The following is a rushed transcript and may contain errors. It will be updated.

Maximillian Alvarez:

Alright. Welcome everyone to Working People, a podcast about the lives, jobs, dreams, and struggles of the working class today. Working People is a proud member of the Labor Radio Podcast Network and is brought to you in partnership with In These Times Magazine and The Real News Network. This show is produced by Jules Taylor and made possible by the support of listeners like you. My name is Maximillian Alvarez, and today we are going to Whiting, Indiana, where for the last five months, oil giant British Petroleum or BP has locked 800 workers out of their jobs at a crude oil refinery on the southwestern shore of Lake Michigan. This is the last unionized BP refinery in the United States, and this is a really important struggle and a really important story. But with everything in the world and the news being so crazy these days, it has not gotten the attention that it deserves from national media.

But that is why we are so lucky to have someone like Sarah Lazare, a brilliant journalist and the editor of the excellent Workday Magazine going where others won’t and lifting up the stories that need to be told and heard. In her recent report titled Locked Out Refinery Workers Say BP is Trying to Starve Us and Crush the Union, which was jointly published by Workday Magazine and the American Prospect. Sarah writes, “British Petroleum, one of the 10 largest oil and gas companies on earth, kicked out its workforce at the Whiting Crude Oil Refinery, which at its peak produces 440,000 barrels a day on March 19th. The previous contract expired in January and United Steelworkers Local 7.1 declined management proposals that workers say would existentially threaten the local. The union has been locked out for over 140 days, and it says it is fighting for its survival against an employer that wants to cut pay in jobs, undermine workers’ ability to strike and tear the local away from national bargaining.

The lockout is illegal,” the union says. By late May, United Steel workers had filed 15 unfair labor practice charges with the National Labor Relations Board, alleging that the company is refusing to bargain in good faith and using threats, coercive statements, and surveillance. The fight has become a test of endurance. On one side are workers who are not receiving the equivalent of strike pay, though members can ask for help from an assistance fund financed by the United Steel workers. On the other side is an oil company that brought in $189.2 billion in revenue in 2025. In an email to Workday Magazine and the prospect, BP spokesperson Cesar Rodriguez said that the company is pursuing, “Modernized job structures, training, and upskilling.” But workers say that this is just code for greater disposability and degraded conditions, and they declare a new pay progression would make it easier for BP to fire people and harder for workers to get to the highest rates of pay.

They’re also concerned about the proposed loss of dozens of jobs from the bargaining unit. On March 2nd, management presented the local with their last, best and final offer and the union membership voted it down. A revised settlement was offered the next day, but it too was rejected. On March 17th, the union gave a counter offer. Just four hours later, the company rejected our counterproposal, issued notice of the cancellation of rolling extensions and a notice of intent to lock us out of our jobs effective at midnight on March 18th, according to the United Steel workers. To talk about all of this, I am really grateful to be joined on the show today by three guests. Eric Schultz is the president of United Steel Workers Local 7.1. Leno Miller is an assistant griever for USW Local 7.1. And Tim Powell is a 19-year member of USW Local 7.1 and a volunteer for the Lockout Assistance Committee.

Eric, Leno, Tim, thank you so much for joining me today on the show, especially with everything that you guys got going on. I really, really appreciate it. And I do wish we were meeting under less horrifying and infuriating circumstances. And we’re going to talk about the lockout and everything that’s going on right now. But before we do, I’d love for listeners to get to know you first because most people have never met or spoken to folks in your line of work. So tell us more about yourselves, how you got into this work, and the kind of jobs that you do on a day-to-day basis before this lockout began.

