Nima Trump Eco Policy Feb 27 2025
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, February 27, 2025 and our friends Richard Wolff and Michael Hudson are back with us. Welcome back.
RICHARD WOLFF: Thank you. Glad to be here.
NIMA ALKHORSHID: Let's get started with what's going on in Germany. People wanted some sort of change in terms of domestic and foreign policies of Germany. They ended up with the same sort of policies. New names got the same sort of policies. How did you find the changes in Germany? Let's get started with Richard.
RICHARD WOLFF: All right. Here's the things that struck me, that the three parties that represent in my mind, the conventional German political establishment, that is the conservatives, which is an alliance between basically Northern Germany and Southern Germany, the Christian Democratic Union and the Christian Socialist Union. All those words have lost whatever meaning they once had anyway, but they are the conservatives more or less. If you want to think from an American perspective, you might call them the Republican Party or even the Republican and centrist Democratic collection of people who have been used to for a long time exchanging the role of who's the president, who's the second in command. But it is musical chairs and most people, including most Germans, long ago lost interest.
They were the government under Mr. Schultz, who's now gone. But as you rightly suggest, it's the same people, it's the same program, the same parties, slightly different, and I mean slightly different faces. And the interesting thing about them is if you put them together, the Christian Democratic Union, the Christian Socialist Union, the Social Democrats, and the Greens, we need to remind people that in Germany the Greens have none of the left-wing aroma that Greens in other parts of the world cultivate and want to have. The German Greens split years ago, and the people who have been green ever since are very much eager to be parts of the government run by the conservatives and the social Democrats. So they really belong together.
And the interesting thing is over the last four or five years since the last federal election in Germany, all three of those parties lost dramatically. Huge portions of their voting base abandoned them. That's what we just learned from last Sunday's election.
Who picked up? Basically, and this is so important because it's so similar to what is happening in other Western capitalist countries. The voters who left the old coalition were not enough to bump them from power. That's why we're seeing the same old, same old again with a couple of new faces. Frederick Mertz and instead of Olaf Scholz. Okay, but not much difference when it comes to it. So they still had enough, roughly half the vote in Germany, roughly, to be a government. Okay, so that's why we're going to see, in all likelihood, a government of the Christian Democrats, the Socialists, and the Greens, which is what we had before. But they all lost votes, the Greens particularly, but all of them.
Those votes either went to the right with the Alternative für Deutschland, English translation, Alternative for Germany, which is a right-wing party that is remarkable in three ways. As a political program, other than getting, being hostile towards immigrants, they don't really offer all that much. Number two, they have inherited the Nazi left, whatever's left of Nazism in Germany finds its way into that party, or at least a large part of it does. And the third interesting thing about that party is that it is overwhelmingly based in the eastern part of Germany.
In other words, in that part of Germany, that used to be a separate country, East Germany. And that was only unified a relatively short time ago. Those people were all involved, basically, in something called the Socialist Unity Party, which was the old Communist Party of eastern Germany. And that's gone, or largely gone. And these people have felt in the east that they were very much misled about the unification of Germany. Very important to understand.
They were led to believe that by unifying, East Germany would enjoy the standards of living and all the rest of it, that West Germany had reached. But that we all have to remember, West Germany was given enormous financial support, because it was crucial to the West, in the aftermath of World War II, to isolate Western Europe from the infection of Socialism and Communism. I want to remind people, after World War II, the first government of General Charles de Gaulle in France had several members of the Communist Party in the Cabinet of France. That's how powerful they were.
The backbone of the resistance to the Nazis in places like France, and Italy, and elsewhere, were communists and socialists. And so they emerged from World War II with a level of popular support that frightened people in the West. Just like the fact that Russia was crucial to winning World War II frightened people in the West. So they pumped a lot of money into Western Germany, giving it the ability to make a politics that said, "Hey, you guys in Eastern Germany, you may have communism and socialism and, you know, guaranteed childcare and all the rest of it, but we have a higher standard of living." Which they did. I mean, they did. And the Easterners then believed, after decades of propaganda, that if they unified with the West, they would become, like West Germany, rich, comfortable, at least relative to other working classes and relative to themselves.
If I had time, I'd talk to you about East Germany. It had a very hard time after World War II, because it was part of the Eastern European Soviet bloc. And yet, inside Russia, there was understandable hostility towards Germany, which had subjected the Russians to an unspeakable destruction during World War II. People should know more Germans died, excuse me, more Russians died than any other nationality. That's how bad that war was. So helping East Germany was not a high priority inside the Soviet Union. And it showed.
Anyway, they made a unification, as I think many people will remember. And the Easterners expected to have the jobs, and the job security, and the incomes, and they never got it. Because for the West, all that Eastern Europe, Eastern Germany represented, was cheap labor. Those people had been getting much lower wages. They were used to living in that way, with low individual wages, partly because they got a lot of collective consumption.
