Original subtitles

I remember in 2008, Paul Volker, who used

to be the chairman of the Fed, not a left winger,

but he was brought in by Barack Obama to oversee

a project for defanging the financial sector.

It didn't go down very well with the financial sector

as you can imagine, but there was this remarkable conference

in which all the representatives

of the financial community were there

and they were looking at Paul Volker as the devil

because he was there in order

to impose restrictions upon them.

And their arguments were all about the financial innovation

that their banks were performing

and what a great service to the world that was.

They were warning them that if you constrain us,

then all this financial innovation goes away.

Paul Volker listened to them,

and then at some point he got up

and he said, "I'm 80 something years old.

I've been in banking all my life, not just central banking,

but private, commercial banking.

The only financial innovation

I've ever come across was the ATM."

"Everything else was differently bundled forms of debt

that you are producing against the interests of society."

That was a very interesting comment coming from somebody

that was in the banking community all his life.

In 1944, President Roosevelt convened

in Bretton Woods the conference

of representatives of different states.

It is quite interesting that within a few weeks

they designed the post-war financial

and economic system, which oversaw the the golden age,

the golden era of capitalism.

What I find fascinating is that the President

of the United States of America only made one condition

regarding who attends that conference.

Remember, Roosevelt made sure

that in the Bretton Woods Conference, which

designed the post-war... the first post-war phase

between the 1940s

and 1971, 1973, he had stipulated

that one kind of person should not be allowed into

the Bretton Woods Conference.

You know who these people were? Bankers.

Not one banker attended the Bretton Woods Conference,

and that was at the explicit order of FDR. True.

So you had boring banks

between 1944 and 1971.

This explains to a very large extent

the serious reduction in inequality.

The difference between what a CEO made

and what a janitor made collapsed

to unprecedented levels, low levels,

and that had to do with the fact that

the financial genie was put into the bottle.

The Bretton Woods system banned the transfer

of capital from one country to another without permission,

and totally did away with the right of financiers to

send money around the world in search of means

to escape taxation.

They were not in a position to gamble with

people's deposits.

This is why the Bretton Woods system was so very hated by bankers.

While that system was viable, you had the highest level

of growth together with the lowest level of unemployment

and shrinking inequality. Alas,

that system could not survive,

and the United States just jettisoned it

famously on the 15th of August 1971,

and all hell broke loose.

Most people believe that money is printed

by the State via the Central Bank.

Well, it is true that the money in our pocket, cash,

is printed by the Central Bank,

but that only constitutes about 3%

of the money doing the rounds.

So, when you get from Barclays Bank, from ING,

from whichever bank a loan, 50,000 quid,

where is the money coming from?

The money is conjured up from thin air.

Somebody just typed 50,000,

somebody from within the bank. This is why 97%

of the money in an economy

has nothing to do with the state.

It's produced by the banks. They just type it in.

You pay interest to the bank. The bank has a profit.

Imagine the power that this gives a banker.

A banker can create money out of thin air and earn a profit.

This is more or less like having a free ATM in your own

living room producing money out of the wall

but, actually, it gets worse.

With financialization,

this process of creating money is turbocharged.

Capitalism is a wonderful beast with a unique capacity

to undermine itself, to be pregnant with its opposite.

Not only is it producing immense wealth

and immense poverty at the same time

but, when it is stable, its stability breeds instability.

When financiers place all sorts of bets

and everything works out

and they make money, they become increasingly greedy, and

therefore they keep taking new risks

that eventually blow up in their face.

Now, in 2008, the whole thing came crashing down

but because the financiers have so much power in society,

when the crisis happens, they also have the political

weight to ensure that their misdeeds,

the losses that they have created,

are shifted onto the shoulders of the weakest

of the proletariat, of the precariat, of those

who did not have the political power to oppose them.

The result is austerity for the many.

Economics is really simple. I've got

£10 in my pocket.

If I go out and buy three pints of beer in Cambridge,

I'm probably borrowing money.

If I carry on doing that, then I'm going to run out of money,

and I'm going to go bust.

It's not difficult guys to sit down, work out

what the country needs to do,

and work collectively together.

Because the country does not operate as your budget

does. We have a magic money tree.

But why not?

Why not?

Why not? In the country, total

expenditure equals total

income. In your life,

you have a wonderful independence

between your expenses and your income.

So, when you cut down on your expenses,

your income doesn't cut... is not cut.

But for the country as a whole, if the country

as a whole goes into a major savings spree,

then its total income is going to come down.

