Editor's Note: This article was updated to correct the word "expansive" to "expensive" in the sentence, "AlterNet had an expansive conversation with Wolff."
President Donald Trump has permanently destroyed both America's working class and its standing in the global community, according to an expert economist who spoke exclusively with AlterNet.
Dr. Richard D. Wolff, professor emeritus of economics at the University of Massachusetts Amherst, made it clear in his Thursday afternoon interview that America's elites and ordinary citizens alike are in mass denial about these realities. They continue to remain in this denial at their own peril, he added. Trump's destruction of long-term trade alliances have prompted former US partners to seek better deals elsewhere, slowly but permanently restructuring the global economy against our country's best interests.
Similarly, the Republican Party's indifference to working class woes — perhaps best embodied by Trump's focus on issues of personal interest only to himself and his supporters (renaming the Kennedy Center to include "Trump," building a White House ballroom) and dismissing efforts to build affordable housing as a "yawn" — guarantees that mainstream economic concerns will be inadequately addressed, if they are indeed meaningfully confronted at all.
To learn more, AlterNet had an expansive conversation with Wolff.
The following interview has been lightly edited for clarity, context and length.
ROZSA: I want to start with a comment that President Trump made in June. He was asked by reporters whether he would sign affordable housing legislation, and his exact words were, "It hasn't been sent to me yet. It's coming. I understand. And then I'll make a de - Here's what I would like to say. It's a yawn." What are your thoughts about Trump describing affordable housing legislation as a quote unquote yawn? To what extent does that reflect on the Republican Party as a whole?
WOLFF: Yeah, I think the Republican Party, like Mr. Trump, when it's convenient for him to go along with the Republican Party, which it often is, but sometimes in a very demonstrable way, it isn't. He has his own agenda. It's not exactly the same. But in this case, it is the same. It's a notion that the private sector, in this case, the private sector that constructs housing, is to be left to make the decision of whether or not to build houses for the American people. And if so, which people. And we have a hard economic reality, which the president no doubt knows, which is that for the last 14 years, the inequality in the United States, the gap between rich and poor, has become steadily more and more extreme. And markets follow where the wealth is. That's how markets work.
You produce where you can get the most profit. That's the way the system is set up.
Rich people have the money to buy expensive housing. So that's the housing that the private sector builds, because it's profitable. What they don't build is housing that's affordable for middle and low income people, because it is either less profitable or not profitable at all. And at a time when you have record high interest rates, and remember, corporations are borrowing money all the time. They have to pay more to borrow more. It's expensive to borrow money. Lumber, because it comes from Canada, is now more expensive in part because of tariffs Mr. Trump put on, and the whole reorganization of the Canadian economy to rely less on the American economy makes the cost of lumber that much higher. You're facing a situation where the costs of housing are rising, and therefore you need to charge more and more money, and only rich people can do that.
And the result is you have inadequate housing, and you have a wild rise in rentals across the country that reflects all that, and a rising cost of owning your own home if you're gonna go that route. Mortgages are now at a record high rate and about to go higher because of the Federal Reserve raising interest rates yesterday. So we're gonna be seeing over 7% mortgage rates become the norm. All of that produces a private sector focused on expensive condos in the rich areas of the country, the New York area, the San Francisco area, all of that. And the massive housing for middle and low income people becoming pinched and becoming more and more expensive. People, young people particularly, cannot afford a home, so they are all renters and there's not enough rental housing being built.
There's no coordinated governmental planning to handle this situation. It's just an unholy mess. And the response of the Republicans and of Mr. Trump to that mess is to wait for the market to sort it all out. Will the market sort it out? It may very well do that. It may, in the process, shift most Americans from owning their own homes to being renters. That process, I believe, is underway. And that will continue for as long as this situation is maintained. And the more the president talks that way, the more he is suggesting that they're not about to do very much, even if there is a bill passed and even if it has a provision here or there to make this situation better. It has already lasted many years. It needs massive intervention to deal with the problem.
None of that is on the horizon. And I think Mr. Trump is basically letting you know that.