The socialist government there provided education and health care and subsidized transport and all of that. And so these Eastern folks were used to low individual wages. And so the capitalists of the West said, "Okay, great. We'll either put a factory in East Germany, paying low wages, or you can come here and we'll pay you low wages if you migrate into the West."
Long story short, you deeply betrayed your fellow Germans. Remember, the East Germans speak the same language, have the same ancient culture, etc. Americans don't know, but Berlin, the capital, was in East Germany. It used to be the capital divided, but Westerners had to drive through East Germany to get to Berlin because of where it's located. All right. So this anger and this bitterness turned to the political establishment in Germany naively, thinking that they could appeal either to the Christian Democrats or to the socialists to get what they had been led to expect they would get. But they couldn't get it. Neither the socialists nor the Christians were prepared to do anything like what would have had to be done to deliver on the promise. And so…
NIMA ALKHORSHID: Yeah, we've lost Richard. Michael.
MICHAEL HUDSON: Well, what he's describing…..there were two groups that turned away from the centrist parties. East Germans are quite right. Western Germany, as soon as there was unification, Western investors came into the East and tried to begin buying up property, housing at a very low price, raising the cost of living in East Germany. But most of all, they sent managers from West Germany that were the least competent. I'm most familiar with what happened in music and the arts. I went to a show, a performance of Wagner's Ring in Dresden. And it was the worst staged opera that I've ever seen in my life. And everybody was commenting on it, the heads of every public authority were brought in from West Germany by the least competent members. So the economy, there was hardly any investment by the West in East Germany. And the result is the local towns and villages are emptying out. And that explains it.
But the other group that's moved away from the centrists, as much as the East Germans are the young voters, voters in their 20s and early 30s. They have been moving away from the Christian Democrats and the centrist parties, because there's a real unemployment problem there. And the enormous housing problem that's caused by the rent. In West Germany, there was no attempt to make money by real estate.
You know, in America, and other countries, how having real estate is the way in which the middle class is gained. In East Germany, you could be the official designated landlord in the building, but you had to agree to essentially be a servant of the tenants. You didn't make any money by being the landlord.
The real estate was hardly worth worth anything. And the result is that hardly anybody wanted to be a landlord, they wanted just to be a tenant. Rent was kept very low because real estate and housing was not financialized. It was treated as a public right, a public service. And that attitude, amazingly enough, survived after the wall came down. And there, I've spent a lot of time in East Germany. I've met with the heads of all of the major parties there at their conferences, annually, and the feeling that, it's so different from the United States, that you could hardly imagine the fact that number one, the East Germans never thought of real estate as something that would become a major cost. And in fact, the housing costs in Germany are still among the lowest in Europe. And also, the idea of equality between men and women in East Germany were such that most East Germans don't actually get married, partly because of the tax situation there. But also, there's no idea that the man has to support the wife, that it's, the whole social structure is completely different there.
In the West, there is a demographic shift, as I said, the young people do not accept the centrists. And when you get down to it, what is a centrist? It means you don't disturb the status quo. But the status quo in Germany is polarizing. And so to be a centrist, the Christian democrat or the social democrat means you don't do anything to stop this economic polarization that's tearing Germany apart. That's now been aggravated by the deindustrialization and the joining the United States war against Russia.
The future leader, of Germany, Merz, the Christian democrat is the far right, right wing, pro-war leader. He says we've got to cut back social spending, and we've got to increase the military spending very sharply. We've got to send troops into Russia. And you can't imagine the bellicosity that was coming out of the East Germans. Merz is very much like Annalena Baerbock, a hawk. And it's almost as if the leadership of Germany really wants not only to block imports of gas and block trade with Russia, block trade with China, but to become totally dependent on the United States – a suicidal economic attempt.
How on earth are we supposed to explain this?
Richard and I are expected to make sense of the situation and explain to people how somehow this all expresses some inner logic. But the inner logic is so illogical. So out of sense with the time. So anachronistic, as it were. So tunnel vision that, I almost, I'm afraid that when I describe how irrational it is, people think, well, it can't be that crazy. But it is.
RICHARD WOLFF: My apologies. I got cut off for some reason. I'm sorry about that.
NIMA ALKHORSHID: Richard, it seems that your connection still has some sort of problems. But by the way, Michael, could you please check out your mic if it's properly connected?
MICHAEL HUDSON: Is this much better here? I forgot to put it right in front of me.
NIMA ALKHORSHID: Yeah. Yeah. Yeah.
NIMA ALKHORSHID: Richard, go ahead.
RICHARD WOLFF: Okay. Before I got cut off, I tried to explain a little bit why the sense of betrayal on the part of the working class in Eastern Germany ended up with them appealing to the major parties in Germany to correct this situation, to deliver on the promises that the leader of Germany, Helmut Kohl, at the time, made to the East when the unification was achieved.
That was supposed to have been delivered to them by the East German Angela Merkel, who was supposed to therefore represent the realization of the promise. When they felt betrayed, they turned to the conventional parties and they got nothing. And so they decided in large numbers to move over and join something new, the alternative. And the alternative for Germany cashed in on this situation by playing a game. And the game is similar to the one Trump plays here.