So, your personal life is not a good model on which

to base planning.

Economists do not know many things about the economy.

We're not real experts in the economy.

There are a few things we know.

One is that you cannot overcome a

bankruptcy through more loans.

And the other is that austerity never works.

Hi. You went on Question Time -

it was probably about six weeks ago -

and there was a bloke in the audience

and he tried to start a parable about having £10 at

the end of the week and going

to the pub and buying four pints,

and you explained to him correctly that his

personal life wasn't a very good model

for economics. But his personal life has been used

as a model for economics by, particularly in this country,

by the Conservative Party.

I just wanted to ask why you thought the center-left

and the left in this country

and in Europe has failed so spectacularly really to

debug that myth. You're

right.

The main point he was making is one which

is dominant around the world

to this day. It's dominant in the Republican Party

in the United States.

It's dominant even in the socialist parties of Europe.

The idea of belt tightening... of austerity.

Austerity is a very specific macroeconomic policy.

It is the policy of trying to

prevent debt from rising, even forcing it to fall,

during periods of recession

by cutting on government expenditure and increasing taxes.

That's austerity. That has never worked and never will work

because it's a law of nature that it cannot work.

Pigs are more likely

to fly than austerity is likely to work.

The problem is exacerbated, the problem of falling incomes,

by an attempt to cut down.

So, if tonight you don't have a pint, you abstain

from having a pint. How much is a pint these days?

£4? Okay, let's say £4.

You've saved £4. Your income doesn't

shrink, doesn't increase.

Stays the same. In an economy like Britain,

total expenditure equals total income.

So, my expenditure is your income

if I'm buying something from you.

Our total expenditure equals our total income.

Suddenly there is a complete breakdown in the

independence between expenditure and income.

What happens during a crisis is this. Corporations

and households seeing that now they're in trouble,

they stop spending. The private sector as a whole,

families, individuals, companies, spend less.

If suddenly you panic

and you try to apply the principles of austerity

that work at the private level, you try

to apply this at the governmental macroeconomic level,

what happens is while private expenditure shrinks,

public expenditure shrinks. What's the sum of these two,

private and public expenditure? It's total income.

So what should we do instead of austerity

if we are serious about cutting down on debt

and on deficits? The answer is, stimulate

investment. Periods of recession are typified by

lots of losses and debts

but at the same time savings that are too

terrified to be invested into productive activity

because those who own that money fear

that if they invest it in productive activity,

then there won't be enough demand for those goods

and services that are being produced

because the rest of society

doesn't have enough money to buy them.

We must remember that, at times of recession,

we are not missing out on money, on people, on skills.

They're all there. The money is there...

idle savings. The workers are there waiting to work,

if only somebody will gainfully employ them.

What we have is a massive coordination failure.

That failure can only be overcome

through the political system.

I'm astounded to hear neoliberals telling us

that we just can't afford a welfare state.

We cannot afford all the public goods

that society absolutely needs.

Think of 1945 in the United Kingdom.

The country was coming out of a war.

There was scarcity everywhere, rationing,

and yet the country managed to finance the most spectacular

welfare state creation process, including pensions,

including the National Health Service.

Tomorrow, there will come into operation

the most comprehensive system of social security

ever introduced into any country.

When the political will is there, the money becomes

immediately available as a result of bringing together

of economic forces that can contribute

to the generation of those public goods.

After 2008,

when the financial sector had created this massive crisis,

it was treated to a version of socialism - the bailouts

that the public was providing

to the bankers - while the public was

being treated to austerity.

What was effectively happening at the time was a cynical

shift of the losses

of the financial sector onto the shoulders of the poor.

Austerity is another term for class war against the poor.

That's what it is.

I grew up in a Greece where you could lose your life

or freedom because you read a book that was banned.

My greatest fear is a fascist Europe.

We had it in the 1930s, we may have it again.

The forces of fascism are feeding off the fragmentation

of the liberal establishment. Greece

was the canary in the mine.

It should be seen as a warning sign that the galleries

of the mine were about to collapse. The powers that be chose

to blame the canary, not the mine's architecture,

not the methane gas that was about to blow up the mine.

And the result is

that now we're facing a postmodern 1930s across Europe,

across the world. Our generation

has to study very carefully the Weimar Republic.

John Maynard Keynes wrote a beautiful piece at the end

of the Great War in which he admonished the winners for

imposing harsh reparations upon the defeated Germans.

So harsh, that it was clear

that they would never be able to repay them.