ROZSA: Now I want to ask about something you said to me recently regarding our trade war with Canada. You said that you were not surprised that our government is surprised by Canada standing up for itself. You added, "Our government is busy strong-arming people around the world in every way that it can, militarily, economically, politically, and discovering time after time to their amazement if you take them seriously that the folks are going to resist." As Canada and the European Union and China and these other nations such as the Middle East, as they resist America's bullying, how will that impact ordinary Americans economically?Wolff: It's gonna cause Americans one kind of grief after another. Let's go back and make sure everybody understands. And what that meant was that the United States helped allied countries recover from the war with the Marshall Plan and things like that. But those, the beneficiary countries, including Western Europe and Japan, were markedly contrasted with the countries that got no help at all, Russia and China being the number one examples, because of communist control in Russia, and then after 1949 also in China. And so those countries had to make it, if you like, on their own. They had to recover from horrific war-related damage. I mean, Russia and China probably ranked one and two in the amount of damage done during and by World War II, before, during, and after it, as any countries on earth.
The difference was after the war, they had to rely on themselves. They got no help. And there's a lesson. China is now the economic success story of this period of human history. No country has grown faster over the last 35 years than the People's Republic of China. And the preparation for that was what happened in the decades between their revolution, 1949, and the takeoff, if you like, in the 1980s and '90s that made them the colossus that they are now. Here's what that proves. If you don't work out a relationship with other parts of the world, they don't all go to sleep. They don't all imagine that their lot in life is to be poor forever. They go to work to replicate and to hopefully exceed whatever you've done. The Chinese and now the Russians too are showing that that's a possible way to react.
And that is having enormous impact on the third world, the global south, as they like to be called these days. And what the United States doesn't wanna face is what I just said. And so it doesn't understand that as it goes about bullying other countries, demanding that they invest in the United States, hitting tariffs so that the cost to Americans to buy their goods is raised by the tax we have to give to Mr. Trump and the Washington to have the imports come in. As you do that, you provoke, you incentivize all the rest of the world to get around the difficulties you are imposing on them, just as Russia and China had to get around their difficulties, consequent on the Cold War. And they're doing it. So, to give you just a couple of examples based on what I said to you five minutes ago, the Canadians being hit with tariffs by, and threatened with more by, Mr. Trump, or outright bans on their stuff coming to the United States. And remember, the US-Canada trade relationship was the most important one for both countries. That their trade with one another outranked their trade with anybody else. You're forcing the Canadians under Mr. Carney to do their version of what the Russians and Chinese did several decades ago. And so they're doing it. And one result is they're gonna sell their lumber to the Europeans who need it. All right, if they're gonna do that, then the lumber is gonna not come south from Canada into the United States. That's gonna make the price of lumber go up and that's gonna make everything having to do with lumber. Every construction project, virtually every one, here in the United States is gonna be more expensive. It's gonna raise your rent, to put it as bluntly as I know how.
In the northern states of the United States, a lot of the electricity comes from Canada. It's electricity generated by water power, by gas and oil that exists under the soil in Canada. That's now not coming here. That's being sold to China and so on. All right, that means that what does come here, either from Canada, if any, or being replaced because Canadian energy is going elsewhere, by more expensive energy sourced in some other part of the world — that's gonna raise the cost of heating, that's gonna raise the cost of gas. The United States' effort to impose rules on the Middle East has just shown us what can happen to the price of gas or diesel oil here in the United States. Diesel is now selling at, I don't know, twice what it was eight months ago. Gasoline, almost that big an increase.It's affecting Americans in a thousand ways. I've only mentioned half a dozen, but cutting yourself off from the rest of the world is a very expensive proposition. The reason the United States is embroiled around the world is because it was profitable for American companies to do that. They could make more profits if they could get oil from the Middle East, if they could get raw materials from Latin America and Asia, and on and on and on. Now, being unable to do that because you badger and bully your allies so that they do business elsewhere, these things are gonna become more expensive because your companies are gonna have to go elsewhere since they're no longer gonna be welcome in these countries, and on and on and on. This is a dead end, and it's a bad story. It doesn't end well.
And the isolation of the United States at this point, after you've had two or three centuries devoted to integrating the whole world, so that 10 years ago we were boasting that the world is now so terribly efficient because we have global supply chains. Now we discover, voilà, that a benefit can be an albatross around your neck if the conditions change. That's what's happened. The world economy, carefully constructed by capitalism over the last three centuries, is now threatening to throttle capitalism, as the tensions among the capitalist countries explode.
ROZSA: It's interesting that you talk about the world economy being restructured by capitalism and yet simultaneously against capitalism. I think about how President Trump is in some ways destroying the free market. He is talking about which industries should win or lose in terms of his tariff policies. President Grover Cleveland referred to that approach as a "communism of pelf." He is offering $5,000 checks to every adult as long as he wins the midterm elections. He openly allows his cronies to benefit, in ways that show you and I are obviously as far removed from being free-market capitalists as humanly possible. But at the same time, if I were a sincere free market capitalist, I would be horrified because he is definitely engaged in crony capitalism. Would you agree? And if so, or if not, why?
