these are really kind of… what in the world are we talking about?
And then you ask us, which is fine, to talk about the new agreement. I mean, the agreement is between the United States that has no claim on Ukraine at all. And the Ukraine government that, you know, was out of power by its own constitution many months ago.
Mr. Zelensky, he’s not a constitutional government. He has no right to sign anything unless he has an election. He hasn’t had an election. None of this mattered. This is all political theater here. The British having a deal with Zelensky, possibly including the same rare earths. No one knows what the value of all of that is. I mean, this is posturing.
And the reason is because the parties involved cannot come to an agreement. They’ve been trying for three months. And since Mr. Trump took office, I want to remind people he promised he could and would bring the Ukraine war to an end in a day. Okay, here we are. One hundred-plus days later. And he hasn’t done it. It’s not entirely his fault. I get that. But I mean, either you boast or you don’t. If you can’t get it done, don’t boast that you will. If you do boast, you’ve got to do a little more than was done here.
The best guess I have, and certainly this is the majority view of the press in Europe that I look at, is that the United States has made the decision to walk away from this conflict; that whatever efforts it made between the opposition of the Russians and the opposition of the Ukrainians, the United States is not going to force it on the two of them.
Between you and me, that’s because it couldn’t. But in any case, it isn’t going to try, and it therefore is going to walk away.
And it will, of course, blame the Ukrainians and the Russians, because Mr. Trump always blames somebody else for whatever it is that goes wrong. And the American people will be treated to this theater again.
And the great question, which has been the great question all along, is how many Americans will, for how long, accept and tolerate what is going on? That’s the only issue. The rest of it is details.
MICHAEL HUDSON: Well, the devil’s in the details. And I think that if you look at the details, Trump has just made the war his war, with an exclamation point.
I think he realized that the terms that he had defended Ukraine against Russia were not acceptable to Russia. Russia made it very clear from the beginning what its terms were. And Trump realized that his attempt to make a peace agreement with a ceasefire, enabling Ukraine to rearm against Russia and enabling the Europeans, NATO people, to move their arms into Russia, was such a no-go that the whole fantasy that Trump had that he could sweet-talk Putin into making an agreement, in the belief that somehow Russia had to do it, is over.
So what is this deal that was signed? I spent a little time reading the Financial Times and the other columns. It’s not about rare earths. That’s the cover story. It’s not really even about minerals. It’s about the Americans protecting any investment they make with anti-aircraft missiles. And the missiles, of course, can go all the way into Russia.
So what seems to be a U.S. plan to try to develop rare earths and lithium deposits, most of which are in the Russian zone, really is only a cover story for the rest of the agreement.
That’s often how the United States makes an agreement. There will be something at the very end saying, “and other purposes,” or an opener. And the agreement means that the actual military solution will be on the battlefield. There’s not going to be a negotiated agreement because Ukraine won’t negotiate with Russia. Then any negotiated agreement would mean that Russia gives up the territories that it already has to some future agreement.
But also, there are many devils in the details. Now, if somehow Trump is not able to get for his backers, such as Blackstone – and by the way, the imminent German Prime Chancellor is going to head, worked for Blackstone before and is virulently anti-Russian. The German new military foreign minister is more anti-Russian than Annalena Baerbock was.
This agreement is a step towards an escalation of the Russian war. There’s no attempt at peace. And it looks like you’re going to have Germany and England come into the war, and America is going to continue to provide defense for Ukraine. And that defense takes the form of guiding Ukrainian missiles, Ukrainian drones, Ukrainian attacks. So the United States has just recommitted itself to Ukraine.
And by claiming that somehow this is going to benefit America, this is how Trump has rationalized with Congress the fact that this new Trump war is much more economically in America’s favor than Biden was able to make. And it’s a very aggressive act.
America’s essentially joined Germany, England, and NATO in making a deal whose details are designed to prevent any kind of a negotiated peace, and leave the aftermath for after Russia conquers the rest of Ukraine, once the rainy season finishes and the ground is hard enough that the tanks can go in. This is to set up the war.