And Keynes's concern was

that the moment you impose unsustainable debts simply

because you have the military power to do it

or the political power to do it,

not only are you destroying the life prospects

of the vast majority of the people in the defeated country,

but you're also creating economic stagnation

that will only foment political forces, social forces,

that will result in another great war.

Moreover, during the 1920s

and early 1930s in Germany,

the liberal establishment at the time

was committing one error after the other.

It was a comedy of errors.

It was constantly shifting the burden of the economic crisis

onto the shoulders of the many, of the disenfranchised,

of those who were finding it very

difficult to make ends meet.

And at the same time, while it was being genuinely

threatened by the monstrosity of the Nazis,

the Weimar Republic was far more preoccupied with the task

of not allowing progressives, genuine progressives,

to gain any kind of influence within German society.

The result was Nazi Germany.

It seems to me that the liberal establishment today

is struggling in order to emulate the Weimar Republic.

Yes, we can.

We are in the middle

of the worst economic crisis since the Great Depression.

So, at a moment like this, the last thing we can afford

is four more years of the same old, tired,

worn-out economic theories that say, as long as we give more

and more to billionaires and millionaires

and big corporations, prosperity will somehow

trickle down on everybody else.

These are the economic theories that got us into this mess.

They have not worked. It is time for a change,

and that's why I'm running for President

of the United States of America.

Obama rode into the White House on a tsunami of

expectations that he cultivated,

and which he spectacularly failed to honor.

In the one and only meeting I had

with Barack Obama in the White House when he was president,

he felt the need, possibly

because he was talking to a left-wing finance minister,

without being prompted to justify himself, he said

to me, "Oh, Yanis, you know, when I was first elected,

I had to save the bankers,

and this was really very unappetising.

It was like drinking a glass of poison."

So, that's his excuse for what he did.

You've got to save the banks.

They are like the arteries of the capitalist system.

He was right on this but he didn't just save the banks,

he saved the bankers.

These two are not one

the same thing. In 1992, when

Sweden's Banks collapsed, in 1998

when South Korea's banks collapsed, the states of Sweden

and South Korea saved the banks,

but they got rid of the bankers.

They nationalised the banks. They cleansed the banks.

They made sure that the practices

that had brought about their bankruptcy

were never to be repeated.

Instead of doing that, he brought into the treasury

people like Larry Summers

and Tim Geithner, who were the ones

who had unshackled Wall Street, and allowed them to run riot

and effectively, in my view, bring about the

Great Crash of 2008.

He brings these people back in with one

remit: to refloat the bankers,

and they spent around $1 trillion without

even this being transparent,

the so-called Geithner-Summers plan, which was

a dastardly plan - very clever

but very dastardly at the same time.

This was his window of opportunity

to bring back the New Deal into American politics.

He misses it.

The combination of austerity for the many

with this restoration of Wall Street

and illiberalism when it came

to never closing down Guantanamo Bay,

introducing increasingly authoritarian powers

for the national security apparatus,

if you put all this together, you end up with Donald Trump.

We will have strong borders and we will have the wall

and Mexico will pay for the wall

Mexico will pay for the wall, believe me.

Donald Trump

was created by the Democratic Party's failure to perform

the duties that a New Deal administration should

and could have performed

after 2008.

In 2016, for the first time in 50 years,

more than half of American families

could not afford the cheapest new car on the market.

When I say that they couldn't afford it,

not only did they not have the money, the $14,000,

but they did not have the credit worthiness

to borrow the money to buy that car.

In the United States, if you can't buy a car,

you can't get a a job,

you can't take your kids to school,

you can't go to the supermarket.

There is no doubt that Trump weaponised racism

and the 75 million that voted

for him are either tolerant of racism or actively racist.

But people are not born racist.

They're made racist.

They're made racist by

circumstances not of their choosing.

We need a humanist embracing of the Trumpists,

of the supporters of Trump, not to vilify them

but to treat them like human beings who

have surrendered to despair.

Nothing is going to change until and

unless we can talk to people who have been deluded,

who have been oppressed, who've been suppressed,

who've been exploited, you know,

and who've become effectively enslaved in a machine

that uses them as fodder

to produce value for the very, very few. You have to speak

to their concerns

and you've got to do it in a way

you have to engage with them.

Fascism only rises up during moments of crisis,

capitalist crisis, to be precise.

Fascism is all about harnessing the discontent

in the people's hearts to grab power

by strongmen, by authoritarians like Mussolini,

like Salvini, like Donald Trump,

and then use this power

to ingratiate themselves

with the financiers, with industrialists.