Eric Schultz:

Yeah, absolutely. Thank you for taking the time to have us. Again, my name’s Eric Schultz. I’m a machinist in the refinery. I hired in October of 2009. I started off in our machinist apprenticeship program. So that was a four-year apprenticeship where you learn the refinery inside and out from a mechanical standpoint. What machinists do out here? It’s kind of an amalgamated trade. It’s more like a millwright machinist. We’ll do anything from repairing pumps in the field, turbines, compressors. We have shop work where we repair relief valves, the pumps and the turbines inside the shop. So we do a lot of things from A to Z as far as a maintenance millwright mechanic would do. And then so that was 2009, about 2014, July of 2014, I came onto the union board as a divisional rep. I represented our machinists and our instrument in electrical groups.

And then about five years ago, I became president of local.

Maximillian Alvarez:

Yeah, man. You machinists need to rebrand as the MacGyver union because you’re out there fixing things that I didn’t even know existed or that are taped together and you got to have an intimate knowledge of this machinery and the kind of machinists I’ve talked to from the railroad industry to the gas and oil industry to Kellogg’s. There are just so many nuances that none of us understand. So I can only imagine the kind of stuff that you guys are doing out there in the field.

Eric Schultz:

Yeah. Especially in an oil refinery, it’s a very niche market. You run into equipment that you wouldn’t run into in many other fields. We’ve got equipment from the 1940s and 1950s all the way up to incredibly modern equipment. So you kind of need to know the gamut. And we’ve got some amazing machinists out here that they’re absolutely experts on their units. They’re the ones that our operators will turn to to ask for help troubleshooting. Even our engineers walk into the main shop where our pump mechanics are, turbine mechanics, and ask them to help diagnose what went wrong and what they could do to fix it. So we’ve got some amazing mechanics out here, machinists. Hey,

Leno Miller:

My name’s Leno Miller. I’m a operations specialist for the refinery. I grew up in the area. I’ve carried a card my entire adult life, first of which out of high school, I carried a Teamsters card for a couple years. I worked at the local UPS plant. After that, I ended up in an automotive plant. I carried a UAW card before I got into the refinery. I hired in just shy of 20 years ago. So if BP refuses to come back to the table and bargain in good faith, I can get 20 years on the outside locked out, which not a good feeling, but that’s where we’re at. Inside the refinery, like I said, it’s been almost 20 years. So I started out as an operator, which do rounds, take samples, monitor the equipment on a day-to-day basis. We work 12-hour shifts, swing shifts. From there, I became a board operator, a council operator, which is a specialist by trade what’s referred to in the refinery.

And then I ended up becoming a chief operator as well, a chief operator and a council operator, which is a cross-qualified position, which is one of the positions that the company is proposing to do away with. So I would essentially get bumped down from a chief operator and a board operator to a technician. I would lose my specialist qualification and my pay that comes with it.

Tim Powell:

I’m Tim Powell. I started almost 20 years ago. It was 19 years this January. Started at the Cats and it was spent just about 10 years.

Eric Schultz:

No one’s gonna know what the Cat is…

Tim Powell:

Yeah. So I started over at basically a gasoline processing unit. Spent 10 years there. Had an opportunity to transfer to another part of the refinery where we were basically make diesel using high pressure hydrogen and crude oil. And I was an outside operator for most of that time. About six years ago, I got onto the console board operator job as well. So specialists, we take training every year. We do training every quarter going through computer training. Now they’re trying to say that we need to interview for these jobs again and see if we’re still qualified to be there if they’re even going to keep the job. I’m third generation USW on both sides of my family. There’s been union people throughout my family from coal miners to steel workers, city bus drivers. I mean, my family has lived on a union paycheck for generations.

Maximillian Alvarez:

Well, let’s talk about that.Because I started this show eight years ago not knowing much about unions at all. I did not grow up in a union family. In fact, back in the day, we were more of an anti-union family. We didn’t know anything. And to be honest, the few union jobs that my brother had had at a Rite Aid just weren’t good. And so I think now that we’re at a point in this country where less than 10% of the workforce is actually in a union, it’s important to talk to folks out there about what being in a union means. And so I wanted to ask you guys, why is it important for workers in this industry especially, and workers in general, to have a union? Tell us more about why being in a union is important to you and your family. And then let’s sort of unpack some of the nuances of labor relations in this industry that listeners need to know about.

