Good morning, folks. Steve Rhodes coming to life from a very pleasant and sunny Delray Beach, Florida. This year, 11 name update, we've got a sea of red out there, all the US indices that we track trading to the downside. Dow's down 176, half percent, 8 percent, eight tenths percent, I should say, for the S&P 35.9 tenths, for the NASDAQ 100, 137.1 and a half points for the Russell, 27 point move there. Summaries are off $60, that's one in seven tenths, three percent for the Trenes, that's a 445 point move. We've got gold up 24 bucks, silver's off six pennies, like to recruit up a buck 73, natural gas up four cents, and the 30-year treasury printing out 109, even Stephen, that is down one full point. Let's figure out what all that means by looking at that nine panel market update chart, ES mini, upper left-hand side, what do we have here? We just have a good old-fashioned consolidation with insiders daily profiles. It runs from the range of $43.33 up to $44.30. We take a look at the Spot Ballotinics. Spot Ballotinics is trading above yesterday's high. That would be bullish for the Spot Ballotinics, that would be bearish for the S&P 500. If you look at the NASDAQ 100, the NQ out here, it's just an inside day, big wide-ranging profile though. And if we get it closed today below $15, 204.83 and follow through tomorrow, that likely a signal to you and I that price is going to pull back to the bottom of its profile out there. And that's at the price point right now of $14,676. The US dollar index on the move, but also just consolidated with inside its profile levels up to the top, watch $106.42. To the downside, it's $105.57. The price closed above $106.42. We'd be looking to move back to its roads, meant to mitigate our top. Now that's in the $107.05 range. If you take a look at Goldilocks, today will become bar number eight. Why did price stop where it did? Well, you've got resistance from a weekly standpoint at the top of its profile. That's up at the price level of $1964.50 out there. Again, today is bar number eight. We will get a TD9 count top tomorrow if Gold closed above $1941.50 tomorrow. Silver already has a TD9 count top. That's going to confirm today, should confirm today. I mean, you need to see a one gigantic sell-off for that, not to take place. That pattern will complete tomorrow. If we take a look at Light Speed Crew, it's inside its bullish structured daily profile. It is trading above the center of that bullish structured profile. That suggests you and I run for the high, the high of the TAS market profile, the top of the box, $91.25. If we take a look at Natural Gas, it has found support at the .618 retracement from its last move from low to high out there. That's the only support that I see in the 30-year Treasury. It's testing its buy the D-point support at $108.29. Closed below that, we're headed much, much, much, much lower. Steve Rhodes with TFNN. Folks, thanks so much for joining us. Stay tuned for the Traders Head Show. Have a wonderful Wednesday. We'll look forward to seeing you again soon.


The question is really, what is referred to as neoliberalism actually coming to an end? I think some people around the world think so. If you look back at events over the last year or so, you've had the election of Donald Trump, who's promising to put America first, making America great again. How? By ripping up free trade agreements, by slapping protectionist tariffs and imports, by building a wall on the Mexican border. On Trump's first day of office, he actually signed an executive order, which removed the USA from the TPP, the Trans-Pacific Partnership. And that's a 12 nation free trade agreement that took seven years to negotiate. It was actually the largest trade agreement in history. So you can imagine the enthusiasm there for the US diplomats, who, when they saw Trump take out his big pen to scribble this big order, putting an end to years of their work to try and pry open this or that country to American capital. And with it as well, Trump declared, he said, the era of multinational trade agreements is over. It also closed the door on the merrily-named Transatlantic Trade and Investment Partnership, or TTIP negotiations between the USA and the EU, which in any case actually were falling apart already due to massive opposition from the working class in several countries. But we also had the referendum in Britain to leave the EU, known as Brexit. Britain being the first country, but I'd say certainly not the last country, to leave the continent-wide trade bloc, the common market. We've also seen increasing anti-EU sentiment in a number of countries across Europe with the rise of parties calling for their own referendums in places like France, Germany, Austria, Italy, and the Netherlands. You also have the current crisis in Catalonia, which if it goes independent will most certainly be ejected from the EU, and as well will take the further break up of Spain. And I'll say historically as well, the growth of world trade isn't an absolute low. So it was at only 1.3% in 2016, and that was following a collapse of 10% in 2015. And just to put this into contrast, during the post-war period, world trade grew at an annual rate of 12.5% each year. We've also seen the number of protectionist measures increasing worldwide, as countries are trying to effectively just export their unemployment. Now according to the Global Trade Alert, who monitors such things, apparently the G20 countries have imposed more than 11,000 protectionist measures since the beginning of the crisis in 2008. So it's not just a question of Trump. And does this mean therefore that globalization is reaching its limits? And is this therefore the end of neoliberalism? Because often globalization is kind of seen as a key plank of neoliberalism itself, this kind of opening up countries to free trade. Now last year the International Monetary Fund, the IMF, is often seen as the kind of bastion of neoliberal policies. It published an article called Neoliberalism Oversold. It kind of indicates a shift in mood away from such policies. But does that mean that the IMF is suddenly all become carbonized? Well I don't think so, and I wouldn't hold your breath. But what actually is neoliberalism? Is it actually a kind of system? Or is it an ideology? Or is it just a set of policies? Well I think everyone here has probably heard of liberalism, which is the kind of outlook and policies, or if you like the ideology of the capitalist class, typically associated with the kind of end of the 18th and early 19th centuries. You know figures such as John Locke, Thomas Hobbes, Adam Smith, John Stuart Mill and so on. And it's associated with things like defensive private property as a source of all freedom. The invisible hand of the market kind of operating to maximize wealth and happiness for everybody. The limited role of the state, you know the state should interfere. And also the promotion of free trade and globalization. And it became the dominant ideology of capitalism as it corresponded to the material interests of the dominant section of the ruling class at that time. And it was these interests kind of boiled down if you like into the language of philosophy and economics that kind of becomes that ideology. So how is that different from neoliberalism? Well I say not much really. You know when people refer to neoliberalism, they're usually referring to the source of policies enacted by capitalist governments around the world since the kind of late 70s and 1980s. So it's particularly associated with those of the Pinochet regime in Chile, with Thatcher in Britain and Reagan in the USA. But actually pretty much with all governments since that period. And the ideas are kind of things again. The idea that the market is king. Everything should be marketized. That state interference should be rolled back from everything. Everything should be privatized, opened up to capitalism. That nearly everything should be deregulated. You know they talk about bonfire of regulations or just we need to cut red tape and all these things. All protectionist tariffs and subsidies should be abolished. And also economies therefore opened up to foreign trade and foreign capital and therefore allowed globalization to flourish. It's also associated with monetarists, i.e. supply side economic policies. Most notably championed by Milton Friedman and his associates, but also going back to people like Friedrich Hayek. Ideas that the states should interfere in the economy except to regulate the money supply and typically be doing so by manipulating interest rates through control of the central bank. And this was seen in contrast to Keynesian policies where governments would actively try and intervene in the economy to stimulate demand and a few public spending. And this was in effect therefore going back to pre-World War II kind of economic policies of balanced budgets by slashing public spending and actually making the working class pay for this shortfall through austerity policies through cuts to wages and welfare and so on. So there's nothing really new I would say in terms of the ideas. So why all this fuss about neoliberalism? Well I'd say the problem is really when people try and portray neoliberalism as something that's kind of distinct from capitalism as if it's some set of just nasty ideas that kind of somehow took over