And the war is not only about Ukraine. Most of the Russian military build-up has been aimed to defend itself against the Baltic attacks on Russia. The Baltics are trying to prevent Russian access to the sea, to get to the ocean. They’re planning on creating problems for Kaliningrad right in the middle of Lithuania. It looks to me like there’s just been a set-up for a large military escalation.
NIMA ALKHORSHID: Richard, here is what the Kyiv Post reported. Right after the deal being signed by the two parties, the Trump administration had agreed to the first arms export to Ukraine for $50 million. And he tries to say that this war is Biden’s war, it’s not mine. But we know that he was supporting, before Biden came into office, he was supporting Ukraine. He was sending a lot of weapons to Ukraine. He’s bragging about that.
Why is he just removing himself from the scene that it’s all on Biden and I have nothing to do with Ukraine?
RICHARD WOLFF: Well, I mean, this is consistent with his behavior. I mean, Michael and I may disagree a little bit. I understand what Michael just said. That is certainly one possible understanding of what’s going on. I see the logic of his argument.
I think Mr. Trump is torn. And I’m not surprised. If you remember, Mr. Biden, for example, ran a campaign against Mr. Trump, clearly implying on many occasions that his war against China had to be rethought. And yet when he came in, Mr. Biden kept most of the tariffs against China and indeed raised the number of them, outdoing Mr. Trump on the very issue where he implied that he would not have done what Mr. Trump did, or outright criticized him for it.
All we’re seeing now is the same thing. Mr. Trump would like to be, and this seems to me clear, he would like to be the president who ended Biden’s war and saved the United States, the money and the blah, blah, blah, and the loss of face and the failure in the war that, you know, is what Ukraine is. It’s a lost war. He would like that.
On the other hand, he gets an enormous amount of pushback and not just from the Democratic Party, but from that part of the Republican Party that always went along with the Cold War, that always went along with the demonization of Putin. Look at the speeches of that strange man, the senator, you know, from North Carolina. It’s just a bizarre expression.
NIMA ALKHORSHID: Lindsey Graham?
RICHARD WOLFF: Yeah, Lindsey Graham. Sorry, I blocked his name out for obvious reasons. Anyway, the situation means that he wobbles back and forth. He would like to drop Mr. Zelensky in the toilet. He’s made enough statements to that. He called him a dictator, called him unelected. He did things that people in that position do not do unless they’d just as soon see that person disappear. Right? And everybody who’s critical has noted that he’s more friendly to Putin than he is to Zelensky. And that seems to me to be the case.
But then when he’s frustrated, when it turns out he cannot get from Zelensky what he wants, and he can’t force it. Not in a position to do that, partly because the Europeans are taking a different position, and partly because they are furious at him for creating the vulnerability that the European leaders now have. They are all alone out there in this Ukraine war. They’re all alone having hitched their entire careers to being patsies for the United States. And now the United States leaves them out there hanging. They are, they’re in trouble and they’re worried about their political futures as they should be.
So he’s got a lot of counter to himself. Much of it’s his own doing. But in making it impossible, he can’t end the war. He can’t go against the Russians as much as he wants to, or would like to. He can’t go against Zelensky and force it. He’s stuck. And so he wobbles. And I think he wobbles one day in the direction of Michael’s interpretation. And he wobbles the next day more in the direction of what I’m saying or others are saying. And we don’t know where he’s going to end up because he doesn’t. He doesn’t know. You know, maybe Mr. Putin will come up with some solution that he can then buy into. But at this point, he’s exhausted.
You know, he sent over a team, which as best one can see – between the old general, whose name I’ve also blocked out, and his ally, Witkoff, the real estate dealer in New York – Witkoff is tilting in one direction, the old general in another direction. And he’s listening to this. And he doesn’t know which way to go. He’s not even interested that much. He would like this albatross off his back. And he can’t get it. And therefore, he wobbles. And he hopes something will happen.
And he gets upset when the Russians send missiles into Ukraine. And he gets upset if the Ukrainians send their missiles until someone tells him that it was the American advisors over there who actually sent the missile. And then he gets upset that he didn’t know that.