The bitterness of betrayal of the German working class in Eastern Germany was refocused away from the German politicians who had, in fact, betrayed them. And was shifted on to the immigrants, on the theory that the immigrants were getting favorable treatment by those West Germans, because they were getting the jobs and incomes that had been promised to the East Germans. So they turned because it's easier, right? It's easier to kick down than to push up against those above you.
So the working class elements in Eastern Germany, to a considerable degree, vented their anger on the immigrants. The immigrants could be blamed for taking the jobs and incomes that had been promised. Now, statistically, when you look at it, that's, that's a false argument. But it plays.
It's like here in the United States. We are a nation of 330 million people. We have undocumented immigrants, maybe 10 or 11 million people. There's no way on earth that those poor 10 and 11 million undocumented immigrants account for the economic difficulties of a country of 330 million. It's ridiculous. It's so ridiculous, it's left out of the conversation. And that creates the open door for demagogues to come in and tell this fanciful story, repeat it all down the stairs. And even though you have the spectacle of Donald Trump coming down a golden escalator, telling you how awful Mexicans are, instead of that being a ridiculous symbol, it touches a raw nerve.
It's a little bit like last week, watching Elon Musk prancing around the stage with a chainsaw in his hand. What an image. He is destroying the lives of tens of thousands of public employees. I mean, what, what a worse image, you know, for people who live in a world of advertising. This is a mistake on a scale that justifies Michael Hudson saying there's a level of irrationality flying around here that has to be factored in because it is so stark.
Only having said that, there's another part of eastern Europe, of eastern Germany that didn't go to the alternative anti-immigrant. It went to the left. That's very important. Die Linke is in part strong in particularly in a number of states in eastern Germany that should not be overlooked because some of those people learn something in their half century of communism and they are supporting left-wing parties. And then Michael is right. The young people overwhelmingly, the largest demographic supporting Die Linke was the 18 to 25-year-old people, the youngest. Well, and in terms of the future of Germany, that is a screamingly important statistic.
So here's a crude summary. Roughly half of Germany is still voting for the old traditional parties, Christian, socialist and green. A little more than half and a little less than half are split between the right wing and the left wing. And you would see it more obviously but for the fluke, that German law says you can't get a seat in the parliament unless you score at least 5% of the vote. One of the two major left-wing parties, Sahra Wagenknecht, built around the most successful and popular politician that the left has and has had for some years in Germany. She got 4.97% of the vote. She missed the cutoff by three tenths of 1% of the vote.
MICHAEL HUDSON: 17,000 voters.
RICHARD WOLFF: Yeah. I mean, incredible. And so she will be outside the parliament. But let me tell you something. Given that where Germany looks like it's going, it may be one of those situations where not being in the parliament is the best thing she could have happened to her in terms of the next election. Because there's going to be a level of anger and bitterness and disaffection in Germany if they go in the direction Friedrich Merz is suggesting, that is going to accrue even more voters, both to the Alternative, but also to the Die Linke and/or Sahra Wagenknecht. Because the, look, let me try to answer Michael's question. Where is Germany going to go? Germany depends either on Russia for cheap energy or on China for a market. And both those doors are closing one way or another. Where is Germany going to go?
The rest of Europe has its own problems. They can't do much more than they've already done. And they already are sucking up to the United States, who's not going to give them any more because the United States is no longer able to support or afford largesse. That's what Mr. Trump is trying to show everybody. If you've been a friend of the United States, if you've trusted the United States, and let me be, let me be real clear with people. The two countries that have most trusted the United States are not the Europeans. It's the Canadians and the Mexicans. They have made their economies dependent on the United States more than Europe. And Mr. Trump is turning on them. And if you're a European leader, you would have to be crazy. And they're not that crazy. Not to see that if he's prepared to savage two countries on his border, imagine what he's prepared to do with the Europeans that are an ocean away. They have nowhere to go there. If they say they're going to build up their defense, what? They're going to compete with the United States? That's ridiculous. They're going to compete with Russia and China? That's equally ridiculous.
It's way too late for the Europeans to be a third force. They could have, they should have, but their disunity killed them. The irony is the nationalism that brought Europe out of feudalism to dominate the world, that same nationalism is now taking Europe into oblivion. If they succeed in keeping out immigrants because of people like Merz and Macron and Meloni in Italy. The Eurostat, the most important statistical agency in Europe, recently issued a report. If you get rid of the immigrants by the end of this century, which is now a quarter old, by the end of this century, Europe's population will have dropped from 450 million people to 295 million. In other words, one third of Europe won't be there. They will be dead and gone. That's the future Europe is looking at.