the world from the 1980s onwards and then adds up to some kind of evil system in itself as something that's kind of separate from capitalism as a system. And you hear therefore time and time again from reformist leaders that what we need to do, reformist leaders in the working class parties, the trade unions and so on that we just need an end to neoliberalism and if we just end neoliberalism that will be it because end austerity will be as simple as that. But they don't specify how they're going to do this or often they don't specify what kind of policies they want to put in its place. And it's implicit that this idea that if we just somehow got rid of neoliberal politicians and people ruining us with these kind of awful ideas that we could just have a return to the conditions of the post-war boom full employment rising living standards and all the rest but I say that this is a very idealistic way to view the world and I don't mean idealistic in terms of like utopian but I mean in a philosophical sense. As in seeing ideas and ideology or kind of policies as primary but ignoring the material conditions that actually give rise to these ideas in the first place. Now as Marxists were materialists we understand that ideas or policies don't just fall from the sky but that they're ultimately rooted in the material economic conditions of society. I'm not in a crude like mechanical way but in a very complex and contradictory fashion. It's not that just some change happens in the economy and it's like a kind of mechanical device it just automatically changes the ideas. Although it's ultimately the economic relations between people that form the root of our conceptions of the world so to take for example different ideas of freedom and equality if you went back to slave society in ancient Rome or Greece there was no kind of concept of universal human rights or freedom, equality, fraternity and so on but it was with the development of capitalism which actually required this idea of equality between people that you get these kind of ideas but I'll say it's once ideas become entrenched as a kind of ruling set of ideas as an ideology they can actually react back on the economic base itself and they can even come into conflict with it so for example take the ideas of the Catholic church in feudal times what's known as kind of the dark ages and holding back scientific discovery and progress so if we're properly to understand neoliberalism in order to actually end it then we need to understand the material conditions which gave rise to it in the first place and I would say that requires a dialectical understanding of the world we need to see the phenomena and its interconnection to the whole and as part of the process it's not a kind of rigid or fixed static thing so for example what were the general trends in the world economy in the previous period and how did this impact on the class struggle and importantly as well we need to have an all sided view of this development we can't just see it as simply this or that whim of this politician from the ruling class you have to also understand what was going on on the other side of the class struggle what was going on in the labour movement what were the policies of the labour leaders during this time and not just in one country but internationally all these things come together so in order to do this it's actually necessary to go back further a bit in history and to understand the post-war period the kind of period before what is kind of referred to as the neoliberal period and I say it's impossible to understand what is referred to as neoliberalism to the extent that we can speak of it as a kind of set of policies or ideas without understanding what was going on before it because that's vital to offer a guide to action how do we take society forward is it enough to simply just reject neoliberalism and what do we replace these policies with is it Keynesianism now as Marxists we say no, Keynesianism doesn't work we need socialism but in order to actually explain that more thoroughly rather than just assert it we need to actually understand what went on during the classical period of Keynesianism i.e. the post-war boom and also before, during and after the Second World War so I say that the post-war boom I think it's fair to call it the golden age of capitalism and it's portrayed as a period when capitalism supposedly worked or released in the West you had things like full employment you had secure jobs for life you had rising wages you had decent pensions you had welfare provisions social housing all these kind of things however there's a tendency to view these kind of things very idealistically simply as a result of a certain set of policies what was called the post-war consensus which in effect really just amounts to Keynesian ideas deficit financing it's important that we understand the real material basis that made this boom possible and I think that is important as well to understand that this boom, this whole period of 25 years or more massively shaped the consciousness of those who lived through it and even many who didn't live through it and many think it's simply just the normal operation of capitalism and that rather than seeing it as really a historical deviation if you take capitalism in the long term take Grant who's one of the founders of the international Marxist tendency he wrote an excellent article during the middle of the boom in 1960 called Will There Be a Slum and I was encouraged everybody here to read it and he was writing this as many on the left at the time even many so-called Marxists thought that capitalism has fundamentally changed they thought that it has completely transformed itself and they thought that there'd be no more boom and bust they thought there'd be no more unemployment and there was some simply developing to socialism this was a very kind of empirical and kind of surface level understanding of things they just saw oh okay well there hasn't been a major crisis for a number of years therefore things have changed and take Grant said no capitalism hasn't changed a slump will inevitably come as night follows day but we have to understand the reasons for the boom in order to not lose our heads and not get sucked along with those who think things have changed and he listed these changes as following number one he said that it was the political factor the political failure of the Stalinists and the social democrats around the world to actually lead the revolutionary wave that followed at the end of the war to victory and in doing so they actually prepared the political climate for the restoration and recovery of capitalism secondly there was the destructive effects of the war itself in destroying a mass of the means of production also stocks of consumer goods and so on in a very similar way in the fact the same kind of way that a crisis works to kind of eliminate a crisis of overproduction and all these goods are wiped out kind of resetting the clock on capitalism thirdly the Marshall Plan which was equivalent to about 130 billion US dollars in today's money it was given or loaned to countries particularly in Western Europe to create a buffer against the USSR it was obviously a political question and also cut across revolutionary developments which were going on in these countries and in doing so this money was used to buy back goods from America but also to soften the need for austerity measures in these countries four was the enormously increased investment in industry particularly with the growth of new industries that were developed during the war so things like plastics, aluminium, rockets, electronics and atomic energy five was the actual increasing output increasing productivity of these new industries these things like in the chemical industry artificial fibres, synthetic rubbers, plastic, light metals and so on it benefited from a general development of science and technology plus new methods of industrial management and supply chains leading to general rise in productivity so there's six, there's a huge amount of fictitious capital created by arms spending and that was thought to account for about 10% of GDP in countries such as Britain and the USA seven he pointed out to the role of the colonial revolutions and the independence of these undeveloped countries giving the local ruling class in those countries the increased opportunity to develop the industry there but also the increased demand for raw materials that was coming from this boom, the knock-on effects in the advanced capitalist countries themselves and you had the role of state intervention and for example in the creation of welfare states which was kind of softening the impact of unemployment but you also had nationalisation of unprofitable industries things like steel, coal, transport, power they used state financing in effect to take over these ruined industries which were shattered during the war, develop them up and then use these kind of key elements of the economy to provide cheap materials and energy for the rest of the capitalist economy nine was also the huge increase in trade that followed the war so I mentioned there was an increase in world trade of 12.5% each year you had the removal of protectionist barriers it was actually a precondition for a lot of countries receiving aid through the Marshall Plan but