There is a tendency to think, because of our ideological society, that what the government is doing is a careful, worked-out, logical, organized plan of action. It isn’t. It is a more than even normal, and normally it isn’t. But with Trump, it’s especially chaotic, partly because he doesn’t want anyone who could threaten him. He wants the freedom to do whatever he wants. He reasons correctly that he has been able to become the president on that basis. Why should he change?
So he’s not going to change. He’s going to do it the way it strikes him at the moment.
Look at what he’s done with the tariffs. I’ll use them as an example. He has around him economic advisors. I know some of them. They have explained to him the following simple economic truth: Investment of money is something handled by employers. Employers are 3% of the population of the United States. The rest of us, 97%, are not employers. Okay?
So, the advisors tell him that the single most important determinant of investment is the probability of it being profitable. If it’s profitable and there’s a good probability of it, you make an investment. If it’s profitable but it’s too uncertain, you hold back.
If Mr. Trump raises a tariff one day, lowers it the next day, exempt somebody from it one day, exempt someone else the next day. What you’re doing is teaching the world that it is uncertain, any profitability calculus you make, which means they’re going to hold back, which means you’re going to have a recession. This is not good.
The problem is Mr. Trump wants to be the focus of attention. He wants Mary Barra of General Motors to call up and say, I can’t make any plan with General Motors. It’s going to hurt our plant, our factories in Michigan, in Kentucky, in Tennessee. And that’s going to hurt your base, Mr. Trump. And they’re going to blame you, Mr. Trump, unless you give me an exemption from these tariffs, Mr. Trump.
He loves that the heads of General Motors call him up, that they want to talk to him, that they want to plead, that they offer to support him, in God knows what ways, to get the lack of uncertainty resolved for them. And he gives that to them. He wants them to call him again next week or next month, which they will. You know why? Because he’s changed what he had to say from Monday to Thursday.
This contradiction between his role as president – the unknowable, the great saver of the country, whose magical powers of making a deal will bring – he loves this. But you can’t run a government like that if investment is in the hands of a tiny group of people who live and die every day, like you, me, and Michael do, reading the headlines to try to get a sense of what’s going on.
I’m not responsible for billions of dollars of investment. I’m not responsible for all the jobs. But Mary Barra at General Motors, or the people running Ford, or any of the others, are. Look, orders three weeks ago were collapsing in China for consumer goods. Last week, a lot of Chinese companies happily announced they’re back in production.
Why? Because the head of Walmart, and the head of Target, and the head of a couple of other companies had a meeting with Mr. Trump, and he told them he would adjust the tariffs so that they wouldn’t miss out on the shipments of goods from China, which are crucial for the Christmas selling season in retail America, which is the most important part of the year for these companies.
He is changing and shifting one minute to the next. You can’t know that’s what he wants, and no one around him, including the economic advisors that I know who have told him what I’ve just said, can get to first base with him. He’s gonna do it the way he feels like.
When you saw an incompetent Biden stay in the office and refuse to step down, you should have noticed the president can do that. He can do it for months, and he can do it at the expense of his political party. That’s the way American individualism always works. It will, in the end, undo the country that celebrates it as its extraordinary strength.
It’s Hegel again. That individualism will make you strong in some circumstances and make you collapse in others.
MICHAEL HUDSON: Well, I want to start by getting back to the original question, and the point that you made about Ukraine.
I think that Trump said the following: “We’re going to continue Biden’s war. It will be my war, but we’re going to make money off it.” But that’s the twist that he’s done. He said it’s okay to keep fighting the war if we can make money. The mineral steal is a fig leaf to pretend that we can make money that conceals the military build-up and the renewed American pressure on Russia.
I think that, as you pointed out in your beginning remark, you said there’s the problem between Kellogg, who is a pro-Biden, anti-Russian general, who had a fantasy idea that Russia needed, that Russia was weakening, that Russia was about to collapse economically, and that Russia would accept whatever proposal Trump made.
And there was Witkoff, who actually was visiting with Russia and was reality-based.
Trump didn’t like the reality-based description by Witkoff. He liked the fantasy that Kellogg had, the anti-Russian fantasy that, yes, America can come out on top of Russia. That’s what Trump always believes. We have to be the winner.
