Chris Hedges Report - Sunday, May 31, 2026

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1. to a scanning system based on sensing danger.
2. But quite obviously, you as a complete individual
3. are much more than the scanning system.
4. You are in relationships with the external world
5. that on the whole are incredibly harmonious.
6. We've been listening to a talk by the late Alan Watts, entitled We as Organism.
7. This was part one of two.
8. We'll hear to part two next week.
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25. Imagine.
26. The economic fallout from two months of war in Iran is already crippling economies across the globe.
27. Energy prices are soaring.
28. Gasoline shortages and rationing are plaguing countries such as Vietnam, South Korea, and Thailand.
29. Japan has had to twice dip into its strategic reserves since the war on Iran started in February.
30. The rise in price of liquefied petroleum gas means cooking gas prices have skyrocketed,
31. devastating households in countries such as India.
32. The price of nitrogen fertilizers produced in the Gulf are also rising at an alarming rate,
33. guaranteeing steep increases in food prices.
34. There are growing shortages of helium, aluminum, NAFTA, devastating industries, including the microchip industry.
35. Textile mills in India and Bangladesh have shut down.
36. Steel mills in India and automakers in Japan have cut production tens of thousands of workers across the globe have already lost their jobs Asian airlines along with those in Poland Germany and Ireland are cutting flights and raising surcharges
37. with a doubling of the price of jet fuel.
38. The United Arab Emirates, one of the world's richest countries, with sovereign wealth funds that total more than $2 trillion,
39. has asked the United States for a financial lifeline in the wake of missile-damaged gas fields
40. and a halt to shipping in the Strait of Hormuz, the New York Times reports.
41. Millions of people, especially in Asia and Africa,
42. are at risk of falling into dire poverty because of the conflict,
43. according to the United Nations Development Program.
44. The U.S., which is a net exporter of oil and natural gas, has been relatively insulated from the global shock, although gasoline prices have risen by $1 a gallon since February 28th, but this will not remain the case if Iran does not open the straits soon.
45. The average U.S. diesel price has already increased by nearly 50%, surpassing $5.60 a gallon.
46. Higher fuel prices, coupled with growing shortages and disruptions in supply chains,
47. will begin to take a heavy toll on the U.S. economy, as everything we pay for,
48. including consumer products, food and transportation, rise in price.
49. We flirt not only with a global recession,
50. But if the closure of the Strait is not resolved, a global depression, with all of the suffering and inevitable social and political instability, catastrophic financial crises inflict on societies.
51. Joining me to discuss the economic consequences of the war is Professor Richard Wolff.
52. Professor Wolff is a professor emeritus of economics at the University of Massachusetts Amherst
53. and a visiting professor in the graduate program in international affairs of the New School.
54. He has also taught economics at Yale University, City University of New York,
55. University of Utah, and the University of Paris.
56. I want to begin, Rick, by examining something that's not, I think, been widely discussed, and that is supply chains, how fragile they are.
57. We're already seeing, of course, supply chains being degraded, how difficult it is to resurrect them, and what the consequences of serious damage to supply chains are.
58. Okay, it's a really good place to start, Chris, because it allows me to talk a moment about
59. economic history.
60. Particularly since the 1970s, major large capitalist corporations, American but also
61. Western European, Japanese, and others, have followed the guideline of profit maximization,
62. the religion of capitalism, to move production, to make a long, complex story short, to move
63. production around the world from being concentrated in the United States, for example, to being
64. spread all over the world.
65. You know, in 1970, Detroit was the center of the automobile industry for this country,
66. surrounding Detroit were literally hundreds of medium and small businesses that fed the
67. auto industry.
68. But they were all within 20 to 50 miles of Detroit.
69. All of that is gone with Detroit showing its population today Just to give you an idea of the social consequences is about 700 people In 1970 it was just shy of 2 million people That the demographic
70. if you like, of what happened to that industry. Well, it went abroad, and here's the reality.
71. If you go abroad to China for one set of activities, to India for another, to Brazil for a third, what you are creating is long supply chains.
72. This is not a matter of technology.
73. That's often a misunderstanding.
74. You know, modern technology requires.
75. No, it doesn't.
76. It's not about modern technology.
77. The technologies installed in China are not that different from the technologies that were installed here.
78. The reality was that the labor cost in China was much lower,
79. and the desperation of those countries to bring jobs there meant that they offered very high profits,
80. and American corporations took that offer.
