The US war on Iran is leading the world to a global depression. Professor
Richard Wolff places the current crisis in the context of the capitalist system
and the decline of US hegemonic power.͏ ͏ ͏ ͏ ͏ ͏
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How the Iran War is Accelerating the Decline of Empire (w/ Richard Wolff) | The
Chris Hedges Report
The US war on Iran is leading the world to a global depression. Professor
Richard Wolff places the current crisis in the context of the capitalist system
and the decline of US hegemonic power.
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| Chris Hedges |
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| May 1 |
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This interview is also available on podcast platforms and Rumble.
The global economic impacts of the American-Israeli war on Iran are already
being felt, particularly in Asia, through shortages of fuel and other
necessities, the closure of factories and the loss of jobs. We are now on a
path heading for a global recession, or even worse, a global depression. To
sort out what potentially lies ahead and the likelihood of preventing the worst
outcomes, Chris Hedges speaks with economist Richard D. Wolff, professor
emeritus at the University of Massachusetts-Amherst.
Wolff begins the interview by discussing the weaknesses of the capitalist
economic system. Since the 1970s, corporations have been moving production to
areas of the world where they can maximize profits. This has created fragile
supply chains that are vulnerable to changes in the availability of energy and
the fallout of political turmoil.
Research demonstrates that capitalist systems result in cyclical downturns
every four to seven years. The last economic crisis was five to six years ago,
so we may very well be on the edge of another one. Wolff reports that it is too
early to determine if that will result in inflation, stagflation or deflation.
For the United States, commitments to greater military spending, a historically
high debt of $40 trillion and a declining credit rating will force the
government to borrow money at higher interest rates, adding to the burden of an
already financially stressed population.
Wolff states, “We are living through the end of the empire and that end has
been accelerated and brought closer by everything going on in the Middle East.”
The United States faces a critical decision. If it chooses to escalate the war
on Iran, the risk of a global depression rises. The future appears to be grim.
At this time, there is an absence of a functioning international mechanism
through which countries can solve the current crises cooperatively. For the
United States, there is also denial about the state of our falling empire.
Wolff concludes: “It’s not a question of maintaining your dominance. That’s
gone. It’s a question of working things out. Our leaders don’t think or talk
like that.”
Host
Chris Hedges
Executive Producer:
Max Jones
Intro:
Margaret Flowers
Transcript:
Margaret Flowers
Crew:
Sofia Menemenlis
Transcript
Chris Hedges: The economic fallout from two months of war in Iran is already
crippling economies across the globe. Energy prices are soaring. Gasoline
shortages and rationing are plaguing countries such as Vietnam, South Korea and
Thailand. Japan has had to twice dip into its strategic reserves since the war
on Iran started in February. The rise in price of liquefied petroleum gas means
cooking gas prices have skyrocketed devastating households in countries such as
India. The price of nitrogen fertilizers produced in the Gulf are also rising
at an alarming rate, guaranteeing steep increases in food prices. There are
growing shortages of helium, aluminum, naphtha, devastating industries,
including the microchip industry. Textile mills in India and Bangladesh have
shut down. Steel mills in India and automakers in Japan have cut production.
Tens of thousands of workers across the globe have already lost their jobs.
Asian airlines, along with those in Poland, Germany, and Ireland, are cutting
flights and raising surcharges with a doubling of the price of jet fuel. The
United Arab Emirates, one of the world’s richest countries with sovereign
wealth funds that total more than $2 trillion, has asked the United States for
a financial lifeline in the wake of missile-damaged gas fields and a halt to
shipping in the Strait of Hormuz, the New York Times reports.
Millions of people, especially in Asia and Africa, are at risk of falling into
dire poverty because of the conflict, according to the United Nations
Development Program. The US, which is a net exporter of oil and natural gas,
has been relatively insulated from the global shock, although gasoline prices
have risen by $1 a gallon since February 28th, but this will not remain the
case if Iran does not open the Strait soon. The average U.S. diesel price has
already increased by nearly 50 percent, surpassing $5.60 a gallon. Higher fuel
prices, coupled with growing shortages and disruptions in supply chains, will
begin to take a heavy toll on the U.S. economy as everything we pay for,
including consumer products, food and transportation, rise in price. We flirt
not only with a global recession, but if the closure of the Strait is not
resolved, a global depression with all of the suffering and inevitable social
and political instability catastrophic financial crises inflict on societies.