And the deal on developing resources, is so open-ended that he hopes nobody will get to the military protection of the resources, meaning that whatever deal that England has made and that NATO countries, European countries, have made, the American deal supersedes all that; and that it’s not the NATO countries, Europe, that’s going to have any role to play, it’s the Americans.
And, one of the aspects of the deal that Trump emphasized was that no country that has dealt with Russia and broken the American sanctions in Russia can have any economic deal made with Ukraine for the resources. This is the Cold War with an exclamation point.
Trump has just gone much more hardline than even the Biden Democrats had wanted to do. This is a really serious saying that, well, Russia didn’t surrender, so now we’re going to show you, Russia. Now we’re going to have the really heavy war. You think you can beat Ukraine? And that it’s all over? And that you’re going to be able to conquer it? Well, wait till you see what we’re going to do now.
So I think that what Trump has done is really much more than just wishy-washy. He’s made a step-change in the whole system towards war. I don’t know what I can say. I’ll leave it to Nima to ask what he wants to talk about the tariff issue.
NIMA ALKHORSHID: Yeah. By the way, what’s going on in Europe is so important. Richard and Michael. Right now, the Financial Times reported that the European Union prepares Plan B, should Trump walk away from Ukraine. What’s going on in Ukraine?
It seems that on one hand, there’s so much concern about Donald Trump leaving the war in Ukraine. On the other hand, if he lets the American companies go to Russia, what would be the future of Europe?
What is this huge loss on the part of Europe? Because they’re losing Russia, on one hand, they’re not getting cheap energy from Russia. And the United States, which was the main party in this conflict in Ukraine, is leaving the scene, and they’re trying to repair their relationship with Russia.
How do you see, Richard, the way that the European Union or European countries are seeing the conflict in Ukraine?
RICHARD WOLFF: In my judgment, the Europeans are in a state for which the only word I can think of is desperation. They are finished. Europe is the fall guy in all of this. The world is shaping up as a declining empire of the G7 on the one hand, led by the United States, and the rising empire of China, allied with the BRICS.
The Chinese have been working for fifteen years to develop the BRICS as a serious alliance, and they’ve done a very good job. The United States-G7 has just been dealt a death blow by the United States turning on literally every one of those countries.
Canada, maybe not Japan, but even there’s the first-time rumblings of a dissent from their subordination to the United States.
And the Europeans are, of course, upset in different ways. The only thing holding Europe together now, the only thing, is the terrible fear each of them has about the other one cutting a deal with the United States to end up being the favored one.
You could watch Maloney trying to make that Italy. You can watch Starmer desperate to figure out how to avoid the United States shifting to Italy rather than using Britain as the lap dog that it has done for all these years.
They can’t get together, and without that they can’t do anything about their situation. They can make whatever plans they want. It doesn’t matter.
Michael may be right about General Kellogg. I mean, we do have to remember that if you’re a person raised in the Cold War, which all of us more or less have been – or the legacy of it – then you think of Russia as this enormous event.
But if you’re an economist, you know that the GDP of the United States is in the neighborhood of $25, $27, $28 trillion, and the GDP of Russia is in the neighborhood of $3 or $4 trillion. This is an elephant and a mouse.
And so, of course, in the minds of the general from the elephant country, there is the notion we can always exhaust Russia. We did get rid of the Soviet Union by exhausting it in an arms race it could not afford, in a take-over in Afghanistan, which it could not afford, in the cutting-back of their consumer society, which they could politically not afford.
So we’re going to do it again. They’re going to do it again, this time with sanctions. And so, sure, the mechanisms shift. Russia is a nuclear danger. That has to be taken.
But what they’re not considering is the biggest mistake of all: Russia has the BRICS. That’s how they dealt with the energy problem. They could stop selling oil and gas – not 100%, but the bulk of it – to Europe, and sell it to China and India. I don’t want to make it too simple, but it isn’t all that complicated.
And they’re not going to be able to force the Russians into any of their fantasies. I want to remind you, Russia was supposed to collapse. Putin was supposed to be kicked out. The ruble was supposed to disintegrate. None of that happened. None of it. Not even a little.