We have the legendary Wall Street genius, Wilbur Ross,

here. He is our Secretary of Commerce.

We have Gary Cohn, who's the President of Goldman Sachs.

When you get the president, this is the President

of Goldman Sachs. Smart. And I love all people, rich

or poor, but in those particular positions,

I just don't want a poor person. Does that make sense?

Fascism never became powerful

by promising war,

the Gulag concentration camps, pogroms.

It combines the rhetoric of nationalism, jingoism, racism

with genuine

or genuine-sounding concern for the weak.

As long as the weak are the right kind of people.

I'm going to deliver jobs,

safety, great education, help small businesses to thrive and

grow. We must

remember that Mussolini was the first

to introduce universal pensions

in Europe, a welfare state. Too

many Americans are living in terrible

poverty and violence.

We need jobs and we're going to produce those jobs.

They look into the eyes of those disenfranchised people,

desperate people, and they promise them their pride back.

They say to them, we will make you feel good about being

Greek again, about being American, about being German,

about being white, about being Italian.

What the Brexit campaign did is we reached those people

who've been let down by modern global corporatism.

We reached those people who have never voted in their lives

but believed by going out and voting for Brexit

they could take back control of their country,

take back control of their borders, and get back their pride

and self-respect.

If the ordinary decent people are prepared to stand up

and fight for what they believe in,

we can overcome the big banks.

We can overcome the multinationals.

They promise them that they will look

after them, that they will shield them from the vagaries

of austerity on condition

that there will be no trades unions,

that you'd never contest the authority, our authority,

or the authority of the industrialists,

that you'll simply follow

the patriarchal authoritarian

social norms that fascists are building up

in order to create solid foundations for the reproduction

of their authoritarianism.

That is fascism. That's

how it grew up in the 1920s and 30s,

this is how it's growing up today.

Really... you know, I campaigned against Brexit

and yet the contempt

with which radical left-wing, good people,

my friends

who were on the pro-remain side, the way

with which they treated contemptuously, people who had voted

for Brexit, that really upset me.

And until and unless younger, more liberal,

more urbanite and more upwardly mobile leftists

can start paying their dues

and be more respectful to those who have been held behind

and left behind in the Rust Belt areas,

or in the Clacton-on-Sea areas

and the Bournemouth areas of the world,

it can't work. I'm all for, for instance,

bringing down the symbols of

institutionalised racism,

whether it is changing the name of Yale University

or bringing down a statue in Bristol.

I don't have a problem with that.

I don't mind it. But what we must understand is

that when somebody is about to lose their job in a factory

or they've lost it, it really offers them no succour,

it offers them no satisfaction to hear

that Yale University now is called something else.

What do you make of those politicians whose reaction

to the rise of fascism is to concede ground?

The so-called liberals who were in power

or close to power at the time of the fragmentation

of the liberal establishment order, fragmentation

that was due to the inane policies

that they were pursuing while in power, panicked.

Started competing with the racists

and the fascists by offering light versions of racism

in juxtaposition to the fully blown versions

of racism from the right.

So you had François Hollande,

who was cuddly socialist... social democrat up

until he became president of the Republic in France

and then succumbed to the austerian logic

of the European Union. When his regime was collapsing

and the ultra-right was increasing its strength,

he introduced in the National Assembly of the people

of France, legislation against migrants

that allowed the state to withdraw the passports

of the children of migrants

who had become naturalised, and citizenship.

A measure that even the right would not have contemplated

up until recently. When Hillary Clinton is

advising European liberals to be tougher on

the migrants and on the refugees so as

to stem the rise of xenophobia,

she's following the same path of xenophobia-lite.

But of course, xenophobia-lite is never

a bulwark against xenophobia.

It simply feeds the beast.

It makes the Le Pens of the world, the Trumps

of the world, the Kurzes of the world,

the Salvinis of the world feel that they're onto something... feel

that all they need to do is up the ante,

increase the toxicity of their racism. Because

however much to the right Hillary Clinton and François Hollande

and Emmanuel Macron moved,

the alt-right will move further to the right.

The fascists do not need to win office to be in power.

Simply by existing, simply by being, simply by

altering the agenda,

they can shift the whole of the spectrum of politics,

the political center, towards increasingly right-wing

and racist narratives

and policies without ever winning office.

And this is a truth about fascism that

I think should keep all of us awake at night.

We are in a church, so let me tell you a story

that has a Christian dimension.

His name is Shabbir. He comes from Pakistan.