you also had the role of the International Monetary Fund and what was known as the Bretton Woods system which forced countries to maintain a fixed exchange rate with the dollar which was backed up by gold and this prevented competitive devaluations of countries devaluing their own currency and this kind of beggar by neighbor kind of race to the bottom instead it forced internal devaluations things like wage cuts and attacks to benefits and so on but tied to this was the role of the USA as a kind of hegemonic power you know it emerged from the war enormously strengthened actually it was the only continent that wasn't completely destroyed and it also had two thirds of the world's gold in Fort Knox the dollar was literally as good as gold and it was enormously powerful it became the policeman of world capitalism all these facts is interacted they all fed back on each other creating this kind of virtuous cycle and since the western economies were booming this provided the material basis for the unprecedented period of reforms that went on during this time so when the pie kept getting bigger and bigger the capitalist under pressure from below always don't forget they didn't give these things gladly they were prepared to throw some crumbs off the table in order to try and keep the class peace when I say actually the most significant reforms things like the welfare state in Britain and a lot of the nationalisations actually came off the back of this revolutionary wave that came about towards the end of the war you know when people said you know we're not going to go back to the conditions of the 1930s we're not going to go back to mass unemployment and poverty you know we want something better and the capitalist were kind of feeling the whole system at risk were prepared to conceive massive reforms in order to hold onto their system as a whole but I say even a lot of these reforms were kept on by the Tories or by ruling class governments even when you know social democratic parties came out of power and this was as the whole economy was going forward as profits were going up there was no need for the ruling class to launch a concerted struggle against all these gains you know they could afford to keep them going and not risk a massive clash with the working class but I say however all these despite all these factors coming together in this kind of circle of kind of never ending growth that are described none of them fundamentally transformed capitalism none of them actually removed any of this major or main contradictions and therefore inevitably a crisis would break out now Marx and Engels noted in the Communist Manifesto when they talk about crises they say the conditions of bourgeois society are too narrow to comprise the wealth created by them and what does that actually mean? now here they're talking about a crisis of overproduction too much is produced in order not for people's needs but to be profitably absorbed by the market and that's inevitable under capitalism as production is only for profit that's the only thing that concerns the capitalist but where does that profit come from? as Marx as we understand it is effectively the unpaid labour of the working class you don't receive in wages an equivalent for the full amount of value that you produce in the working day or week or month or year or whatever in fact what you receive is enough to keep you a certain standard of living and which for the majority of the working class worldwide is typically just enough to keep you alive and kind of maintain yourself and your children and therefore the working class is only paid a fraction of the wealth that it produces the rest goes a surplus value to the ruling class in the form of profit, interest and rent now the problem is that the capitalist can only make a profit they can only realise this if they can actually sell the commodities that is produced by the working class but if workers only have paid a fraction of that value that they produce where will the demand come from the market for all these commodities? now if that's the case you could ask all why isn't capitalism in permanent crisis? how is there always this massive shortfall between what is produced and what is bought? well there's several ways around this one of those is that the capitalist in one country don't just sell to the market of that country they export their goods, they try to sell to the world market and you can see this for example in China today obviously the Chinese working class can't buy what is produced by the Chinese working class but it's sold primarily in Europe and North America and so on but as you'll notice it doesn't actually solve the problem it just shifts it from one area of the world to another the major way that capitalism has got over this crisis historically has actually been to reinvest part of this surplus produced back into production itself and that's what kind of gave capitalism its kind of progressive features and its heyday and it actually was forced to develop the means of production forced to build more factories, more industry, more infrastructure and so on but the problem is in order to actually use these expanded means of production profitably you actually have to produce more things with them and you have to find an even bigger market in order to sell these things with so ultimately it just sets up this problem but on an even higher level another major way that the capitalist uses is the use of credit which sounds wonderful you can artificially expand the purchasing power of the market today but it's at the expense of tomorrow the catch with anyone who's taken that credit knows all too well is that you take out this money now but you have to pay it back later on in the future with interest it doesn't come for free and over a certain time this kind of contradiction will always build up and the goods go unsold, companies go bust and at a certain stage a generalized crisis will break out and it reaches a tipping point where all the factors that push society forward turn into the opposite and actually become a kind of break on the economy and everything goes into reverse now if you go back to the communist manifesto Marx and Engels then said well how does the border always get over these crises? it says well on the one hand by the enforced destruction of a mass of the productive forces i.e. factories are closed down, people are made unemployed and so on but on the other hand by the conquest of new markets and by the more thorough exploitation of the old ones that is to say by paving the way for more extensive and more destructive crises and by diminishing the means where crises are prevented now that I think is the key to understanding this post-war period the ruling class got out of the depression in the 1930s through the enforced destruction of a mass of the productive forces as a result of the Second World War and then following that war there was a massive increase in world trade i.e. the conquest of new markets as well as a more thorough exploitation of the old ones through technological advances and through rising in productivity and so on now following the war there was this massive increase I was going to say ultimately the boom all these conditions that drove the boom forward actually paved the way for the crisis in the 1970s which really if you look it was the first major worldwide crisis of capitalism now that was triggered by the oil crisis which came about as a result of the Arab-Israeli war and it led to this oil embargo which massively shot up prices and led to huge deficits and defaults all around the world but I would say that was really just the kind of accident which expressed the necessity for this crisis to break out in the first place it could have been any kind of factor which acted as the tipping point in the same way that the collapse of the subprime mortgage crisis in the USA in 2008 was simply just the tipping point of a generalized crisis of overproduction it could have been another tipping point that caused this the result was you ended up with what was called stagflation a low growth, high unemployment alongside massive inflation now according to Keyneson's this wasn't supposed to be possible high inflation was supposed to reflect a high demand for goods which in turn would reflect a high demand for labour but it was this kind of reason why the ruling class actually abandoned Keynesonism, deficit financing printing money or just borrowing it in order to try and fund the economy as it simply didn't work it led to this massive inflation which actually kind of ate in and it kind of acted as a massive break on the further development of the economy and I would say the key point is that Keynesonism sounds wonderful the whole point of Keynesonism is they see the crisis has been just a lack of what they call effective demand people aren't paid enough in order to buy things therefore we just need to increase that demand we can just patch it up by getting the state to meet the shortfall and that sounds wonderful let's just get the government to invest in things create jobs, build infrastructure, invest in industry and how the problem solved but I said there's a small detail and that's governments don't actually have any money of their own they don't produce it, they have to raise it through taxes borrow it or print it the thing is if