That's why they look to Michael Hudson to be crazy, because in a certain way they are. They don't see which way to go out. And so they intensify the mantra, the songs they learn to sing all their lives, which are Russia is terrible, China is irrelevant, and America is the leader of the world. That's the only song they know. And when it looks as bleak as it does for Europe, you sing even louder in hopes of drowning out what your brain is telling you. You've got to make fundamental changes or you're gone from the historical picture. Remember, Europe colonized the whole world. There's a special indignity for that part of the world to now fall into the position where by the end of the century we may be looking at Europe with the same sad view that we now devote to Africa.
MICHAEL HUDSON: I'm going to say one word about the left there since you mentioned it. Sahra Wagenknecht was really the head of the Linke party for often. Now, I've addressed the annual conference of the Linke. I've had long lunches with Sahra, so I have some familiarity with them. Sahra broke from the Linke party because it's not really the left anymore in the sense that Richard and I describe the left. It's become more like the party trying to be a party of the professional managerial class.
The only politician that has a truly left-wing economic logic, like Richard and I have discussed, is Sahra Wagenknecht. And that logic enabled her at the beginning of last year, her party only began in 2024, really. It began with a bang. She made, I think, 11% of one of the local elections in East Germany, 8%. Of course, she expected to be able to be in Parliament and have a voice. What happened? Well, in practice, she did what Bernie Sanders was doing in the United States. She, in order to consolidate her position in the East German cities where her party was well represented, she cooperated with the Christian Democrats and with the Social Democrats. And the effect was to look at her like people now look at Bernie Sanders and AOC.
They felt that she was compromising and she didn't achieve the rhetorical or, as some people might say, populist talk that the Linke politicians had. And the Linke party did not adopt her left-wing domestic politics, but at least they said, we're on the left. We will not work with the other parties. And people worried that somehow Sahra was like AOC and willing to give up her principles. That is not the case in reality, but it reflected her attempt to consolidate her position in what seemed reasonable at the time in East Germany.
Now, the interesting thing is that 15 years ago, there were progressive forces within the Christian Democrats Party. And the newspaper of the Christian Democrats is the Frankfurt Allgemeine Zeitung. And they were my first big publishers of interviews and articles there. And they arranged luncheon interviews and joint interviews with Sahra and me. There were elements of the Christian Democrats that recognized at that time that her left-wing logic describing exactly what Richard has just been talking about was correct. But then the editor of the Feuilletons section died of a heart attack, unfortunately, and there was no more voice in the Christian Democrats to try to say, well, we need to take the economic conditions under consideration.
That wasn't done, and so now you have essentially the only person talking about the economic dynamics that we're discussing is Sahra Wagenknecht. But the West was not receptive to what she was saying. She did very well in the East, not in the West. And they went for the Linke party that has sort of become much more like the Democratic Party here. A lot of good slogans, but not much content, where Sahra actually comes out with a specific policy program.
I just thought I want to distinguish between Die Linke party and the Sahra Wagenknecht party. It's important because I'm sure from this she's going to regroup and try to become much more effective. And you can be, as Richard just pointed out, correctly, that you can probably be more effective if you're outside of parliament and saying, I don't want to be blamed for any of this crazy economic program that you're putting together. It would have been nice to be a voice in parliament to warn about where Germany is going. But all we can do now is speak from the outside. They don't have much funding. They don't really have a party newspaper or a vehicle to promote their ideas. So that's part of the problem that AID and the National Endowment for Democracy has not given Sahra Wagenknecht the money that it's given to the centrist parties.
RICHARD WOLFF: Yeah, and I think let's take this further because much of what we are saying with a few adjustments applies to other countries, including the United States. So please don't see this as sort of an esoteric conversation out of a particular European country. It's relevance is that Germany is facing very similar problems to what the rest of the capitalist world is. And that's why I think it's worthwhile to have this conversation and to devote it here.
What are the Germans going to do? They apparently are going to try to hold their disintegrating society together around a mantra in which the Russians are, you know, at the gates. The Russians are threatening, the Russians will come, the Russians will take over. Let's talk for a minute about the nuttiness of this. The Russians are having a significant difficulty controlling a poor little country on their border, namely Ukraine. They can't. They don't even want to take over Ukraine because it would be an unbelievable expensive in life, in money. And what do you get from it? I mean, my God, Russia is the biggest country by geography on Earth. It needs more geography? Come on. It doesn't. And it will it would expend all of its resources trying to hold on.
The last time Russia tried to hold on to another territory, the name of that territory was Afghanistan. That didn't go real well. Then the United States tried it and discovered that didn't go real well. OK, Russia is not going to invade other parts of the world. What the hell is the point of it? It would be very, very difficult. And talk about creating an opportunity for Russia's enemies. Look what Russia's enemies did in Ukraine. Now imagine to yourself what they might do in Poland or Germany or any. Come on? This is a strange argument. So, but that's the one they're going to use because they can't come up with anything else. And their country is in deep trouble.