And by the way, they never speak about it. It’s as if that history never happened. It’s up to us as critics to remind them of the total nonsense of their strategic thinking that they shared with us.
Look, it’s possible that the British will read the agreement that Michael has been talking about, the way Michael has, and understand it to be a maneuver rendering the deal they made with Zelensky null and void.
What are they then going to do? This is another declaration of war, like imposing tariffs on their aluminum and steel, and all the rest of it. They are being told that as the American empire struggles to slow down its own decline, sacrificing Europe is perfectly okay.
So, look, they didn’t react to the election two days ago in Canada, in which a political party that was far behind in the polls turned Mr. Trump into a winning strategy.
The man running for them, the old Bank of England director, gave the middle finger to Mr. Trump. That was his whole campaign. And he won. And he won by plenty. Even in Quebec, with their own native son, French-speaking fellow, they couldn’t get off the ground. Quebecois voted against Trump.
This is a sign. If it can happen in Canada, what’s going to happen in the elections coming up in Europe when candidates begin to smell the opportunities of running a campaign against Trump? If you’re going to run against Trump, you’re going to get a lot of votes. And if you force Mr. Starmer or Mr. Macron or the Germans to be the pro-Trump? Uh-oh, that’s very dangerous for them. They must know that.
And so you see, they don’t know what to do. They can’t back away from Ukraine because they’ve made their whole career. They can’t really back away from Trump because that’s their whole life. That’s who they are. That’s why they’re in power.
They ran against neoliberal globalization to get into power. In other words, it was the American plan for the world that gave them their chance. They can’t betray that now. They wouldn’t know where to go. They couldn’t speak about it.
But there will be politicians. There already are politicians in all those countries, inside their parties, and on the left – both – who are going to make life very difficult for them in the years ahead. And that’s no matter what happens in the Ukraine.
MICHAEL HUDSON: Well, the problem is how do they escape from this fantasy that Richard has explained? And he’s quite right to bring it up.
The fantasy was a paper written, I think, by a Hudson Institute neocon, who actually said the Russian economy is about to collapse if only we can make it spend enough on the military, that it’ll be a replay of the Soviet Union collapsing under the military. That was explicit.
It was said that there will be a regime change. If we fight against Russia, the Russian people will want to overthrow Putin, and we’ll have the regime change. We can have another Boris Yeltsin there.
That was explicitly the plan, and there was no plan B. They were stuck into it. And that’s been the plan for the last few years. And that’s the plan that the current European leaders are committed to.
Remember that Europe is a democracy. And a democracy means you don’t let voters vote for parties that are not considered pro-American. Because democracy means Cold War. Democracy means NATO. Democracy means military spending.
And military spending means class war, that if Germany spends the 700 or 800 billion euros on rearming, that money is no longer going to be available for social spending. Military Keynesianism essentially means the end of social democracy, the end of social spending.
That’s why Germany cannot let the Alternativ für Deutschland Party, which is the equivalent of what we’ve just seen in Canada, win, because that wouldn’t be democratic. That wouldn’t be pro-NATO. That would be Putin’s puppet. And yet the AfD has been increasing its popularity week after week after week.
So, as the European voters are voting against the war, and in England you’re having Starmer going way, way down – for tying himself to Trump – each week and month. And you’re having the third party, that had been the anti-Euro party, gaining votes.
So you’re having the European voters doing just exactly what the Canadian voters did. And yet you have the European Constitution is such a rotten creation of CIA lawyers that the European Constitution has placed power not in who the voters vote for domestically, but in the EU leadership where they have, as we have, as we’ve said before, von der Leyen leading, and the crazy Estonian lady beating for war.
I think Richard did begin by mentioning the GDP. Something very important there. It is not simply that the GDP of China and Asia and the BRICS are going up. It’s that the GDP is going up. And the American GDP is going down. And you’re going to see that in the statistical reports that are coming out, for an obvious reason.