you're the capitalist class if you tax the capitalist it comes out of their profits and as I said earlier the investment for profit is the only thing why capitalists invest if you lower the rate of profit beyond a certain point the capitalist will just refuse to invest in that thing they'll say well fine there's no point in this we'll take our money elsewhere where it is more profitable if you tax the working class though you're into the very demand that you're trying to boost you're effectively taking away of one hand and giving it back with another so it doesn't actually solve the problem in itself now borrowing money as I said earlier the problem is it has to be paid back with interest there's clearly limits to what can be done with that and printing money simply leads to inflation if you put more currency into circulation than the amount of values that it's supposed to represent it simply leads to the debasement of the currency and that is exactly what happened in the 1970s you saw inflation go through the roof in Britain it reached 9.4% in 1971 and it went up to 27% by 1975 it was combined as well with massive unemployment there were one million people unemployed in that year and that resulted in a massive wave of class struggle as workers had to strike in order to keep their wages in line with this runaway inflation the result was massive unrest and in 1972 and 1974 the British miners actually went on strike several times this was the first time since 1926 the general strike that almost threatened capitalism and the demand was obviously we need higher wages but we can't afford basic things inflation is effectively giving us a massive wage cut but the second time in 1974 the Tory government who were in power at that time actually called a snap election and they presented it as a question of who runs the country is it us the Tories or is it the unions is it the miners and so on and as it turns out a majority of people thought well yes they're working class it should be the unions and they're replaced by a Labour government who came to power and they actually settled this strike they were forced to but ultimately they couldn't afford the terms of the settlement the government therefore faced this enormous balance of payments crisis along with a huge budget deficit which was getting out of control and I say that if they were socialists if they were revolutionaries they would have taken this opportunity to actually break with capitalism they could have taken over the commanding heights of the economy they could use all that unrest all that kind of momentum in the Labour movement to decisively take power out of the hands of capitalism and begin planning production for need but of course they weren't socialists they were reformists so they saw their option as either on the one hand declare bankruptcy, sacrifice the integrity of the pound and therefore shatter the interests of the city of London or go to the IMF for a loan which is precisely what they did do in 1975 and 1976 now obviously that loan came with massive strings attached the IMF and they're not a humanitarian institution they just give out money for fun namely that was massive budget cuts and enforced austerity so therefore you had a Labour government bought to power on the back of a powerful minus strike for higher wages actually now demanding wage restraint from the working class as a whole in order to keep the capitalist system going and obviously that wage restraint was bitterly swallowed for a year or so people thought well okay this is our government kind of telling us okay if we keep our heads down things might get better next year and it was a kind of temporary thing but actually it didn't solve it and years and years after it the inflation was still enormously high there was still a massive unemployment and people's living standards were getting worse and worse and that's because ultimately this crisis was a global crisis of capitalism you can't solve it just by trying to attack wages in one country or another and it resulted in what's known now as the winter of discontent this winter in 1978 and 1979 there was a massive wave of strikes I think the light that we've not seen since in Britain there was almost 29.5 million strike days lost and I was including hospital workers truck drivers all over the country bin collectors rubbish was piling up on the streets and even grave diggers bodies were actually piling up in the morgues in the cemeteries the Labour government was reformist as it was unprepared to break with capitalism it had no solution to these problems it couldn't offer any way out of this discontent there was no way out except trying to kind of just balance the budgets and make the working class pay now James Callaghan who was the Labour Prime Minister during this period he actually told the Labour Party conference in 1976 he said we used to think you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending i.e. changing policies he said I tell you in all Canada that option no longer exists and insofar as it ever did exist it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy followed by a higher level of unemployment at the next step now James Callaghan wasn't a Marxist and it sounds very similar to Marx and Hengels in the Communist Manifesto where they talk about the way that the bourgeoisie gets out of crises by preparing even deeper and more extensive crises in the future and this is effectively why Kensington was abandoned by the ruling class in the 70s it was simply that it just didn't work it was actually aggravating the crisis it was actually leading to further class struggle and more unrest and actually challenging the whole capitalist system I mean the capitalist has seen events in 1968 in France and actually across the world and thought hold on things are going out of hand here we need to this kind of situation can't go on and that's ultimately why Labour lost the election in 1979 to Thatcher and it was due to this massive disappointment and disillusionment in a Labour government that was supposed to be on the side of the working class but in effect ended up abandoning its programme wholesale and simply just saw its job as managing capitalism and actually doing the work of the Tories now when Thatcher came to power she simply did what was necessary from the standpoint of the ruling class to restore profitability so for example they massively attacked living standards they attacked the power of organised Labour they attacked the trade unions they massively deregulated the economy they privatised all the nationalised industries and so on and this is the real meaning I would argue of what is referred to as neoliberalism it was simply undoing the gains of the working class that were won through the past period through struggle and hence it opened up this whole period of counter reforms and with Keyneson unable to deliver the ruling class went back over to monetarism by strict balanced budgets attacks on wages and so on they actually jacked up the interest rate overnight under the name of taming inflation but the effect of this actually was to massively increase unemployment in Britain it went over 10% went over 3 million people as many businesses couldn't afford to pay their debts and part of this was actually I think a deliberate attempt to actually increase unemployment so as to better be able to take on the workers to take on the trade unions and so on and drive down conditions because they could always say to trade union leaders and so on oh you're not happy with these terms? fine you can join the ranks of the unemployed just either take it or leave it and that had a powerful effect and in the five years between 1979 and 1984 the TEC in Britain actually lost 17% of its membership and this was openly admitted by Alan Budd as one of the chief economic advisers to Thatcher who actually said on record he said the 1980s policies of attacking inflation by squeezing the economy and public spending were actually a cover to bash the workers and I would say that that was certainly the case with the miner strike in 1984 which was consciously provoked by the Tory government and was actually prepared for over years in advance the government was stockpiling coal for years and they saw the miners as historically being amongst the most militant of sections of the working class either kind of vanguard of the working class and they didn't forget the lessons of 1974 where it was the miners who brought down the Tory government and the Tories saw that actually a defeat of the miners would have a profound effect on the rest of the class and of course they were right but I think we have to point out that the defeat of the miners wasn't automatic the miners fought heroically and actually they had enormous support throughout the working class actually not just in Britain but internationally and I would say the only reason for the defeat was actually the timidity of the TEC and the Labour Party leaders who were unprepared to actually spread that strike spread the struggle and into a general strike and actually bring down the Thatcher government and replace it with something different and that's not an accident but that actually flows from the very logic of reformism itself and since the reformists have no programme to actually fundamentally change society particularly in a period of