Joining me to discuss the economic consequences of the war is Professor Richard
Wolff. Professor Wolff is a professor emeritus of economics at the University
of Massachusetts-Amherst and a visiting professor in the graduate program in
international affairs of the New School. He has also taught economics at Yale
University, City University of New York, University of Utah, and the University
of Paris.
I want to begin, Rick, by examining something that’s not been widely discussed
and that is supply chains. How fragile they are, we’re already seeing of course
supply chains being degraded, how difficult it is to resurrect them, and what
the consequences of serious damage to supply chains are.
Richard D Wolff: Okay, it’s a really good place to start, Chris, because it
allows me to talk a moment about economic history. Particularly since the
1970s, major large capitalist corporations - American but also Western
European, Japanese and others - have followed the guideline of profit
maximization, the religion of capitalism, to make a long complex story short,
to move production around the world from being concentrated in the United
States, for example, to being spread all over the world. In 1970, Detroit was
the center of the automobile industry for this country and surrounding Detroit
were literally hundreds of medium and small businesses that fed the auto
industry, but they were all within 20 to 50 miles of Detroit. All of that is
gone, with Detroit showing it, its population today, just to give you an idea
of the social consequences, is about 700,000 people. In 1970, it was just shy
of 2 million people. That’s the demographic, if you like, of what happened to
that industry.
Well, it went abroad. And here’s the reality. If you go abroad - to China for
one set of activities, to India for another, to Brazil for a third - what you
are creating is long supply chains. This is not a matter of technology. That’s
often a misunderstanding: modern technology requires. No, it doesn’t. It’s not
about modern technology. The technologies installed in China are not that
different from the technologies that were installed here. The reality was that
the labor cost in China was much lower and the desperation of those countries
to bring jobs there meant that they offered very high profits, and American
corporations took that offer. No one held a gun to their head. This wasn’t done
under duress. This was your normal capitalist investment where the profits are
the highest.
The end result, which they did not calculate because they rarely do, was not to
take into account all the secondary consequences of long supply chains. And let
me go through what they were. But they didn’t count what I’m about to tell you.
For them, the higher profit settled the matter. Well, here are some of the
consequences. You have to travel long distances to bring the finished product
from China or India or Bangladesh or wherever it is back to the United States
for sale. That means you are dependent on shipping. That means you are
dependent on the shipping industry. That means you’re dependent to take current
events on the Strait of Hormuz, among others, Malacca, Panama, Suez. There are
many of those, and those are now important in a way that they weren’t before.
Number two, when you ship everything long distances, and you do it mostly by
boat, you pollute the ocean. That’s going to affect travel, fishery, water
access, all kinds of secondary consequences that, of course, should have been
taken into account.
Third, you’re going to be subject to political turmoil. If your shipping route
takes you here or there, if you need to have storage facilities along the way,
which you usually do in case of all kinds of situations, you have to have
friendly locations in which to do all of that. And anybody at any point can
hold you up. And if they do, then you are suddenly frozen. We’re seeing that
now.
Energy is a basic component, but often even a little component, you know, the
carburetor in your car. Well, the car has to have a carburetor, and even if
everything else is available, but the carburetors aren’t, you’re stuck. And
when you’re stuck, you can’t deliver on time.
Okay, long story short, this is a wonderful example of what in economics is
called the difference between private cost and social cost, private profit and
social profit. We, as a society, need to know what we are investing in in terms
of all of its social consequences. Or at least as many as we can foretell and
get some measure of. But the corporation doesn’t do that because it doesn’t
count the costs it does not have to cover. It’s not responsible for the
pollution of the water. It’s not responsible for the political turmoil that may
interrupt. So, it doesn’t have to count for those things. It doesn’t have to
set aside funds to manage the contingency. None of it. They just go ahead and
make their investment. It has all the social consequences I’ve sketched here.
And we, the people, the government, the society, are left to try to cope and
clean up whatever it is that they didn’t foresee while they make the profit
that comes, not from the intrinsic benefits of the investment, but from the
fact that they don’t have to count, let alone cover, the costs, the social
costs that are involved. We are now living with that.