His great move that completely wrecked his life

was to come to the aid of his neighbour.

His neighbour was a Christian,

a Christian family in a town in Pakistan.

The Islamists petrol bombed the house

of the Christians in the middle of the night

and Shabbir, who is a Muslim, went out and helped that family.

The next day, he was branded an apostate

for having helped the Christian family.

His brother was killed. He was a businessman,

he had a rent-a-car business.

His cars were burned down,

and then he had, in order to divert the attention

of the Islamic fundamentalists away from his family,

he took his elderly father

and walked across Iran into Turkey.

In Turkey, he was at attacked by robbers. His father died.

He carried his father's corpse in his arms.

Policemen attacked him. He managed to escape.

To cut a very long story, an odyssey, short,

he ends up on the boat from the Turkish coast

to Lesbos.

The boat sinks. There were 70 people on board. 35 died.

He managed to just about survive, to escape with his life.

He ends up in Mitilini in Lesbos, and he applies for asylum.

This person whose life was wrecked

because he tried to help a Christian neighbor,

and what does Christian Europe do? In the context

of the EU/Turkey treaty,

he's now waiting extradition back to Turkey.

Now, you only have to tell the story in order

to capture the horrors

that is the European Union/Turkey deal

and this humanitarian refugee crisis.

Civilised Europe is using the Mediterranean Sea as a means

by which to drown migrants

and other refugees trying to make the passage to Europe so

as to deter more of them from making the crossing.

The moment Europe behaves that way, it loses the right

to call itself civilised. It becomes barbaric

and, in the end, such barbarism turns against its own people

because it's a very short step

from turning a blind eye

to the way in which you are using other people as means

to an end and accepting that you can be used

as a means to an end.

Borders are a scar on the face of the earth.

The only way to beat this project

of creating fear, terror in the mind of the natives

about a refugee crisis is to confront it head-on.

We need to take the courageous position, let them in.

I think it should be a slogan for

all progressives across the world.

Let them in.

Globalisation was a process of liberating capital.

If you want an image of globalisation,

take the US-Mexican border.

It prevents any movement of humanity,

while at the very same time, it's got large openings

for huge trucks to be going up and down, in

and out, ferrying commodities while

across the ether through electronic means, trillions

of dollars are going backwards and forwards.

That's globalisation. Internationalism is

a project of reversing that, of liberating people

and constraining capital.

Our freedom as human beings

is oppressed by the freedom of capital

to move about unimpeded.

So, internationalism is all about going back

to the original Bretton Woods idea

that the financial genie must be placed back into its bottle,

that banking must be boring,

capital flows must be politically controlled,

money is socially produced

and must be controlled socially and democratically.

That is internationalism.

Of course, it is a major challenge to the model

of society which has been bred under globalisation.

The establishment has always been in denial. The worst

were the Social Democrats, the SPD in Germany, the

Parti Socialiste in France, the PASOK people in Greece.

They were the ones who used the name of social democracy

in order to do favours to the bankers

and in order to shift all the pain onto the innocent

victims of the financial sector.

Once you have the political centre,

whether it's the centre left

or the centre right, participate in this

crime against logic,

the result is infinite discontent.

Out of infinite discontent and hopelessness,

one thing grows. Xenophobia, antisemitism,

Islamophobia, misogyny.

It is a mistake to believe

that there is an almighty political clash

between the establishment and the populists.

I think of them as accomplices. They need each other.

Le Pen thrives on the failures of Brussels.

Farage would not have existed without the inane handling

of Europe's inevitable crisis.

And at the same time, the establishment needs Le Pen

because what is the only argument today for voting

for somebody like Fillon

for God's sakes. Vote for him otherwise

Le Pen will come in. So, they need each other. They are

accomplices. The toxic deception is that there is a clash

between the so-called liberal establishment on the one hand,

Mateo Salvini, Le Pen and so on

on the other hand. Nothing could be further from the truth.

Macron, Juncker and Merkel draw their authority

from the fact that they are facing Salvini

and they're facing Le Pen.

Macron would never have been President without Le Pen.

Juncker would never have a leg

to stand on if you could not say, if it's not me,

après moi, Salvini.

What you see there is an evil dance

between partners.

Comrades in arms. The inane austerity

politics create

greater economic failure.

The greater the economic failure,

the more austerity you need in order to keep a lid on it,

which means you need more authoritarianism.

So, there is this vicious cycle, process

of positive reinforcement, between authoritarianism,

austerity and economic failure.

The Weimar Republic lives on.