crisis they back down from any kind of serious struggle against the capitalists which risk them beyond the limits of the capitalist system itself they thought if we bring the Tories down and then what we're in power doing the same thing that the Tories are trying to do so they're afraid of a mass movement developing beyond the limits that they're kind of safe to see and this is ultimately because they don't have confidence or they don't believe that working class people can actually run society themselves without the need for a layer of bankers and capitalists and so on and their managers to actually kind of stand at the top of society and siphon off all this wealth they don't believe in socialism, they don't think it's possible therefore they accept the capitalist system the result of this defeat therefore was a powerful demoralisation amongst the working class because many thought well if the miners can't win after a year of intense struggle in their fierce class battles then how on earth can we do it this actually further strengthened the Thatcher government this kind of demoralisation who proceeded then to deregulate the entire economy things like the financial big bang and so on and opened it up to foreign competition and investment and there was also a wave of privatisations which were conducted in quick succession as the government was actually afraid of if we don't do it soon we're going to be forced to have power and we want to make sure this is irreversible and it opened up an enormous field therefore for private investment and a private capital into areas that were previously off limits and so therefore nearly all the industries that were nationalised by the 1945 Labour government were actually privatised including energy, telecom, steel, coal and transport as well as actually privatising most of the council housing stock through the right to buy and this struggle was also reflected in the Labour Party which began to actually empty out of activists and that crisis has begun in the 1970s on the basis of the attacks of that government but this continued in a large way under Thatcher and it was in this kind of process of generalised defeat which the right wing actually took control of the Labour Party first under Neil Kinnock but later under Tony Blair and they simply continued these policies they didn't have any alternative they just continued what was from the standpoint of the ruling class necessary in order to keep the system going and make it profitable it wasn't the case of just this nasty neoliberal policy which they just happened to be brought up in and also the collapse of the Soviet Union also played a big role in this, particularly worldwide in actually strengthening the right wing particularly in the Labour movement who constantly repeated that well, you know, socialism is all over but actually there's no alternative look, this doesn't work and since they based themselves on capitalism to them, to these leaders, there was no alternative they were kind of from their mindset they were sincere and conditions were therefore being driven down across the whole world in a kind of race to the bottom and nowhere was there a kind of a very powerful Labour movement actually led with a Marxist leadership that was prepared to challenge capitalism and actually take power now although Thatcher is one of the most famous champions of what's referred to as neoliberalism she obviously wasn't the first to carry out these kind of policies before her you had the Pinochet dictatorship in Chile as well as similar policies being carried out in the USA now Chile is interesting it's often cited as the first example of neoliberalism it's often described as a kind of testing ground or kind of experiment of these policies which would be copied in place elsewhere but I think it's important to see actually the full picture in that what actually happened was a developing revolution in Chile since the early 1970s under the Olende government which actually nationalised key industries and nationalised healthcare and so on it began a programme of massive reforms that formed the lives of millions of working class people and poor peasants and affected them deeply and despite being led by reformists this government unleashed a process of a mass movement of millions of people who actually wanted to go far further than the intentions of the Olende government and the ruling class feeling threatened by this mass mobilisation actually mobilised their full might to try and bring down this government with the full backing as well of US imperialism which was terrified about this revolution spreading to the rest of Latin America like this Domino theory thing and remember this was at the same time that they were sending hundreds of thousands of troops into Vietnam to try and cross the revolution there and with Olende actually unwilling to lead that struggle to the end he was unwilling to arm the working class despite the advanced layers of the work as understanding clearly what was going on the dangers of counter-revolution he was unwilling to mobilise the masses against the capitalist the situation came to a head with a successful counter-revolution and it was through that that you had the installation of General Pinochet an extremely brutal military dictatorship which sought to crush the labour movement killing thousands in the process and rolling back all the gains of the working class that they'd won through that past period and in 1975 you had a group of economists known as the Chicago boys because they were trained in the University of Chicago under Milton Friedman they were sent in to restructure the economy for the benefit of the working class and they set about therefore reversing the nationalisations opening up the economy to foreign particularly American investment and sweeping away welfare removing any kind of labour protections and so on therefore it wasn't this kind of just evil neoliberal ideology which happened to be experimented or tested in Chile it was the policies enacted by a victorious capitalist counter-revolution in order to brutally crush a worker's revolution restore profitability for the ruling class and send a message to workers in other countries don't try this elsewhere now I just wanted to mention the USA as Ronald Reagan came to power in 1980 and famously enacted very similar policies to Thatcher ultimately for the same reasons to restore profitability following the crisis of the 1970s but before Reagan came in he was the chairman of a man called Paul Volcker he was a monetarist as chairman of the Federal Reserve Bank and in 1979 he massively increased the baseline interest rate which of course had a knock-on effect across the whole of the rest of the world since America was the kind of key capitalist country and by 1981 the nominal rate of interest had actually been raised to nearly 20% now over the previous period New York banks had actually lent an enormous amount of money to the so-called Third World countries and with the raising of this interest rate many of these countries, many of these governments therefore struggled to pay their debts and went into default therefore they were forced to appeal to the IMF for loans and debt relief obviously US banks are not humanitarian institutions they're imperialist institutions they serve the interests of the US ruling class and so also is the IMF which is a key tool of US imperialism and the situation is kind of akin to taking out a loan from a mafia boss who then jacks up the interest rate forces you into default but forces you to seek relief from the same mafia family now of course they're going to demand their pound of flesh and they're going to squeeze you dry and so the IMF used these defaults as opportunities to force these countries to open themselves up to foreign capital to imperialism and what has become known as structural adjustment programs and they provided debt relief but on condition that these countries privatized the nationalized industries removed protectionist tariffs and subsidies cut back on welfare removed labour protections and so on opened up their economies to foreign investment and that's precisely what happened in Mexico in 1982 when Mexico was forced into bankruptcy but by 1994 the same process had been undertaken in 18 countries around the world including Brazil, Argentina and Venezuela and it continues to this day for example the Bank of Badaus in Greece with the IMF and the EU, the ECB and there's the Troika say yeah, we'll give you the money but as long as you privatize what's left of the nationalized economy and reduce welfare and deregulate and so on and without the working class parties prepared to break with capitalism what choice do they have if you break with capitalism or you accept their terms so that's really what I think this is about neoliberalism I think it expresses the bankruptcy of reformism and neoliberalism you can't see it as existing in a vacuum so neoliberalism and reformism are simply two sides of the same capitalist coin and in all these situations I've outlined in Britain, Chile, Latin America and so on the ruling class was able to go on the offensive and actually roll back all the gains that the working class had run through struggle previously precisely because of the failure of left-wing reformists to actually change society when they were in