81. No one held a gun to their head. This wasn't done under duress. This was your normal capitalist investment where the profits are the highest. The end result, which they did not calculate, because they rarely do, was not to take into account all the secondary consequences of long supply chains.
82. and let me go through what they were. But they didn't count what I'm about to tell you. For them,
83. the higher profit settled the matter. Well, here are some of the consequences.
84. You have to travel long distances to bring the finished product from China or India or Bangladesh
85. or wherever it is back to the United States for sale. That means you are dependent on shipping.
86. That means you are dependent on the shipping industry. That means you're dependent, to take
87. current events, on the Strait of Hormuz, among other Malacca, Panama, Suez. There are many of
88. those, and those are now important in a way that they weren't before. Number two, when you ship
89. everything long distances, and you do it mostly by boat, you pollute the ocean. That's going to
90. affect travel, fishery, water access, all kinds of secondary consequences that, of course,
91. should have been taken into account. Third, you're going to be subject to political turmoil.
92. If your shipping route takes you here or there, if you need to have storage facilities along the way, which you usually do in case of all kinds of situations, you have to have friendly locations in which to do all of that.
93. And anybody at any point can hold you up.
94. And if they do, then you are suddenly frozen.
95. We're seeing that now.
96. Energy is a basic component.
97. But often, even a little component, you know, the carburetor in your car.
98. Well, the car has to have a carburetor.
99. And even if everything else is available, but the carburetors aren't, you're stuck.
100. And when you stuck you can deliver on time Okay long story short this is a wonderful example of what in economics is called the difference between private cost and social cost
101. private profit and social profit. We as a society need to know what we are investing in,
102. in terms of all of its social consequences, or at least as many as we can foretell and get some
103. measure of. But the corporation doesn't do that because it doesn't count the costs it does not
104. have to cover. It's not responsible for the pollution of the water. It's not responsible
105. for the political turmoil that may interrupt.
106. So it doesn't have to count for those things.
107. It doesn't have to set aside funds to manage the contingency.
108. None of it.
109. They just go ahead and make their investment.
110. It has all the social consequences I've sketched here.
111. And we, the people, the government, the society,
112. are left to try to cope and clean up whatever it is that they didn't foresee while they make the profit that comes not from the intrinsic benefits of the investment, but from the fact that they don't have to count, let alone cover, the costs, the social costs that are involved.
113. We are now living with that. The war between Iran and the United States and Israel, whatever you think of it, is an interruption in a long supply chain. And we are dealing with the enormous social costs that you nicely listed, some of which at the beginning of the show.
114. And we're all going to struggle economically, politically, culturally.
115. You know, the UAE just withdrew from OPEC.
116. I saw that literally a few minutes ago.
117. That's one of the cascade of social consequences of this whole situation that will change the oil business and everything that depends on it for years to come.
118. and the so the degradation in the supply chain which i did kind of illustrate at the introduction
119. uh you know a lot more about this than i do it it it it's not necessarily even if the
120. straight of hormuz was open today that supply chain is going to be disrupted for some time
121. am i correct absolutely it's supply and even more chris even more every company that has any occasion
122. directly or indirectly to utilize this trade of Hormuz is now calculating, in a way they
123. didn't before, the risk.
124. And that risk means they will have to, or not have to, but many of them will decide
125. to change.
126. For example, there's an acceleration of pipeline construction all over Asia in order to avoid
127. dependence on the Strait of Hormuz for oil and natural gas and so on.
128. Okay, that's diverting investment from other projects to pipelines.
129. No one is thinking about, well, what are the projects that are being put on postponement?
130. What social need were they invented to secure?
131. And those are now foregone because we have to build pipelines all over the place.
132. Why?
133. are worried about the risk of not doing a pipeline.
134. Countries are making these calculations, and corporations.
135. They have to. That's the job.
136. The purchasing manager in every company,
137. whose job it is to secure the purchase of fuel oil and gas at an appropriate price,
138. is now charged by the CEO with finding alternatives that are less risky,
139. and balancing that against the relative prices. Of course, we don't know the relative prices
140. because we're in the middle of all of this, and how the relative prices shift is being determined
141. right now. Just to give you an example, because Europe is in almost as bad shape as Asia about
142. all of this, the strategic reserve of oil maintained by the United States, about half of it
143. has been used up now, and they're selling that oil way below market price, mostly to the Europeans.