WOLFF: Oh, I think most people who pay much attention would agree. I don't even think that's very controversial anymore. If you pay attention, as I do, to the statements of the United States Chamber of Commerce, you will see — and it's not too subtle either — that they are very, very agitated and worried. They see Mr. Trump buying shares of the Intel Corporation on behalf of the government, taking a position in a dozen other major corporations, getting so close to the high-tech, artificial intelligence and all the rest of it that it's becoming difficult to know where the government ends and the private sector begins. For them, that's all anathema. That is all apostasy, that's all a departure from the notion that a free-market system is the best system. If it were the best system, then he would be leaving not just a rental business to the private sector, but he would be leaving Intel Corporation to live or die based on its own private market manipulations. Instead, he's funding them and giving the government a say in what happens to them as a result of the government being an owner. So, but I don't think this is unusual. The three centuries, 17th, 18th, and 19th, were the centuries when capitalism's major achievement was the world economy, as they organized every corner of the globe into colonies of Europe, North America, and Japan. And they created a very lopsided, unequal world economy to their everlasting shame. But they did at least weld the economy together, making a center to which the wealth was collected and a periphery from which the wealth was taken. Okay, how did this end up? It didn't end well. It ended when the colonial countries went to war, World War I, and then again, World War II, destroying every single one of them in the process with one exception, the United States.
It benefited because air power hadn't been developed far enough, so the Atlantic and Pacific Oceans protected the United States from the mutual slaughter that the Europeans and the Japanese imposed on one another. So the end of capitalistic colonialism was the end of colonialism. Within a very short time after 1945, all of the old empire was gone. The British lost India, the French lost Indochina, and on and on and on and on. But the irony of ironies was, one country, the United States, inherited all of the global empire's results. Three centuries of colonialism handed over when those countries couldn't hold onto their colonies anymore, handed over to the one country that could try to run a global empire, unified, therefore bigger than anything the British, French, Germans, or Spanish had ever been able to do. That's been the life you and I have led.
We were born into this really odd moment when the United States was the global, singular, colonial power left, which could and did replace all the other colonial authorities with nominally independent governments, but that were, in reality, and particularly economically, utterly dependent on the United States, which dominated after 1945 in a way no other country ever did the globe. And we've been experiencing now the end of what everyone should have understood was a highly artificial temporary period of American history. Had they understood that, they wouldn't be as bereft of solutions as they now are as this singular empire dissolves all around them.
ROZSA: I have one final question. To what extent is the dissolution of America's supremacy the direct result of Trump's policies, and to what extent was it the inevitable consequence of variables that preceded Trump's ascension?
WOLFF: Mostly the latter. Mr. Trump isn't that powerful, never was. He's the latest in a long line. He's interesting because, being toward the end of this whole process — he has, in part, that's why he was elected — he's a bit more honest, a bit more blunt, a bit more transparent about all of this than the predecessors. If you look even now at the leadership of the Democratic Party, they still live in the fantasy that the United States occupies the same position now that it did, for example, in the 1980s and '90s. It doesn't. It's over. The empire is dissolving. You can't win in Iran. This desperately poor Middle Eastern country has stalemated you, the ostensibly most powerful in the world. Read what's going on. It is incredible. And it isn't just about Iran. It could have been anywhere else.The point is, it's happening, and these poor countries, especially now with the alliance they have with Russia and China, they have the capacity to tell the United States, "No, you're not gonna get this. No, you're not gonna be able to do that. No, you're gonna have to share your power. You're gonna have to share your economic power." Mr. Trump is going to try to bomb his way, genocide his way, be Mr. Tough Guy and reverse all of this. It's not gonna happen. It's not within the capability of the United States. And that reality is impressing itself, but not surprisingly, it has the problem of massive denial. What population ever experienced the decline of its empire without a fairly long period of denying the inevitable, denying the very decline that was shaking them to the core? And that happened in Greece and Rome and the Ottoman Empire, Persian Empire — it's happening to the American Empire.
And so, you know, Chuck Schumer — I cannot imagine him saying what I've just been saying to you. That would be unpatriotic, or whatever goes through that tiny mind there. And so he's gonna say what it is that got him to his position now. You're seeing it in the leaders of Europe too. The Macrons, the Merzes, the Starmers. These are all people talking as though their countries still are the center of the world. It's over. They haven't been the center for a hundred years now. They still hold on to the delusion that they are. Americans make fun of them because of it, not realizing that they're replicating it.