The war between Iran and the United States and Israel, whatever you think of
it, is an interruption in a long supply chain. And we are dealing with the
enormous social costs that you nicely listed some of which at the beginning of
the show. And we’re all going to struggle economically, politically,
culturally. You know, the UAE just withdrew from OPEC. I saw that literally a
few minutes ago. That’s one of the cascade of social consequences of this whole
situation that will change the oil business and everything that depends on it
for years to come.
Chris Hedges: And so the degradation in the supply chain, which I did kind of
illustrate at the introduction - you know a lot more about this than I do -
it’s not necessarily, even if the Strait of Hormuz was open today, that supply
chain’s going to be disrupted for some time. Am I correct?
Richard D Wolff: Absolutely. And even more, Chris, even more. Every company
that has any occasion, directly or indirectly, to utilize the Strait of Hormuz
is now calculating, in a way they didn’t before, the risk. And that risk means
they will have to, or not have to, but many of them will, decide to change. For
example, there’s an acceleration of pipeline construction all over Asia in
order to avoid dependence on the Strait of Hormuz for oil, natural gas and so
on. Okay, that’s diverting investment from other projects to pipelines. No one
is thinking about, “Well, what are the projects that are being put on
postponement? What social need were they invented to secure?” And those are now
forgone because we have to build pipelines all over the place. Why? Because we
are worried about the risk of not doing a pipeline.
Countries are making these calculations and corporations. They have to. That’s
the job. The purchasing manager in every company, whose job it is to secure the
purchase of fuel, oil and gas at an appropriate price, is now charged by the
CEO with finding alternatives that are less risky and balancing that against
the relative prices. Of course, we don’t know the relative prices because we’re
in the middle of all of this and how the relative prices shift is being
determined right now.
Just to give you an example, because Europe is in almost as bad shape as Asia
about all of this, the strategic reserve of oil maintained by the United
States, about half of it has been used up now. And they’re selling that oil way
below market price, mostly to the Europeans. That’s a political game being
played by Mr. Trump. But the Europeans don’t know how long he’ll do that. They
don’t know whether the tariff wars will be reignited the way he seems to want
that will once again lead to trouble between the United States and Europe
beyond what already exists. You can see how far that can go by looking at the
alienation of Canada and Mark Carney and all of that.
So, everybody’s trying to recalculate, reposition with an awful lot of
variables shifting as we talk makes it all very, very difficult. But it doesn’t
change the challenge, which I think will eventually be dealt with explicitly.
You cannot allow the development of a world economy that ties everybody
together without the participation of the mass of people, as if this could be
left to the private interests of literally a few thousand corporations who are
making decisions based on what’s best for them, granted. But the notion that
what’s best for them is what we all need is being blown apart by today’s
headlines.
Chris Hedges: So, if the Strait remains closed, and I don’t see that Iran has
any incentive to open it at this point, and prices continue to rise, i.e.
inflation, how does the global ruling class respond? Do they jack up interest
rates? What are they going to do?
Richard D Wolff: At this point, I don’t think they have a clue and let me
explain why. The National Bureau of Economic Research, one of the major
institutions in our country keeping track of economic data, are the place we go
to the economics profession to find out about business cycles. A long story
short, their discovery years ago was that wherever capitalism settles in as the
basic economic system, we have a downturn on average every four to seven years.
It’s an average, so sometimes it’s shorter, sometimes it’s longer. And each
downturn has its unique qualities and paces and all of that. But it is a
pattern that we have tried for three centuries to overcome and we haven’t done
that.
There’s even an entire economics Mr. John Maynard Keynes developed to cope with
the worst of it, the 1929-30s crash. And we have a whole system of analysis
called Keynesian economics, and that has helped modulate them a bit, but
overcome them? No. Well, if 4 to 7 is your average, and if the last one was in
the year 2020-2021, Well then, we’re due. That’s the first thing to be aware
of. We are due for an economic downturn. And if you read the financial press,
the articles are full of that. They know that. That’s not a secret. That’s not
something that people on the Left believe and others don’t. It is pretty well
established empirically.