Because again, we’re talking about the last unionized BP refinery in the United States.

Eric Schultz:

Yeah, sure. I mean, from my perspective, the first thing that most people come to, they think about is pay. Pay, retirement, when they think of a union. For me personally, I feel like in this industry, it’s more about the ability to collectively bargain, meaning we have 800 people that get to stand shoulder to shoulder, elect representatives, the representatives, then go sit down with the company. And you’re on as close to equal footing as you’re going to get. Without a union, it’s each man or woman for themselves. So the byproduct of that collective bargaining, yeah, it gets pay and it’s retirement, but to me, most importantly, it’s having a voice on the working conditions inside the plant, safety issues. We’ve got a contractual joint health and safety committee where members of the union sit down with members of management monthly to identify safety issues and then create programs to try to address those issues.

So at the end of the day, we do make good money because we work in an incredibly profitable industry and it’s a highly complex job that all of us do out here. But what good does that do if at the end of the day, you’re going to go home and you’re not going to be the same way that you left? You’re going to go home injured or even worse. And this is an industry that when things go wrong, they can go wrong real fast. Incidences can turn into fatalities very fast in this industry. An incident that spirals out of control inside of an oil refinery is highly likely to affect the community. And if you follow along in the news in the last year or two, it seems like once a month we’re reading about a refinery fire in which the community is ordered to shelter in place because of toxic releases that are getting into the community.

So to me, the most important piece of a union is to make sure that we go home safe and that when you retire, you actually can enjoy your retirement and not be struggling with debilitating injuries or diseases, which are very prevalent in this industry. You look at the cancer rates for an oil worker versus any other line. You look at mesothelioma, different issues. We have asbestos is all over the refinery. Everywhere you look, there’s stickers on piping that say warning asbestos. So we live with these things every day. And that’s to me the biggest thing that a union could do is help protect its workforce.

Maximillian Alvarez:

Well, and just to sort of underline everything that you said in red pen, listeners are going to have the hairs on the back of their neck standing up the same way I am because I’ve interviewed on this show a worker, Leo Linder, who was on the deep water horizon when it blew in the Gulf. So if folks are wondering how bad could it get, that’s how fucking bad it can get. Pardon my French. But it can get bad in so many other ways like we’ve been covering on this show. We talked to folks in Roseland, Louisiana near the Smitty Supply Plan where that massive explosion in fire happened and people said it was raining black sludge all over the place. I mean, we’ve talked to residents of East Palestine, Ohio where that Norfolk Southern train derailed over three years ago. And you’ve heard the hell that they’re going through.

You’ve heard the hell that railroad workers are going through and how they are being crushed into oblivion while all of our communities, our supply chain are being put at long-term risk for the sake of short-term, massive profits for Wall Street shareholders and company executives. This is part of the same horrible, vicious cycle that we’re hearing about from working people in different industries in different parts of the country all over the place. So please, I beg you, pay attention to what these guys have to say. Leno, sorry to hop in there. Please hop back in.

Leno Miller:

No, you’re spot on. And the refinery operates not only in Whiting, it’s basically in the center of three communities. It operates in Hammond, Indiana as well and also East Chicago. So it’s in the middle of a very populated area that has accepted the risks of operating a large crude oil refinery in the middle of it. But the promise that was made was the community was going to get some of the benefit of that. We were going to get the jobs. And it’s like you said, that’s where they’re breaking the promise. So if you’re bringing in workers from out of state to try to replace us and you’re trying to extract wealth out of the community, not even wealth, you’re just trying to extract a basic income and a basic way of life from the area in order to send it to shareholders and wealthy executives, especially it’s a foreign oil company.

So I mean, that’s the goal, right? And that’s what people need to understand. They’re trying to take from our community and from people that actually live and work here in order to send it elsewhere.