power previously which of course would have meant breaking with capitalism now Britain and Chile are striking examples of this taking Britain, the labour movement in the 1970s was managing capitalism it was carrying out cuts and austerity and actually just started what factor continued or take the failure of a lender to lead the revolution in Chile to victory it prepared the conditions for the counter-revolution and that brings me on to therefore neoliberalism today so you know with an increase in protectionism is neoliberalism going out fashion? what about the return of Keynesian policies? does this mean that according to pure neoliberal theory the government shouldn't interfere with the market but of course the government doesn't interfere with the market look at the bank bailouts of 2008 what about China which is embarked on the biggest Keynesian spending program in history in order to save a crisis since 2008 they did this by quadrupling their debt in the space of seven years to over 235% of GDP they spent massively on infrastructure housing, roads, railways, heavy industry and so on they poured more concrete in three years than the USA did in the whole of the 20th century which was a staggering statistic and the result of that now is massive overproduction and it was reflected in chronic over capacity in Chinese heavy industry and actually the existence of these kind of ghost industries like whole cities which are kind of effectively empty and it's inevitably heading towards a crash nothing fundamentally has been solved and I say this proves the inability of Keynesianism to actually solve a crisis and fix capitalism but I say I wouldn't see this as a sign that neoliberalism is dead in fact I say nowhere in history have the capitalists ever adopted like a pure neoliberalist program they just take whatever measures are necessary that they feel they can get away with given the class balance of forces in each particular circumstance hence the relaxation of monetarist policy in the early 1980s in Britain and Chile when unemployment was actually skyrocketing down to dangerous levels hence as well the payload of the banks in 2008 and I see the key thing today is that there's a world crisis of capitalism and if we're to end neoliberalism capitalist policies it necessarily means ending capitalism and ultimately it's not the capitalists it's the governments it's the policies are dictated to the capitalist by the very crisis of the system for which they have no way out and hence the adoption of austerity policies by governments of the left and the right all across the world on the basis of capitalism they don't have any kind of alternative hence why the so-called socialist party in France ended up implementing vicious anti-worker laws it's not that they just happen to be neoliberals they accept capitalism they therefore have to play by its logic this also has a lot of lessons for the Corbyn movement because of course we support Corbyn but we've got to say honestly how is he going to implement his program given this worldwide crisis of capitalism and I think we can discuss that in the discussion a lot more in the next session but I think there's clearly a layer of activists who think that all we need to do is just reject nasty neoliberalism and therefore return to Keynesianism and we'll have a repeat of the post-war boom and I've tried to show why that isn't possible since the conditions that gave rise to that boom do not exist in the world today and I say the only real way to get out of this crisis is to break with the market is to break with capitalism to take the vast productive forces that capitalism has created and take them over on a worldwide scale run them democratically for people's needs and not for profit


Mr. President, you've caused, often, given your views of Nicaraguan called it a war machine and said it poses a threat to its neighbors and ultimately to our security, but the Salmon East has appeared to be firmly in control and there are a few signs that they're changing. What looking back on your policy over the last four years has it actually accomplished as far as Nicaragua is concerned? Well, yes, I think there are more people who are opposing the regime right now in Nicaragua than actually fought in the revolution against Samoza and it seems to be growing. The unhappiness of the people, you only have to look at the floods of refugees that are escaping from Nicaragua to realize that the people of that country are not happy with that totalitarian regime. With what final result would it lack? Well, I know the Contadora is still trying to find an answer of that kind, the Contras themselves have offered to lay down weapons and go in negotiations in an effort to have what they had fought the revolution for and that is a democracy. So I think as long as the people of Nicaragua are still striving for the goals of the revolution that they themselves fought, I think that we're obligated to try and lend them a hand. In this country, even though your popularity remains very high, on the issue of Nicaragua polls show that there are many Americans opposed to your policy there and the Congress shows very little inclination to give you the 14 million you've asked. Do you have any new proposals or ideas that would change this view in Congress? Well, nothing that I can talk about here, but let me just say, I know this about what the polls show and I know what happens up on the Hill. But we've been subjected in this country to a very sophisticated lobbying campaign by a totalitarian government, the Sandinistas. There has been a disinformation program that is virtually worldwide and we know that the Soviets and the Cubans have such a disinformation network that is beyond anything that we can match. And of course, I don't think the people have heard actually the thing that we're trying to explain of what is going on. People go down some people to Nicaragua and claim they come back now with views that are favorable to that totalitarian government, but why don't they go to some of the neighboring countries and talk to the thousands and thousands of refugees and ask them why they fled Nicaragua? Is there anything that you can do as president that your administration can do to help the countries and their supporters if Congress does not vote this money? I don't know. That's something I'd have to face if they do this. We're not alone in helping them. As a matter of fact, in spite of the polls, there is more and more private support for the countries. On another subject, sir, have you heard back from the Soviets on your proposal for a meeting with Mr. Grubasha? Lou, let me just say in this, I know it'll be kind of frustrating. I've had a response to my letter, but I never talk about content of communications between myself and other heads of state. Well, without putting it then in the context of a letter, we've heard that the Soviets have given some indication that they would like to meet with you, but they have not given a time and place. Could you? Well, again, as I said, then that would be commenting and that would be opening the door to all kinds of speculation. I wrote and he answered and we're in negotiations and we'll just leave it at that. Do you expect that you will meet with him sometime without reference to the letters? Do you foresee a summit meeting or a high-level meeting between you and him? Well, I'm going to continue. I made it evident or made it plain that I would have liked such a thing with his predecessors, but I'm going to continue hopeful that we can have such a meeting. Has the killing of Major Nicholson had any impact on these negotiations? No. There seems to be a little misunderstanding in the part of some columnist about my answer the other day to that, that it made me even more anxious for a summit meeting. Some have made it seem as if I was being an appeaser or something, not at all. This was a murder, a cold-blooded murder, and it reflects on the difference between two societies, one that has no regard for human life and one like our own that thinks it's the most important thing. And yes, I want a meeting even more so to sit down and look someone in the eye and talk to them about what we can do to make sure nothing of this kind happens again. Mr. President, on a related subject, the Strategic Defense Initiative, you have said that the world would be a safer place if the superpowers moved to strategic defense from mutual assured destruction, but the Soviets don't agree. Does this mean that the present negotiations at Geneva are really on hold until the Soviets come around your point of view, or is there some way that we can move now to have these talks deal with the immediate questions, the immediate questions of medium-range and long-range missiles? Well, I don't think there's any hold on the talks over there. They're in three groups. One group is talking about space, things within defense weapons. One is talking about the strategic weapons, and the third one is talking about the intermediate-range weapons in Europe. And the negotiations are going forward. The Strategic Defense Initiative is purely research. And Mr. Gromyko himself said, there's no way to control that, that it's not covered by any treaty. And the plain truth of the matter is they've been doing the same kind of research in the same areas and started it before we did. Now, I do mean that if this research could lead to the kind of a weapon that would make one have to think twice as to whether they could be successful with the use of nuclear weapons, then it would lead to the very thing that both the late Mr. Chinenko and Gromyko have said, and that is that they would like to see the elimination of nuclear weapons. So would we. And if a defensive weapon that could be successful against them helped bring that about by making them too costly to take the chance of putting those costly things in the air only to be shot down, then we'd be further on the way toward the elimination of nuclear weapons.  