Okay, so now here’s the interesting thing that needs to be understood. To
whatever extent we are on the edge of a downturn, and rising unemployment over
the last six months suggests it also, and there are other indicators, it is
quite possible, although the press never mentions it, that the kind of shock
coming from the oil disruptions out of the Strait of Hormuz could actually
produce a serious downturn. And if that happened, it’s an open question whether
we would have an inflation. We might still see corporations raising prices. If
we do, we get that phenomena economists call stagflation, a mixture of
stagnation on the one hand and inflation on the other. But, and let me stress
this, it is also possible that the downturn would lead corporations fearful of
being stuck with unsaleable inventory, cutting prices. I want to remind people,
in the Great Depression of the 1930s, prices fell. And that cushioned the
breakdown for many American families. They lost their job. They had very little
money. But the prices for food and clothing and shelter were dropping because
the downturn was so severe.
Could we have a comparable downturn? Absolutely, yes. I’m not saying we will,
but we could, and in that event, we will be looking at an interruption, an oil
shock, and a deflation rather than an inflation. The economics of that are
pretty well known. There are plenty of examples of it going in that way, and we
should be aware that that’s part of the problem. If it is true, as recent
statistics suggest, that literally the top 10 % of the American consumers,
richest 10%, account for more than half of the whole consumption bundle in this
country. Then if the other 90 % are as strapped as the data suggests, then I
don’t know what the reaction will be when you have another dollar a gallon to
get to and from your job, to get to and from shopping, to or from going to the
movies.
And you know, it’s the joke that I hear here in New York all the time. There’s
too much month at the end of the money. And in that situation, you will get a
deflation because the system will contract bitterly out of all of it.
Chris Hedges: But if, for instance, fertilizer prices, which have rocketed
upwards, doesn’t that inevitably mean an increase in food prices?
Richard D Wolff: No, I wish it did. It just as often means that the farmer
makes the decision to let part of his fields go fallow. Let them go. Grow
weeds, plow them under. That’s another kind of fertilizer. In the long run, you
have to do that periodically anyway. The chemical nitrogen from oil is good,
but has its limits, like everything else. And the question is how many farmers
will take 10 or 20 or 30 percent of their acreage and let them go in order to
save on the fertilizer, figuring they can make it up by shrinking their output.
If enough other farmers do it and communication is now pretty well developed
among them, then the prices will, they hope, go up. But if their prices go down
and they’ve cut their acreage, we could see another wave of farmers go out of
business.
We should be aware that most of our farmers are badly indebted. They don’t have
much slack. Even though we don’t have lots of little ones the way America used
to, the big ones can go out of business also. They are also peanut counters.
And if the prices of their inputs exceed what they can reasonably expect, and
if you add the risk of a deflation in terms of the final output, how many
Americans are going to make the decision to go from hamburger to Hamburger
Helper? To really begin to eat like poor people? Grain flavored with a little
something else, but it’s basically rice or pasta or bread, etc. You know, we’re
on our way to that anyway in this country and we can call it all dietetic, so
you lose weight, so we don’t have to face that it’s an economic problem. But
those are real possibilities that are now shifted from vague in the future to
much closer because the Strait of Hormuz, this long supply chain, is disrupted.
Chris Hedges: And what are the effects of this on the empire itself?
Richard D Wolff: Well, mean, this is a sore point for me, Chris, you know me a
little bit. I think our empire is over. I think what we are living through,
you, me, our generation now, is the very unhappy, unpleasant, scary experience
of a declining empire, which the Americans have never had. Our empire, over the
last century, was nicely upward. Not for everybody, of course, but for enough
of them to give it the quality of an upswing. And particularly after the Second
World War, when all the other potential competitors for that role had blown
themselves to bits. So, the result was we were ‘King of the Hill.’ And that
gave rise to the 1950s, 60s, 70s, 80s, when you and I both know there was this
sort of odd celebration of all things American, American exceptionalism, that
if you were religious then God loved you more than he loved everybody else, and
on and on.
Where did this come from? It was very classic, the failure to understand the
particularity of the conditions of the moment and a projection, as if something
guaranteed that they would stay the same, or even if they changed, they would
somehow continue the odd special position of the United States. And that’s
simply not true. And starting 10 or 15 years ago, I think it became palpable.