Given the fact that trade with China and other countries is interrupted, this means that companies are drawing down their inventories, if they’re not able to get goods from China. They have a lot of inventories that we’ve saved up, including inventories of rare earths that we have a one-month supply in America.
If you look at the components of the GDP, inventories are a very major indication. It used to be back in the 1960s, when I was an economist, all of the economists and the newspapers, the press, would look not only at GDP, they’d look at the composition of the GDP, what elements are going up, what elements are going down. And inventories are always very, very important.
Well, right now, as America is drawing down its inventories, instead of importing from China, that counts as a decline in GDP. And you can be sure that the GDP figures are going to go down. It still bewilders me as to why the stock market is going up in all of this. And that’s going up, apparently, because of NASDAQ, primarily, because of the technology monopoly. And I don’t see how this will be very helpful.
Regarding the inventories, Trump had his Marie Antoinette moment yesterday. He said, “So, we don’t export the dolls from China we used to. So, now girls are only going to have two dolls to play with, not twenty.” I wonder what percentile he’s referring to that has twenty dolls, instead of others. I mean, that was essentially his version of “let them eat cake.” That is imagining that everybody is already, the Americans are so affluent that somehow they already have enough. They don’t need the imports from China.
But you’re seeing that the imports from China won’t come. And I don’t see China giving into the United States, although there was some hint that spurred the stock market to go up this morning, that somehow China was going to look for a rapprochement.
I don’t see that at all. I think China realizes that when Trump says China’s our number one enemy, all of our economy, all of our war is geared towards hurting China, that he means it. And that the negotiations that he’s planning on making over the next three months with other countries, to free themselves from these enormous tariffs America has done, is all conditional upon their getting these countries not to trade with China, or with Russia.
And as Richard said, there’s some fear among some countries: Well, who’s going to give in to Trump first? Are they going to take our position?
But basically, I don’t think there’s that much of a problem.
The choice is between: Are you going to shift your trade arrangements to countries that are growing and that make steady agreements that are firm and not subject to the kind of change that Trump has? Or are you going to tie your trade to an economy that is shrinking, that is blocking trade, and that whatever agreement you think you’ve made for the next three months will be subject to the kind of change that is happening every single week in the United States.
So I think that the changes that Trump has made is not simply something that can be reversed, something that, okay, that deal wasn’t made. We made a big ask, but we always make a big ask, so that we can back down and settle in the midpoint, which is what we wanted from the beginning anyway.
And I don’t think that’s going to work anymore. I don’t think people are going to settle for the midpoint. They’re going to reject the whole kind of negotiation that’s been taking place in trade. And I think they’ve already realized there’s going to be a change in trade patterns.
I think India is very critical in all this, especially with the problems with Pakistan that they’re having. And the Americans have been trying to ally with India on this. It’s one of the countries caught in the middle. Turkey is caught in the middle.
These are the flashpoints, I think, that you have to look at.
RICHARD WOLFF: If I could add something about Europe. The reason – I’m going to state it bluntly – the reason that the Europeans lined up and gung-ho to help Zelensky and Ukraine is because they have to show their people that they are not the puppets of Mr. Trump.
All of the people of Europe hate Mr. Trump now. They understand that the tariffs and everything else, plus what he says, is a denigration of Europe, a willingness to throw them under the bus, to utilize trade deals with them, to squeeze them every which way he thinks is appropriate, to snatch Greenland, if he can, to take over the Panama Canal, to make Canada the fifty–
These are all assaults on everything that the Europeans– These politicians are desperate. They have to show that they are not the puppets of Mr. Trump, because they are, and they always have been. And the way to do that is to be very strong on something that looks like a disagreement with Mr. Trump.
And Ukraine was the only option.
So, we are going to stand firm with Ukraine. We are going to send our troops.
A silly joke. They don’t have the troops. The Russians would make short shrift of them.
It’s silly. But it is the desperate behavior of politicians who know that given Mr. Trump’s assault on them, and given their pro-American credentials developed over a lifetime, they’re going down. And this is a life raft, this Ukraine. So, yeah, they will spend the money. They will change the rules of Europe so that the European Union can borrow money.
The Germans had to do that as part of their rearmament program.