Look, Marco Rubio, the Secretary of State of the United States, gave a speech, a few days ago. It didn't get the attention it should have. But in this speech, at a certain point, he goes into a little soliloquy. And my ears perked up and I focused real well. So what I'm about to tell you is a pretty good rendition of what he said. He didn't use the words I'm going to use, but the meaning was unmistakable. Here we go. Time is not on our side. Now he was speaking of the United States. If we don't do something dramatic, in a few years, here we go. Everything that Americans take for granted, their clothing, their automobiles, their daily life, will be available if and only if the Chinese Communist Party agrees to make it available. That's what we're facing. And we have to act now.
If you want to understand the wild heaving of tariffs wherever he can throw them, or anything else that Mr. Trump is doing, then Mr. Rubio is explaining what Trump explained to him. We have no choice. Now, of course they do. The alternative to this desperate effort to stop the Chinese, which has been a 100% failure to this moment that we're speaking, staying with that is a strange move. So here's my guess.
There will be people, political people, who will begin to see an alternative. We can't win this. So we better sit down and cut a deal with the Chinese while we still can. That that is a better strategy. And it does have the advantage of being less likely to slip into a war anytime soon. Eventually, as the futility. Look, they got terribly shocked three weeks ago with DeepSeek. No one should underestimate. Not that the particularity of how it does, inexpensively does AI or, you know, all of that. It's just another demonstration.
Huawei did it again last week with yet another chip that they produced. You can't stop this. That's what we're learning. Maybe you could have, but you can't anymore. And now transpose that to Germany. What is Germany gonna do? Given its dependence on Russia for energy and from China for trading partner. The logical thing for Germany to do is to become the leading European to join the BRICS. That's the problem.
They either have to do that or they have to suck up crazily to the United States or develop their own military, which will cost them a fortune. Which they don't have the industrial base to provide for themselves and which will take money away from the social services that the German working class has become used to. And that will drive even more voters either to the Alternative or to the Die Linke or to Sahra Wagenknecht. They are in an unbelievably difficult situation and no one should be fooled by the bravado of words. The storm of words is how Mr. Trump is trying to deal with this. And they're copying him, no surprise. But the futility for them is even greater than the futility of all of that for the Americans.
MICHAEL HUDSON: Well, that really should be the key to what we're talking about, the role of the United States in Germany's future. You have two demands that the Trump administration is making. Number one, that Europe, and especially Germany, increases its military spending to as much as 5% of its GDP. Now, since, as Richard just pointed out, they can't produce very much industrial goods because they don't have the gas and the oil and the energy that's needed to produce industrial products. They're going to have to buy from the United States, which is just exactly what Trump says. We want you to rearm by buying American military products, which are much more expensive than, say, Russian military products.
Well, at the same time, Trump announced yesterday at his cabinet meeting that he intends to put a 25% tariff on European imports to the United States. Well, this is pretty and specifically focus against buying European cars, meaning primarily German cars. So looking at the balance of payments, which I know I always go back to that as the key for this, but very often the balance of payments is the constraint.
The Euro dropped in the last few days as an exchange rate because people think, how on earth if there is a widening trade deficit by Germany and by Europe, how indeed can the Euro's exchange rate not begin to decline? And of course, Trump will say the decline is an attack on America. What he did say the other day is that the prime driving force behind the original creation of the EEC, the European Economic Community, was the agricultural policy, the common agricultural policy that set out to do for Europe, France and Germany in particular, what Roosevelt's Agricultural Adjustment Act did for the United States. You protect your agriculture by support prices, parity pricing that will provide farmers enough to capitalize their and modernize their agricultural output. And I think we discussed this in the last show, to achieve an enormous increase in productivity. Well, that's exactly what Europe did, increasing its productivity. Trump said yesterday that this policy that has been the key to the EEC is, as he put it, an attack on the United States.
Now, this is exactly what the United States said after the EEC was created throughout the 1960s. The United States kept trying to attack the European community because of its agricultural policy, saying we wanted Europe to be dependent on American agriculture. And now it's not only independent, but its policy of agricultural protectionism is enabling it to become a food exporter. Well, you're seeing the problem right now.
America is trying to dismantle the EEC's attempt to achieve domestic self-sufficiency. To Trump on any country seeking self-sufficiency instead of reliance on dependency on the United States for food and agriculture, for oil, for high-technology good, is an attack on America's attempt to control them, to control the world. And Trump says if we can't make other countries dependent, then we won't have the tool of being able to cut off the supply and starve them for food, starve them for energy, starve them for technology, or expel them from the swift bank clearing agency. Trump and the U.S. wants to impose the degrees of control. And Europe is not making any official defense of this, saying we don't want to be in a position that we're dependent.
What the European leaders are saying is, if we lower our costs by buying Russian energy at one quarter of the price of American liquefied natural gas or oil, that's dependence on Russia weaponizing its trade. Russia has not at any point tried to weaponize its trade. The only country in the world that has tried to weaponize trade and finance is the United States. And yet Europe is, European politicians are stating that it is the only country not weaponizing their dependency is the United States. We're dealing with an inside-out world. And again, how do we explain how absolutely crazy this is? Well, obviously, there's personal opportunism at some point there, personal support from the United States. It'll be very interesting to see as the United States winds down the AID and National Endowment for Democracy subsidy of politicians, whether somehow you remove this whole block of inside-out politicians and somehow enable room for a logical, realistic European discussion to take place.