Not the explanation, because we sure live in a country that practices what my
wife, who is a psychotherapist, massive denial. It’s a refusal to entertain the
very idea the empire is over; and therefore, what does that mean? How do we
approach China or Russia or Iran if we’re a declining empire? It’s a whole
different mindset.
Then you want to work out how do we go through a decline without blowing
ourselves up or blowing the whole world up. It’s not a question of maintaining
your dominance. That’s gone. It’s a question of working things out. Our leaders
don’t think or talk like that. They talk like they’re still in the 1970s and
80s, when you could make an argument that the United States’ position was
extraordinarily dominant. That is over. Vietnam was the beginning of the end,
maybe even Korea, but Vietnam for sure, Afghanistan, Iraq, Ukraine now. I mean,
unbelievable. We are not in a position to do all the bravado, even the wisdom
coming out now that clearly the American government, Mr. Hegseth, Mr. Trump,
thought they could do this thing in Iran in a few days, kill the Ayatollah and
drop a bunch of bombs into Iran, and it’ll all break apart in our way. That is
so catastrophically wrong that it almost takes your breath away. Well for me,
we are living through the end of the empire and that end has been accelerated
and brought closer by everything going on in the Middle East right now. And
because what’s going on from the American side is still premised on the notion
- we don’t have our declining empire - it is making one mistake after another,
which is feeding into the decline of the empire. But that’s what denial gets
you.
That’s what a similar denial in the decline of other empires, the Roman, the
Greek, the Persian, the Ottoman, all of them. The pattern is not that
different. You start the denial, you can’t believe it, you don’t want to
believe it, you decide not to believe it and then you make a lot of mistakes
that drive the point home because they accelerate the decline. When I do
interviews with the British these days, I invite them, “Help us. You’ve been
declining longer than we have.” The American Empire really picked up the pieces
when the British Empire was gone, and the British have had to cope with it for
a very long time. We’re just beginning, and we’re not doing a very good job.
Chris Hedges: I want to ask about the hegemony of the dollar, Swift and the
petrodollar. The Iranians imposing these kind of tolls or taxes, they don’t
accept the dollar. They’re accepting the Chinese Yuan and maybe
cryptocurrencies. I can’t remember. But anyway, there is this active effort by
China, Russia and certainly Iran to free themselves from the tyranny of the
dollar
Richard D Wolff: Yes, and there is, if you allow me, a wonderful illustration
of the Hegelian notion of contradiction. And here’s what I mean. The Chinese,
in particular, understand, to their credit, that they achieved - and by the way
I should premise this, I mean you know me so you don’t you won’t worry about
it, but I have to say it these days, what I’m about to say is not an
endorsement of China. China has loads of problems that would be worth many
programs. This is not an ideal society or anything like that. But, having said
all that, China’s economic growth over the last 40 years is absolutely
phenomenal. There’s nothing in the world that I’m aware of, and that’s my
field, economic history. Nobody has achieved that level of economic growth in
that shorter period of historical time. So, they are aware that this miracle of
economic development, which they can boast about, was achieved at a time of the
United States being the hegemon and the dollar being the world currency. And
therefore, and I’ve had this conversation with Chinese economists, they are
aware that they better tread carefully and slowly because they do not want to
kill something that they know has been part of their success. They are not in a
rush to see the dollar disappear. They think that would be dangerous to them,
let alone to the rest of the world.
On the other hand, as you rightly are pointing toward, they are the competing
superpower economically now in the world. There’s no question. It’s not Russia.
It’s China. It’s not Russia at all. It’s China. All right? And they know that
that’s what’s happening, and they know that the United States gets
extraordinary advantages, both out of the role of the dollar in the world
currency and the role of the dollar in the oil business, which is part of its
role in the world. And they would like some of those privileges, if you like,
the benefits, values that come from having your currency play that role. They
would like it to play that role for them. So, they are both deferential to the
dollar and the US, and that’s the contradiction. They fight against, they don’t
fight against. And you can see it in the advice they gave early on to the
Iranians, if I’ve read my news reports correctly, they are pushing for the end
of the war. They want the Iranians also to make concessions. It’s a little
different from the advice I think Iran is getting from Russia. They have their
differences too. But having said that, the long-term historical process is
definitely one of taking away from the dollar its global role.