What is this? This is desperate behavior. They can’t commit Germany for the next eight years. This government may not last eight months. And everything they do can be undone by the next one.
So the reality is that this is, again, political theater in a desperate situation.
Here’s another dimension. When Mr. Trump disrupts global trade by putting a tariff on everybody, it is well understood that this changes all of the global supply chains. We don’t know where the ships are going to go. We don’t know which ship is going to be empty on one step of its route, so it can’t go from here to there, because even if it had to carry a freight to go there, it doesn’t have a comparable freight to come back, because of the–
So, if you’re involved with a globalized supply chain, you are in trouble. You’re going to have multiple tariff effects added on to one another, and you’re going to have extreme uncertainty.
China and the BRICS is where the manufacturing supply chain moved to over the last forty years. They need the international supply routes least of all. People misunderstand. Do they depend on exports? Yes, to a remarkable extent. Does that vulnerabilize them to supply chain problems? Yes, to some extent.
But the irony is, most of the manufacturing in the world needs inputs from far away. China does not. China has internalized all of that to a remarkable extent. That offsets their dependence on global supply chains.
But for Europe and America, nothing offsets it. They have denuded themselves of the components of the supply chain. They are totally vulnerable.
American automobile Mary Barra of General Motors and the fellow at the head of Ford have been busily explaining, both to the press and to the Congress, the complicated supply chains that their car production is dependent on. That’s why they have to be involved in all of it.
Even for the cars made in America, their dependence on supply chains is what we’ve been doing for the last half-century.
Meanwhile, China has been gathering into itself and even more into its BRICS allies, so they’re not vulnerable in the same way. Nobody seems to be able to put that together.
And what that means is when you do it, you end up with the following remarkable guess that this disruption of the world economy is more costly to the West and America than it is to China. China is in a better position to cope with this than we are. And we’re doing it.
This is like having a duel with a skilled swordsperson, and you never touched one. And when the duel is arranged, they ask you, what weapons do you choose? And you choose swords. And that’s crazy because the other guy is an expert.
This tariff game of Trump has to be the act of a person who never either thought it through, or who never listened to the advisors who explain to him, here’s the cost if you do that. And there again, you’re watching– Whoa. Whoa.
MICHAEL HUDSON: Well, it’s political theater, but it’s political theater with the real-world consequences that you’ve pointed out. And these consequences are irreversible.
And that’s the point. Once he’s done what he’s done, once he has done the tariff policy and shifted his war policy, this cannot be rolled back. You can’t say, oh, I made a mistake, I’m going back, as Trump has done with the tariffs. He can roll back the tariffs for the automobiles with Canada and say, well, we’re going to permit the Canadian auto parts to be imported without a tariff so that the supply chain will not be interrupted.
But it’s all about the supply chain.
He may fix it with the tariffs. He may fix other supply chains with– For instance, he said we won’t bother with having Apple lose its supply chains for its iPhones, they can all trade. He can try to then have walk-backs of individual parts, but he can’t walk back the entire deal.
And there are so many supply chains besides the big Apple chain and the big automobile tariff chain that there’s going to be disruptions.
And that’s why yesterday, two days ago, UPS said, well, we’re laying off 20,000 delivery people because the ships are not landing in the ports full of goods to be downloaded and distributed now.
There’s been the huge government supply chains of officials that have been fired under Musk that are playing critical roles. They’ve been putting all of the medical test animals to death because he’s canceled the research into medicine that have been using animals.
So all of these, all of these supply, not only a supply chain is interrupted, that leads to layoffs of labor. That leads to unemployment. It means claims for unemployment insurance. It means that there’s an enormous shrinkage within the labor force.
And even if the Dow Jones average and the stock market’s going up, the labor market is going down.
RICHARD WOLFF: Yeah, I would like to add, I looked into it the last couple of days. As of May 1st, if the statistics are correct, about 120,000 federal employees have been fired. And another unknown number of thousands have either taken a voluntary buyout, that’s not included in the 120,000 fired, or have been “placed on administrative leave.” And that, it is explained, that’s not in the 120,000. So those are x, I don’t know the number, I couldn’t find it, x-thousand beyond. All right.