I'm sure, if you look at Trump's interview with Macron yesterday, Macron was trying to say the usual silliness. I mean, it's just hilarious to see the visuals of Trump while Macron was speaking. Well, the next meeting, I guess, as we're talking now, is probably going to be with England's awful Prime Minister Starmer, who's going to say the same thing as Macron was saying. You've got to fight Russia. You've got to give up your attempt to make peace. And then tomorrow we've got Zelensky with the crazy raw materials deal. That also impacts Germany. Because what Trump wants to say is there's going to be a lot of demand of money that needs to be spent on Ukrainian reconstruction.
Most of the real estate property destruction has been civilian areas in the Russian section. The Ukrainian destruction has been largely in its military sector for industry. But there's going to be a large, let's say, investment opportunities in Ukraine. What Trump and Zelensky are discussing tomorrow is how do we prevent Europe from getting any part of this reconstruction?
How do we make an iron curtain between Germany and Europe on the one hand and Ukraine on the other, linking you to the United States? All of this discussion is to isolate Europe and essentially to treat Europe like Trump is treating Canada and Mexico, as dependencies. And there's hardly, I haven't seen any discussion in Europe as to say, they are cutting us out.
The Europeans have spent most of the money on the, Ukraine's war against Russia, which is really NATO's war against Russia. And yet Trump is acting as if the United States has been spending it all. And so all of the, not only is Ukraine lost the war, but it has to pay reparations for losing. Not to compensate Europe at all, but only to compensate the United States. All of this is locking out Europe. I mean, this should be the centerpiece, you would think, of European politics. And it's something that's too embarrassing to bring up in public discussion. That's the story.
RICHARD WOLFF: Yeah. And I think that there you have it again. You have these politicians, look, they bet on the wrong horse. That's their problem. After World War II, they made the decision, understandable, but they made the decision to bet on the United States. That was their best hope. And they did it. And they forgot why they did it. And they forgot all the hesitancies, which is always a terrible mistake. And they made believe if they were all together in the same ideological war against communism. And that was another mistake, because that was not the real reason.
They weren't threatened by communism in a serious economic way. That was never the case. Russia was always much too poor and much too backward, even in the 30s and 40s and in the 50s, to be an economic. It's not like China is a completely different economic issue for the United States than Russia ever was. That has to be understood. So they bet on the United States and like people who bet on the wrong horse, they've put everything into it. What in the world will Baerboch in Germany, the Green Party leader, what will happen to her now that the United States has said, Russia? Putin's not a monster. We're having meetings with Mr. Putin. We don't have a problem with Mr. Putin. What? What? Before he was the unspeakable monster. Now he's the important global leader that we have meetings with.
The United States is meeting, I believe, today in Istanbul, and the name of the game there is to establish their embassies, the U.S. in Moscow and the Russians in Washington, in order to, quote unquote, normalize relations. Well, you have a generation of politicians who are not willing to normalize relations with Russia, even as they were dependent on Russian oil and gas. They were so confident that they had bet on the right horse that they would denounce as monstrous and with the international court promised to arrest and prosecute Mr. Putin. And now this has blown up in their face.
My judgment, and Michael might disagree, but my judgment, they have no idea what to do now. They have no idea. The whole world is watching. Michael's quite right. I hadn't thought of this that way before. But the whole world is watching Mr. Zelensky, who is not anymore, you know, his elected term is over. He didn't have another election. So there isn't clear who is in charge of this country by its own constitution. It's not Mr. Zelensky. He hasn't been elected. He was elected in the last term, but not this one. So an unelected leader is taking the minerals under the soil of a country, Ukraine, and discussing selling them or some access to them to the United States. Please notice the Europeans are not in the conversation. They spent money, but they're not getting any back. Only the United States. What?
And let's also remember that if you're giving away wealth in the country that loses the war, then the demand for reparations, which has come usually in the last century from the winners against the losers, then the question is, where are the Russians? But the difference between the Europeans and the Russians is the Russians already control a good part of those minerals because they have the army there. The Europeans control nothing. They're the odd man. And nobody should miss what that means.
A discussion over minerals. And forget now whether the minerals are really there or not and how valuable they are, because apparently that's unknown. But the conversation is between two of the four combatants. It's between the Ukrainians and the Americans, led by a Ukrainian who isn't the elected leader because he hasn't had elections. And two other combatants, the Europeans and the Russians, are not involved in the conversation. That's craziness. That's a little bit like having those peace conferences that they had in Switzerland and those other places where they didn't invite the Russians. Interesting. You don't have a peace conference in a war where one of the two sides isn't present. Interesting. And then you wonder why no one cares or no one knows what happened at those conferences, because it doesn't matter. It's the same issue here. It doesn't matter.