And I think you’re going to see, not just Iran, but when the United Arab
Republics announced today that they are no longer members of OPEC, that they
are going to enter the global oil market in their own way for their national
interests, not with the other countries, which is of course particularly
important to Saudi Arabia and Iran as other major oil producers. They were also
announcing they’re breaking away from the system. They may still trade in
dollars, but then again they may not. Or they may split it. They may do some in
dollars but some in yuan. We might even see a desperate Middle East get
together with a desperate Europe and resuscitate the euro. All of these things
are now possible because of the disruption that what is happening in that war
now is causing across the board.
Chris Hedges: And so, if the dollar is weakened or eventually removed as the
world’s currency, I’m assuming that means nobody wants to buy our debt. And
there’s a kind of instantaneous contraction of an empire you can’t afford. Is
that correct?
Richard D Wolff: I think you’re correct the way I would put it just to spell it
out a little bit, the United States is running spectacular budget deficits and
given what Mr. Trump has said: he wants to raise the defense budget up to one
and a half trillion dollars. That’s an increase by my arithmetic of six hundred
billion dollars on a base of nine hundred billion. That’s fifty percent. It
blows the mind. And he also wants to do all kinds of other things, and the
Supreme Court has told him he can’t collect tariffs, at least not the ones he
thought he got. That means, and I know the American budget, there’s not a new
revenue source coming in of any great consequence, and there’s an enormous
increase of expenditure being programmed in. And nobody is saying, wait a
minute, you’re then going to have to go into the global market, borrow huge
amounts of money. You’re a country that already crossed the 40 trillion dollar
national debt level this year, and you can’t keep doing this.
For your audience, the three American companies, Standard & Poor, Moody’s, and
Fitch, that do the evaluation of credit worthiness, have all now, over the last
few years, dropped the credit rating of the United States’ debt from AAA to AA.
Okay, still good, but it’s not the best. There are other countries that have
3A. We don’t. The whole world must understand that we are borrowing more than
ever when we are a riskier bet than ever. And all of the history of economics
teaches us that that situation will produce one or the other of following two
events. One, people will stop lending to the United States, in which case it
can’t run its deficit. And I’ll come back to that in a moment. Or, they’ll keep
lending, but they’ll demand higher interest rates to compensate for the greater
risk of lending to a country that’s got a $40 trillion debt. The United States
is the most indebted country in the world. Nobody’s close.
So, these are very serious. If we don’t have the ability to borrow, or we would
have to borrow but jack up our interest rates, imagine, Chris, a recession
hitting us for the reasons we talked about earlier, and then the interest
rates, instead of going down to offset it, go up because of the global dilemma
of the dollar, we would make the recession worse, but we would have no choice.
Why? Because we now rely on deficits, huge ones.
As I try to explain, the wars we have fought, Vietnam, Afghanistan, Iraq, if
those wars had had to be paid for by raising taxes, we would have seen
opposition sooner and bigger. We would pay for wars by borrowing. The irony is
the rest of the world lends us the money to fight the wars that much of the
rest of the world wishes we didn’t fight. But they are complicit. That’s what a
global economy is. That’s how it works.
The Chinese help the people we fight against while we, every year, send
billions of dollars in interest to China because it’s the second largest holder
of U.S. government debt. So, you and I, our taxes go to China we say is the
great dilemma. But we’re helping them finance their military. And people
shouldn’t think that this is a secret. It isn’t. It’s all public knowledge. But
it is a consequence of the multiple dead ends into which the United States is
proceeding. And you put them together and then you get the scary scenarios that
come out of it.
Chris Hedges: Let’s say Iran continues a prolonged closure of the Strait. They
do let some ships through and Saudi Arabia is able to, through their pipeline,
get stuff out through the Red Sea. But nevertheless, it’s a huge disruption.
Microchip factories in Taiwan have shut down, et cetera. Explain for us the
dark scenario. How could it all go really bad?
Richard D Wolff: Here’s one way. There are unfortunately multiple. I’ll give
you one. Mr. Trump continues to build up and makes one of two decisions.