So we need an interim that gradually everyone would see that it makes more sense to keep on going until you've eliminated them. Would it be wise to try to achieve that sort of interim agreement about the time when the SALT II limitations would have expired that have been generally observed by both sides? Well, I haven't really thought about whether that makes any difference or not. It's just that the world is living under a threat and other people are going to try as we know to get missiles themselves and some of them are less responsible than others and they're not all superpowers. And I just think that it's a threat that humankind should not have to live under. And another subject, Mr. President, a British newspaper reported yesterday that the United States has warned Iran that military retaliation would take place if any of the Americans who have disappeared in Lebanon were to be put on a show trial or murdered by pro-Iranian factions. That's such a warning that issued to Iran. Well, here again, I don't think I should discuss anything of this kind. What I have said is that there is increasing evidence that some terrorists in the world are actually emissaries of sovereign governments and if that's the case and can be established then that business of trying to find and track down in all the world a few terrorist individuals for some crime, no, go to the source. The government supports them. But you put Iran in that category of government that the state supports. Well, as I say, I can't comment on this specific question that you asked beyond that. But this, we've been working as closely as we can with allied countries and friends to see if together between us we can't do something. And we have done something. I think we've had some measure of success. But in the exchange of information to get a handle on this widening terrorist activity, we know it's not just one group. There are a number of groups representing different interests. Sometimes they apparently collaborate and it's a new form of warfare. Can you tell us something about the accomplishments in this area that you believe you have achieved? Well, we're making headway and have been successful in getting cooperation in trading information, intelligence information, getting agreements with other countries with regard to extradition and denying their countries a shelter for terrorists who then cross a border and reasonably have been in the past reasonably safe if they leave the country where they've been terrorizing. And there's going to be much more mutual agreement about the need for all of us to work together. Mr. President, on the subject of South Africa, there have been 38 fatalities and civil strikes there in the past few weeks and the government seems to be engaging in increasing repression, banning assemblies and meetings. Isn't it time to go beyond the policy of constructive engagement and silent diplomacy in our dealings with South Africa? We think that what we're doing has the best effect and the most effect of anything that we could do. Just walking away would leave us with no ability to influence them. We think some progress has been made. We do know that there is a factionalism there. That isn't just a simple question of two groups, the government versus a group. Over in this group there is a division and there is a sector that once violence is the answer and or even violent to the others, not to the government alone. And we think apartheid is the main problem that must be resolved and we're going to continue doing all that we can to encourage the government in its course. But have we done anything to try and discourage that government from this violence? It seems that it's gotten worse rather than... Well, except that the violence, nothing can be solved by violence. And that isn't the answer. But remember, the violence is not just alone stemming from a government put down of demonstrators. You have in the black community there, you've got rival factions and the violence is sometimes between them fighting each other. And we've seen evidence of that and we've seen murders and some of the 40 deaths have been created in among the people without the government participating. When you mentioned that in your recent news conference, some people in this country and around the world took that as condoning the government's actions. No, and it wasn't intended to be, but it is true. I think some people, and I would have to say that some who did maybe have a political bias, but they tried to read into it that I was voicing a bias. And I wasn't. I was trying to point out just what I did here. Maybe I should have taken more time. You know in a press conference you feel a little pressed for time in your answers and sometimes maybe you don't make them as full as they should be. But I was trying to point out that from this being simply people opposed to apartheid against a government that is supporting apartheid, no, it has gone beyond that. There is an element that wants an overthrow of the government by violence and is not just limiting its fighting to the government. It is fighting its own fellow citizens and even in the same communities. Mr. President, we could change a little bit to domestic matters. I wanted to ask you a question about the budget. You said in a Saturday radio speech recently that you would not accept cuts in vital, conventional or strategic weapons systems. The Senate Armed Services Committee has voted to cut 175,000 from the defense payroll to bring down the deficit. Since you don't want to cut weapons systems, would this cut in personnel be acceptable to you? That wasn't adopted by the committee, was it? I understand that you just saw members of the committee. Well, it's part of an option directed towards zero real growth. No, that is the type of thing. I haven't had a chance to study, since I've heard that also, and see what the effect and where they're choosing these people to go. But as I've said with regard to defense, when you start to economize, you have to look at it in the standpoint not of the number of dollars that you're hoping to save, but what can you do without? Now, I don't know whether we can do without that many people and where they would come from and what shortages it would create in our defensive capability. So again, as I say, if we can find additional ways, and we have already reduced the original budget considerably. If we can find additional ways in which there could be some postponements of something or other, not weapon systems, there are a number of fairly civilian type activities that take place in the military also. If some of those would not in any way reduce our defensive capability and yet would provide some savings to help us as we try to get a handle on this budget, all right, that's one way to look. But I don't see where there could be any compromise on weapon systems that have been chosen because we believe they're necessary to redress the imbalance between ourselves and the Soviet Union. I've heard some spokesmen and some who should know better in and out of government on some of the shows on television and sometimes in voicing their in the newsprint voicing their opinions that somehow we're on a parity. They've even used that term with the Soviet Union.  The Soviet Union virtually outnumbers us in any type of weapon you want to name has consistently modernized their land-based nuclear missiles where we're just trying to with the traumatic experience of the 21 these last few days, which is the first modernization of our land-based missiles in almost the lifetime of the men who are and women who are handling these weapons. They are about three to one in megatonnage, nuclear megatonnage over us. They outnumber us in conventional weapons in almost every category. Their navy has several hundred more ships than we have. We've been making progress. We think that we have, we've achieved, I think, a deterrent to the effect that they'd have to think twice about taking us on, but we haven't caught up with them or surpassed them in any sense. You, in returning to trade with Japan, you have expressed your sympathy with Prime Minister Nakasone's problems in trying to open up markets there. Nevertheless, it appears that the negotiations continue to be very difficult with Japan, particularly on telecommunications most recently. Are you satisfied, after the report from your special envoy, that some sort of agreement can still be reached, or do you think you're going to face an increasingly frustrated Congress on this issue? Well, I'm going to place my confidence in Prime Minister Nakasone and his confidence that he wants to arrive at a solution to these trade problems as much as we do.  