Every agency has a minimum of ten percent. Some of the larger agencies, the largest single agency of the federal government is the veterans administration. They’re scheduled for a fifteen percent cut. That’s 70,000 workers. And already they’re announcing cutbacks.
The most recent one announced today is this program – it’s a little program, but it gives you an idea of what Michael was pointing to. It’s a little program that helps veterans who fall behind in their mortgage payments and so therefore are at threat of foreclosure from the banks. There used to be a government program that would step in and help them, either take over the mortgage – which I believe they did – or refinance one, etc.
All of that’s being cut back, which now threatens – and listen to these numbers – which now threatens tens of thousands of veterans currently behind in their mortgage payments. They’re going to lose their homes, which puts burdens on mental health facilities, physical health facilities, communities where veterans are concentrated like Southern California, and so on and so on.
None of this is being dealt– It’s as if there’s no problem. You know what kind of society functions like this? The kinds of societies we used to say, wrongly, but we used to call Third World countries, places where there’s a capital city or two, where you get kind of Western standards of living, and then a vast ocean around them of desperate poverty, where there’s no transportation and no health care and no education system that most people can afford.
You’re watching the end of an empire when the people at the top hold on to the great wealth that the empire gave them, that they don’t want to lose, understandably. So they push the burden off onto those who can’t help themselves.
So a country that gives Elon Musk $300 billion of personal wealth will not help a veteran who can’t find a mortgage for three months. I mean, do you need more than that?
And you know, if this is correct, then the only real question is how long the American people will tolerate what we are living through.
And if I were at the top, that’s what I’d be worrying about. And that’s probably a clue as to why I’m not at the top.
MICHAEL HUDSON: If only the Americans had a choice. And there really isn’t a choice. The Democrats are saying, well, we’re not Trump. But they are Trump. They’re the same policy as Trump. Trump’s doing to the working class what the Democrats dreamed of doing but couldn’t do, basically.
So there really isn’t an alternative here.
As we’ve said before, do we need a third party? We need some solution that is not on the spectrum right now. I don’t know what that solution will be, but it’s going to be not the Republicans and not the Democrats. That’s what’s open.
What on earth is going to be the solution? I don’t see a solution. I see just a continual shrinkage of the similar party, no matter which party or which president is in power.
I don’t see a change in this policy.
I think that the military is going to be gaining with the war in Ukraine and against China and against the Baltics here, as it is in Germany. But that’s not going to be the economy. The stock market isn’t the economy. The economy is going to be left just in the way that you described, Richard. It’s going to be a mess.
And the voters are not going to have much to say about it.
RICHARD WOLFF: No. And one of the reasons we have been talking, and I believe it’s the correct thing, we’ve been talking about a declining empire as a larger context for much of the particulars.
I think it is very, very significant that it’s only people like us who talk like that.
If you listen to Republicans or the Democrats, not a word. Everything is reduced to this detail or that. They won’t cut the veterans as badly as the Republicans do. They won’t. That’s it. We are Trump light. You know, you don’t want to drink Pepsi, drink Pepsi light. You don’t want Trump, vote–
That’s what they did in Canada. That’s what they are going to be doing in Europe in the elections to come. At least I think so. That’s what’s certainly worrying the leading politicians there.
But no one said– You know, Biden didn’t say a word about a declining empire. Trump didn’t say a word. And Kamala Harris didn’t say a word. None of them can even entertain a larger context. For them, there is no contextual problem. The larger everything is, okay. It’s just we have to adjust our, minor navigation–
It’s the attempt of people who are fundamentally supports of the status quo: a little this, a little that, center left, center right.
Mr. Trump gained office by suggesting he wasn’t part of that broader consensus, but he was, and he’s proving it to us now.
NIMA ALKHORSHID: Yeah. Thank you so much, Richard and Michael for being with us today. Great pleasure as always.
RICHARD WOLFF: Same here. Talk to you soon.
NIMA ALKHORSHID: Talk to you soon. Bye-bye. Bye-bye Thank you.
Photo by Simona Sergi on Unsplash