Either, A, he actually introduces ground troops into Iran against Iran. Or he
doesn’t do that, but instead, bombs wildly their civilian infrastructure. I’m
assuming he’s gotten all the military targets that they set out to get. So
that’s where they’re going to bomb civilians. The Iranians, for their part,
have told us what they will do. A, they will make it impossible for anybody to
go through the Strait of Hormuz. but they will tell their allies, the Houthis,
to close the other strait up at the top of the Red Sea. That, in case people
don’t know, adds another blockage to global trade movements, very, very
important for Asia and Europe particularly. So, it’s not going to be the same
problem. It’s going to be a worse problem, significantly worse economically.
Meanwhile, they send their missiles to do ever more damage on Israel. I don’t
know to what extremes they will go, but extreme behavior has now been an
Israeli hallmark for some years, so we have to assume it will continue. They
will bomb things, ports and other facilities in the Gulf countries.
My assumption then will be that everything is worse, that the shortage of oil
will be worse and the shortage of natural gas and helium and fertilizer and the
plastics that come out of oil. People should be aware. We haven’t felt all of
the impact, even of the interruption yet, because there is storage and there
are some inventory and people turn to that. And they’re trying to find
alternative sources of oil and gas or even shift more quickly to wind and solar
and all the rest. So, there’s a little bit of a slack. But what I just
described is the capacity the Iranians have to eat up that slack real quick or
to neutralize it. And so, it could get very, very bad.
I mean, in the Philippines, if I’m informed correctly, they’ve gone from a
five-day week to a four-day week in both schools and offices and stores. Wow,
okay, that’s a constriction. Now they have to decide, are they going to pay the
workers for five days or four days? If they only pay them for four days, the
constriction of demand and all the consequences of that in a poor country like
the Philippines, who knows how bad that’s going to get? So yeah, we have to now
think practically that three leaders, if you like, the group around Trump, the
group around Netanyahu in Israel, and the group around whoever is exactly in
charge in Iran, have in their hands a decision based on all the pressures that
they face that are contradictory, of course, but we are all at risk in a way
most of us don’t want to face. Hence the appropriateness of your questions. But
those risks are very, very real. As real as ever we have had them to this
point. You can be destroyed without a bomb falling here or anything else by the
accumulation of these interruptions.
And again, I’m always struck when Trump says, “We don’t care. We have oil. We
have fracking to give us oil and gas.” This is so naively childish. American
oil companies are not going to continue to sell oil in this country at a much
lower price than they can get a dozen places in the world. It’s only a matter
of time. That’s what a market system is. That’s how it works. And that’s what
you’re going to see here. We’re not going to escape the price increases if
that’s the way it goes, and we won’t escape deflation if that’s the way it
goes. And either of those are now risks that are real.
Chris Hedges: Are we flirting with what some people who have said, a global
depression?
Richard D Wolff: Yes, absolutely, because all the leading countries in the
world system are wrapped up. That’s what a world system means. Led by the West,
no question, because we were the ones in charge as the 20th century evolved
into the 21st. We’re the country that had the wealth. We set up the colonies.
We developed the colonies in the way we did. They then fought independence, got
their political independence, discovered that didn’t give them economic
independence. Now, they are slowly realizing and acting on that understanding,
but they’re not going to be held back. And so, they are now a real force, the
Global South, and becoming more so. And you put together their demand and what
their history is and where they want to go and what it means to the United
States that it’s a declining empire and what it means to the Chinese, the
Russians, and in a way the Iranians, that they’re sort of hegemon in the wings
waiting to kind of become the next one, perhaps. You have recipe that each one
is busy with their own idea and they don’t have any way to work this out.
World War I was so horrible a war that at least afterwards there was this
effort, the League of Nations, to try to get them to get together. Eventually,
led by Italy and Germany, they left the League of Nations and we had World War
II, which was as horrible again a few years after the earlier horrible, and
then we tried the United Nations. And now we see the United States basically
withdraw from the United Nations in many formal ways and in informal ways even
more. So, you have very little in the way of an even an effort to sit down and
try to work out a way that you could accommodate the United States as a
declining empire without it having to threaten the whole world and accommodate
the Chinese desire to grow without that threatening the world. I don’t know if
it can be done, but that we’re not making the effort, that is so terrible a
comment on the human race that I don’t go there.
Chris Hedges
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