144. It's, you know, that's a political game being played by Mr. Trump, but, you know, the Europeans
145. don't know how long he'll do that. They don't know whether the tariff wars will be reignited
146. the way he seems to want, and that will once again lead to trouble between the United States
147. in Europe beyond what already exists. You can see how far that can go by looking at the alienation
148. of Canada and Mark Carney and all of that. So everybody's trying to recalculate, reposition
149. with an awful lot of variables shifting as we talk makes it all very, very difficult. But it
150. doesn't change the challenge, which I think will eventually be dealt with explicitly. You cannot
151. allow the development of a world economy that ties everybody together without the participation
152. of the mass of people, as if this could be left to the private interests of literally a few
153. thousand corporations who are making decisions based on what's best for them, granted, but the
154. notion that what's best for them is what we all need is being blown apart by today's headlines.
155. So if the Strait remains closed, and I don't see that Iran has any incentive to open it at this
156. point, and prices continue to rise, i.e. inflation, how does the global ruling class respond? Do they
157. raise, jack up interest rates, and what are they going to do? At this point, I don't think they
158. have a clue, and let me explain why. The National Bureau of Economic Research, one of the major
159. institutions in our country keeping track of economic data, are the place we go to,
160. the economics profession, to find out about business cycles.
161. A long story short, their discovery years ago was that wherever capitalism settles in
162. as the basic economic system, we have a downturn on average every four to seven years.
163. an average, so sometimes it's shorter, sometimes it's longer.
164. And each downturn has its unique qualities and paces and all of that.
165. But it is a pattern that we have tried for three centuries to overcome and we haven done There even an entire economics around Mr John Maynard Keynes developed to cope with the worst of it the
166. 1929-30s crash,
167. and we have a whole system of analysis called
168. Keynesian economics
169. and that has helped
170. modulate them a bit
171. but overcome them? No.
172. Well, if 47 is your average
173. And if the last one was in the year 2020 and dash 2021, well then, we're due.
174. That's the first thing to be aware of.
175. We are due for an economic downturn.
176. And if you read the financial press, the articles are full of that.
177. They know that.
178. That's not a secret.
179. That's not something that people on the left believe and others don't.
180. It is pretty well established empirically.
181. Okay, so now here's the interesting thing that needs to be understood.
182. To whatever extent we are on the edge of a downturn, and rising unemployment over the last six months suggests it also, and there are other indicators.
183. It is quite possible, although the press never mentions it, that the kind of shock coming
184. from the oil disruptions out of the Strait of Hormuz could actually produce a serious
185. downturn.
186. And if that happened, it's an open question whether we would have an inflation.
187. We might still see corporations raising prices.
188. If we do, we get that phenomena economists call stagflation, a mixture of stagnation
189. on the one hand and inflation on the other.
190. But let me stress this, it is also possible that the downturn would lead corporations
191. fearful of being stuck with unsaleable inventory cutting prices.
192. I want to remind people, in the Great Depression of the 1930s, prices fell, and that cushioned
193. the breakdown for many American families.
194. They lost their job, they had very little money, but the prices for food and clothing
195. and shelter were dropping because the downturn was so severe.
196. Could we have a comparable downturn?
197. Absolutely yet.
198. I'm not saying we will, but we could, and in that event we will be looking at an interruption,
199. an oil shock, and a deflation rather than an inflation.
200. The economics of that are pretty well known.
201. There are plenty of examples of it going in that way, and we should be aware that that's
202. part of the problem.
203. If it is true, as recent statistics suggest, that literally the top 10% of the American
204. consumers, richest 10%, account for more than half of the whole consumption bundle in this
205. country, then if the other 90% are as strapped as the data suggests, then I don't know what
206. the reaction will be when you have another dollar a gallon to get to and from your job,
207. to get to and from shopping, to or from going to the movies.
208. It's the joke that I hear here in New York all the time, there's too much month at the
209. end of the money.
210. In that situation, you will get a deflation because the system will contract bitterly
211. out of all of it But if for instance fertilizer prices which have rocketed upwards doesn that inevitably mean an increase in food prices
212. No, I wish it did.
213. It just as often means that the farmer makes the decision to let part of his fields go
214. fallow, let them go.
215. Grow weeds, plow them under, that's another kind of fertilizer.
216. In the long run, you have to do that periodically anyway.
217. The chemical nitrogen from oil is good, but has its limits like everything else.
218. The question is, how many farmers will take 10 or 20 or 30 percent of their acreage and
219. let them go in order to save on the fertilizer, figuring they can make it up by shrinking
220. their output if enough other farmers do it?