They're going to have elaborate conversations. They have been having them. They are now, if I understand, Mr. Zelensky is going to come and sign something. And Mr. Trump will sign something. And we will laughingly refer to that in the future because two of the four players in this game weren't present and are not going to accept any. And it's just, wow. Michael is right. There is something farcical emerging here that the situation is so dire and the behavior correspondingly desperate that it's beginning to become humorous because it's too difficult to find a serious thread, as people who are acting out. Even Mr. Merz in Germany acknowledged in his victory speech how badly their party had lost over recent years. Even Mr. Scholz, who was kicked out of his party for the awful showing they made, thereby underscored, wow, they're now going to do something. It's a little bit crazy, you know.
Last point. Mr. Trump won the election over Kamala Harris by one and a half percent of the vote. Now, whatever that is, a mandate, it isn't. So you see how when politics gets crazy, you have to say over and over again, you have a mandate. You actually have to act as though you had a mandate. To take the richest man on earth, give him a chainsaw in order to show what we're doing. The richest man is taking jobs from average men and women in the government like you and me. This image is so bad for Trump, you have to stop it. What in the world is possessing you to function like this? And the only answer you really can get is the sort of answer Michael gave. There really is something nutty emerging here. We're at that stage of a unwinding of a historical phase. And maybe if I knew my history better, I could find parallels at the end of the British Empire or the Persian or the Ottoman or the Roman or the Greek, where things like this comparable crazinesses emerge.
MICHAEL HUDSON: Not only nutty, but illegal. I want to make one comment about tomorrow's meeting between Trump and the Ukraine. It's very much like the concept of odious debt. Odious debt is when a government makes a deal that benefits or takes on debts and receives money, borrows money that are used only for the government officials themselves, not for the country as a whole, or debts that are imposed externally on a country in the interest of the creditors or the trade surplus people with that country, not in the interest of the country.
The concept of odious debts is that these debts should be annulled. Well, what we're having on Friday is going to be something like an odious resource sale. It's the resource sale negotiated between Trump and Zelensky. How many billions of dollars is he going to give to Zelensky to pay off the kleptocrats that are the current owners of these? What resources that Trump wants to spread it around? And what will Trump and the U.S. get? The agreement for Ukraine to pay reparations for a war that it has lost to the countries that have created a coup d'etat and put a foreign-backed leader, Zelensky, in charge of the population, waging a war that the population opposes, and making a settlement, for the natural resources.
Trump originally said is we only want not only the natural resources, we want the ports and everything that makes money. This is an odious resource sale that has no foundation in any body of international law. It's not in the interest of the nation, but of its corrupt leaders doing insider deals dictated by force and the urgency of a foreign government under military urgency by a former president that has no legal standing as president. Only the Ukrainian Rada today has the permission to make such a deal, not the personal head that is a puppet of the United States that is the main beneficiary of getting something for nothing from Ukraine.
Trump is not saying we're in exchange for these resources, we're going to give you the Patriot missiles and the ability to hit Russia and all the military support. We're not going to support you militarily. We're not going to let you into NATO. We're just making a deal between you and me, Zelensky, to transfer Ukraine's resources to us. And that is an odious deal subject to annulment by any international court. So again, how do you make a forecast of what's going to happen when, as if what's being proposed is all legal and it's a signed contract that has no solidification under contractual law subject to international law, and the usual concepts of economic order. It's what America calls, I guess, the rules-based order.
RICHARD WOLFF: Yeah, I like that image of the odious debt because it touches so many other issues. And I know that, you know, that Nima's program is interested in a whole range of issues across the world. But I'm reminded of those famous Latin American loans that I used to study where you get a cozy room somewhere in an elegant New York City hotel. And on one side of the table are three or four bankers from the big New York City banks. And on the other side of the table are three or four big politicians from and I'm afraid I have to say, any Latin American or almost any Latin American country.
They sit around and they're discussing the deal and they work out the deal. And I'll give a hypothetical number. A billion dollars. The bankers are ecstatic. They're going to now get a loan for a billion dollars. Out of the billion dollars, the first hundred million will be an assortment of fees paid to the bank for making the loan. The second hundred million will be a set of fees paid to a variety of the officials in that country that are sitting on the other side of the table or are directly, indirectly connected to them, which will also be fees for managing them. What does the country finally get?
If it's lucky, seven or eight hundred million dollars out of the billion. But what does the country owe to the bank in New York? A billion dollars, because that's what the size of the loan was. So the mass of the people are stuck with having to pay the taxes from which the interest will be paid to the bank in New York. And the amortization, the repayment of the one billion in principle. A dozen people in that country have become millionaires overnight. They are going to become very important political and economic figures in their country among the 50 richest people. The bankers in New York will become the names we hear in the years ahead, Because their cut of what they just got is 20-30 million out of this deal they worked out. Because the bank is making so much money. Then this goes on year in and year out.