And so we're going to, we just have to wait and see what he can accomplish. We have made some progress so far, and some time ago with regard to citrus fruits, beef, things of that kind, and the negotiations aren't over, by any means. Mr. President, for a long time, you've been theoretically strongly committed to the idea of free trade. Will you make an active effort to try and oppose the legislation, the protectionist legislation that now appears to be building in the Congress? Yes, I will. Because protectionism, if you go back over the years, all of you have only read about it, but the Great Depression, I think the Great Depression was extended and carried on and worsened because of a tariff, a tariff situation in our part called the Smoot-Hawley that reacted unfavorably against us. It was supposed to be protectionist. But protectionism is a two-way street, and it may be that here's an industry that is suffering from, let's say, some unfair competition. What we're trying to cure is unfair competition, to see that the markets are free to each other, both ways, that we're not competing with subsidized products, government subsidized and so forth. And all of these things, we're doing our best to change. But in normal competition and international trade, the, to set down here a restriction that is based on some import in our country from another, they then may retaliate and affect another industry of ours. So to help one industry by protectionism, when you can't help all the others that are our exporters and what's going to happen to them at the other end, we saw a little example or an example of that, not exactly in this sense, but in the grain embargo, we lost a market and we lost our recognition of us as a reliable trading partner in doing that. Mr. President, you said in your last news conference that you didn't want to visit Dachau during your upcoming European trip because of an unnecessary guilt feeling that you said has been imposed on the present day German people. How do you respond to those American Jews who have interpreted this remark as minimizing the Holocaust and as passing up an opportunity to dramatize this idea of never again? Well, Lou here again is one that may be, well, no may be about it. I guess I should have elaborated more in my answer. I have made it very plain and spoken publicly in a number of occasions and will continue to say we should never forget the Holocaust. We should never forget it in the sense that this must never happen again to any people for whatever reason in the world. What I meant in this time to be a guest in that country at this particular time when it is the coincident date with the end of the war and recognizing that the most of the population there, I grant you, there are some people there my age who remember the war and were participants in it on that side, but the bulk of the population, you might say everybody below 50 or 55 were either small children or not born yet. And there's no question about their great feeling of guilt, even though they were not there to participate in it, of what their nation did. And then to take advantage of that visit and that occasion to go there, I just think is contrary to what I believe we should all start recognizing the day of the end of the war and make it more of a celebration of the fact that on that day, 49 years ago, began the friendship that we now know, 40 years of peace between us. And at the same time, you can say, and let us keep it this way and never go back to that other way. And it just seemed to me that it would be just out of line to emphasize that when I was there as a visitor in their country. I am supportive of the Holocaust Museum. I've done everything I can to be supportive of that. And I will say anytime that anyone wants me to say it as publicly as I can, that no, we must never forget that chapter in the history of humankind, that and our determination must never happen again. Mr. President, on tax reform, Secretary Baker is at work, as you know, trying to come up with a revised proposal, and you have frequently talked about your desire to lower individual tax rates. Yet the first Treasury plan envisioned a higher corporate tax burden. Are you willing to accept higher burdens on corporations as a trade-off for lower burdens on individuals? Well, no, the corporate tax was going to be cut even lower than the top personal rate in their plan. What we're talking about is generally more money from the corporate sector, but by way of broadening the base, that the rates would be lower for everyone. But there would be an end to some loopholes that probably were never intended to allow large profit-making corporations to escape tax, totally tax-free for years on end. And it would simply mean that there'd be more fairness that you'd know that your neighbor was paying a tax too and not getting off scot-free. So you would envision as a result of this effort both lower corporate and individual rates and all the revenue that is lost made up entirely by base broadening efforts? Yes. The rates, there's no question, the plan calls for a 33% top rate instead of 46% for the corporations and then calls 50%, 25%, and 15% for the, I mean, 35%, 25%, and 15%, instead of the 50% and other 13% tax brackets for individuals. So no, we don't want to penalize some taxpayer into paying a higher share by way of higher rates. We want all the rates to be lower, but as I say, close those loopholes that have permitted this thing of very profitable businesses not paying any tax. Mr. President, you said it at St. John's last week. I know you were in a lighter mood. You said that you're the students, you're not a young man anymore. And you're a person who has always celebrated your own vitality. And I guess I wanted to ask you whether you feel yourself aging or growing any older in this job? No. Do I look older? I don't feel any older. No, I feel fine. And no, I haven't. I think maybe part of it, Lou, is that there have been a lot of people who have sat at that desk and have come from, let's say, different experiences in government by way of the legislature, for example. I have to believe that eight years as governor of the most popular state in the Union, California, was a pretty good foundation. In other words, I didn't find things too different. I had eight years of dealing with many of the same problems. Granted, we didn't have a foreign policy in California, but I think that this is part of it. For eight years, somebody handed me a piece of paper every night that told me what I was going to be doing the next day. And when I became governor, I had something of the same problems in California that we had here. I came in in the middle of the fiscal year. You don't quite come in in the middle here. You only come in four months into it. You've got eight months to go on the other fellow's budget, but in the middle of the fiscal year and with already a deficit that had been piled up in California and the difference there, and I wish I had it here. The difference there was that in the six months remaining, to me, when I took office of the budget, that first budget, I had to balance the budget, which was one of the reasons why, in contrast to everything I'd said in campaigning, I had to go for a tax increase because when July 1st came, that budget had to be balanced. And but I promised the people that as soon as we could, we'd give it back, and we did. You know that every time there was a, we got to the place where it was surpluses, not deficits, and every surplus, we gave back to the taxpayers. I think we're to our last question. Dave or Lynn, do you have a question? Well, Mr. President, speaking of the balanced budget, you apparently reportedly got very upset at a congressman who quoted, who said that he asked you if you want a balanced budget, why don't you submit one? Well, I'd like to ask you, what was your response to that question? There was the most hypocritical question I'd ever heard. What is a member of a party that for 50 years, with only a couple of years exception, two or four years exception, has been responsible for the government spending, the Democratic Congresses of the past 50 years, and we've had deficit spending for 50 years, and a trillion dollars piled up in national debt. Before we got here, that for someone now to suggest when they themselves have refused to give me the cuts I asked for, to suggest that I should have asked for so many more cuts that we had a balanced budget all at once, no, it is hypocritical. He knows, and everyone knows, there's no way that you could pull the rug out from so many people by trying to balance this budget in one term, in one year. You have to, the people have become accustomed for a half a century to many of the things that government is doing, so you've got to warn them that down the road here is not going to be doing some of these things, and you start us on a downward path of reducing the deficits to where you can point to a time reasonably certain and say here is where we can reach the balanced budget. And this is our goal, but for him as a member of the body that has refused to give me the cuts that I asked for ever since I've been here, if they'd given us the cuts in 1981 that we asked for, the budget deficit would be 50 billion dollars less than it is today. And then for him to say, why don't you submit a balanced budget? Yes, I told him that and no uncertainty.