221. is now pretty well developed among them, then the prices will, they hope, go up. But if their prices
222. go down and they've cut their acreage, we could see another wave of farmers go out of business.
223. We should be aware that most of our farmers are badly indebted. They don't have much slack.
224. Even though we don't have lots of little ones the way America used to, the big ones can go
225. out of business also. They are also peanut counters, and if the prices of their inputs
226. exceed what they can reasonably expect, and if you add the risk of a deflation in terms of the
227. final output, you know, how many Americans are going to make the decision to go from hamburger
228. to hamburger helper, to really begin to eat like poor people, grain flavored with a little
229. something else, but it's basically rice or pasta or bread, etc.
230. You know, we're on our way to that anyway in this country, and we can call it all dietetics,
231. so you lose weight, so we don't have to face that it's an economic problem.
232. But those are real possibilities that are now shifted from vague in the future to much
233. closer because the Strait of Hormuz, this long supply chain, is disrupted.
234. And what are the effects of this on the empire itself?
235. Well, I mean, this is a sore point for me. Chris, you know me a little bit. So
236. I think our empire is over. I think what we are living through, you, me, our generation now,
237. is the very unhappy, unpleasant, scary experience of a declining empire,
238. which the Americans have never had.
239. Our empire over the last century was nicely upward.
240. Not for everybody, of course, but for enough of them to give it the quality of an upswing.
241. And particularly after the Second World War,
242. when all the other potential competitors for that role had blown themselves to bits.
243. So the result was we were king of the hill,
244. and that gave rise to the 1950s, 60s, 70s, 80s,
245. when you and I both know there was this sort of odd celebration of all things American,
246. American exceptionalism.
247. them.
248. If you were religious, then God loved you more than he loved everybody else, and on
249. and on.
250. Where did this come from?
251. It was very classic the failure to understand the particularity of the conditions of the moment and a projection as if something guaranteed that they would stay the same or even if they changed they would somehow magically continue
252. the odd special position of the United States, you know, and that's simply not true. And starting
253. ten or fifteen years ago, I think it became palpable.
254. Not the explanation, because we sure live in a country that practices what my wife,
255. who is a psychotherapist, calls massive denial.
256. It's a refusal to entertain the very idea the empire is over, and therefore what does
257. that mean?
258. How do we approach China or Russia or Iran if we're a declining empire?
259. It's a whole different mindset.
260. Then you want to work out how do we go through a decline without blowing ourselves up or
261. blowing the whole world up.
262. It's not a question of maintaining your dominance.
263. That's gone.
264. It's a question of working things out.
265. Our leaders don't think or talk like that.
266. They talk like they're still in the 1970s and 80s, when you could make an argument that
267. the United States' position was extraordinarily dominant.
268. That is over.
269. Vietnam was the beginning of the end, maybe even Korea, but Vietnam for sure, Afghanistan,
270. Iraq, Ukraine now.
271. Unbelievable.
272. We are not in a position to do.
273. All the bravado, even the wisdom coming out now that clearly the American government,
274. Mr. Hague said, Mr. Trump, thought they could do this thing in Iran, kill the Ayatollah
275. and drop a bunch of bombs in Tehran and it'll all break apart in our way.
276. That is so catastrophically wrong that it takes your breath away.
277. Well, for me, we are living through the end of the empire, and that end has been accelerated
278. and brought closer by everything going on in the Middle East right now.
279. And because what's going on from the American side is still premised on the notion we don't
280. have a declining empire, it is making one mistake after another, which is feeding into
281. the decline of the empire.
282. But that's what denial gets you.
283. That's what a similar denial in the decline of other empires, the Roman, the Greek, the Persian, the Ottoman, all of them.
284. The pattern is not that different.
285. You start the denial.
286. You can't believe it.
287. You don't want to believe it.
288. You decide not to believe it.
289. And then you make a lot of mistakes that drive the point home because they accelerate the decline.
290. When I do interviews with the British these days, you know, I invite them, help us.
291. You've been declining longer than we have.
292. You know, the American empire really picked up the pieces when the British empire was gone.
293. And the British have had to cope with it for a very long time.
294. We're just beginning and we're not doing a very good job.
295. Great. Thanks, Rick.
296. and I want to thank Sophia and Max who produced the show.
297. You can find me at chrishedges.substack.com.
298. 🎵