More and more the countries have to go to New York and have to sit down with the bankers because they are in debt up to their eyeballs with what they've done. Their own country. They have to borrow more to pay the debt on the previous one. This never stops. It never stops. And it makes the United States' economy complicit in the most odious way with the colonial ripoff. But the beauty of this is that no one sees the hand of the United States. It's local officials in Peru or Argentina. It doesn't matter. Who are having to have the meetings in their Congress and raise the taxes. Oh, fantastic.
It's a colonialism run by the bankers, hidden away, unknown, unavailable, unaccountable, until it blows up and then it's all over. And then everybody gets crazy because no one has explained how we got to this. You know, we saw this in war. The victims of war often become mentally disturbed because nobody explained to them. Where? Why is this happening? Why did a bomb just fall in my house? What did we do? How did? And no one has any answer for them. And that's too much. You can handle, you know, losing your left arm. But you can't handle living in a world whose level of chaos is murderous. It's too much. Too much for human beings to handle.
MICHAEL HUDSON: I want to make one technical comment that makes the situation even worse than what Richard described. He talks about the loan that's negotiated. It's not the loan that's negotiated. It's the size of the debt. When the debt issue is issued, the buyers buy it below par. It's sold below par. So the amount of the debt that is agreed on is much less than the actual proceeds, the loan proceeds that the borrower receives. So there's that opportunity for a capital gain in time.
And of course, as the price of the debt goes up and down depending on the risk, there is a very active arbitrage trade going up and down. And I think since Richard just pointed out we're dealing very much like a post-war situation, this is PTSD on an economic scale, post-traumatic stress disorder. So you could say what we're seeing politically is the counterpart to what soldiers receive in wartime.
RICHARD WOLFF: I'd also like to just make one last comment if I could, Nima.
NIMA ALKHORSHID: Go ahead.
RICHARD WOLFF: Almost every country in Europe, like the United States, is now more or less anti-immigrant with varying degrees of deporting people the way the U.S. is doing or making it much harder for people to come in or both. Okay? But there is one glaring exception, and that is Spain. Over the last few years, Spain has welcomed immigrants, has brought them in, has not only not made it harder, made it easier, has explicitly committed itself to welcoming immigrants. And it is one of the best-performing economies in all of Europe.
If you put Spain's pro-immigration politics next to Germany's or Italy's or other countries, anti, you would come away, at least with the hypothesis, noticing how the two numbers move, that being pro-immigration is a better road to economic well-being than being anti-immigration. And if you think theoretically, it kind of makes sense. An immigrant comes into Spain like he or she would into any other country, around somewhere between 18 and 30 years of age. Young people. It's too arduous. It's too difficult. It's too risky for children and elderly. So it's young people. And here's what that means. And let me put on my Marxist hat. Young people cost the society resources. You have to feed them. You have to clothe them. You have to shelter them. You have to educate them. And then finally, when they're, say, 20 years old, they're ready to do what?
To come in and provide surplus value for the employer. But the beauty of it is the employer class gets surplus from these immigrants without having to invest all of the resources for the first 20 years of that immigrant's life. The cost of making that immigrant a productive worker is borne by the country that the immigrant leaves. So, yes, if you bring immigrants in, it may be dangerous for your own working class.
The immigrants may compete, offer themselves for less work. That's true. And that's a serious issue. But for the economy as a whole, and for the capitalist system's robustness, it's wonderful to have immigrants. It's one of the irrationalities of our time that what capitalism needs, and I haven't even gone back to mention the declining population, which is a serious issue. But even without that, capitalism needs these free workers to be producing surplus. But they have so badly managed immigration that they've created such hostility with their own working class that they have to expel what they need. Oh, that's a time that should show you you've got a system whose internal contradictions have exploded on you.
MICHAEL HUDSON: Adam Smith made that a central point of what he was saying. He said that the Protestant countries of Europe, such as England, were benefiting from the flow of skilled labor from the Catholic autocracies. And in France, you had the driving out of the Huguenots that became the intellectual class, the workers, not only of Europe, but into the United States. And this idea of using the objective of industrializing a country would be to draw the population in from the trade deficit countries was central to the dynamic of British mercantilism that they expressed very clearly throughout the 18th century.
I have a whole chapter on that immigration point in my book on trade development and foreign debt. All of this is dropped from current trade theory. We don't look at the fact that deindustrializing leads to emigration, not immigration. Industrialization draws in immigrants. And in fact, the skilled immigrants that are part of the industrialization process. You have the propaganda today as if all immigrants are backward, not performing economic, any economic function at all, which, of course, is a travesty of reality. Only economists think that way, but they're the people who are making all the models today. Yeah.
NIMA ALKHORSHID: Yeah. Again, we can wrap it up right now. Thank you so much, Richard and Michael, for these excellent points that you were talking about.
MICHAEL HUDSON: All right.
NIMA ALKHORSHID: And see you next week on Thursday.
RICHARD WOLFF: Okie doke. Take care.
NIMA ALKHORSHID: See you. Bye.
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