Tim Powell:

To build on something that Eric said too about the equal footing to have when we’re talking, when we’re negotiating with this company, a union honestly to me is the only way that everybody who has a particular job is going to get that same pay. Doesn’t matter how much the guy next to you is kissing ass to the company. It doesn’t matter if you’re a bad woman or what color you are. You’re getting that pay. It’s not that your friend across the aisle is going to get an extra 20 bucks an hour because he’s buddies with the boss. Everybody gets the pay for that work. And that’s the only guarantee honestly to me in this country that you have that.

Eric Schultz:

Yeah, absolutely. One of the company’s large proposals that they have on the table is to eliminate seniority as a means for promotion. And they view it as, well, it’s a flawed system. It’s not always the best person that gets it with seniority. They want to go what they call merit-based. Well, you look at, well, let’s look at reality. Let’s look at outside of a union facility. Do women and men in this country make the exact same amount of money for doing the exact same job? Why not? Because the merit-based system is so effective. Do minorities make as much money as white men in this country for doing the exact same job? Absolutely not. I mean time and time again, no one would even argue that case. Well, is that a merit-based system? It is. So merit, they act like merit is some great system that only the best and the brightest rise to the top.

And they’re full of shit and everybody knows that. The guy who plays softball and goes to the bar with the supervisor afterwards is more likely to get the good jobs and get better pay. The executive’s nephew that gets brought right into the plant and gets to go to the front of the line, that guy is more likely to make more money than everybody else. That’s what merit-based systems are. So absolutely, that’s one of the main issues with them. And back to the safety piece, another one of their issues, and I don’t want to get too much into the nuances of the proposals because we would need a three-hour show probably. But what one of them is the reclassification of all of our jobs. So as Leno was saying, right now he’s risen to the level of an operations specialist. We have operation specialist field, operations specialist board, and then operations specialist cross qualified, which is you do them both.

That is the top of the top. So they want to eliminate those roles, but then still have us do the same work. But they want to call us tech threes and tech fours, and then the company would get to pick the tech fours. But then they also, for our operators, they want them to have to know five different jobs throughout the refinery. Places that are, it might take you 15 minutes to get from this unit to the next unit, and that’s hoping there’s not a train stopped in the middle of the refinery. So they want to spread everybody out and make them the term jack of all trades, the ace of none. Well, if you just go back a few years ago, our sister refinery in Toledo, Ohio, which BP has since sold, it’s no longer a British Petroleum facility, but there was a double fatality.

Two brothers were killed in a fire out there. And the Chemical Safety Board, when they came back, when they finally concluded their study, one of their findings that they punished the company for was rotating the operators too much so that they didn’t just get good in one area. So the company’s taking credit for, well, I’ve got this many operators that can handle this many jobs, but they can’t do it. They necessarily can’t do it well. You do it better when you specialize. So flash forward, so the Chemical Safety Board says that the company was wrong for the way that they were handling operations. So what does this management group decide to do? They decide to put a proposal on a table to do exactly here what they were doing in Toledo and spread our operators too thin. And people just saw the proposal, the average person in the community, they wouldn’t understand the implications of the company’s proposals.

And it would make it incredibly unsafe out here. Not to mention making these guys do a lot more work for less money, but again, more importantly, you’re going to have a bunch of people who just aren’t going to be as familiar with the equipment. When stuff goes wrong, you need the people that just know instantaneously, instinctively how to get out there and what to do.

Maximillian Alvarez:

Well, and I mentioned earlier that this is the sickness that we’re seeing spread to industries all across the board. And even though people may not understand the nuances of y’all’s contract, they understand that sickness of the corporate-minded Wall Street-minded obsession with cutting costs year after year, piling more work onto fewer workers, removing important layers of security to save a buck, and all at the expense of the workers who are being asked to do way too much for less than they were getting before. That leads to hazards all over the damn place. That’s the same stuff that we’ve heard from your fellow machinists at Boeing who described like, “Hey, how did job conditions and planes get so bad at Boeing over the years?” Well, this is part of it. That worker that I interviewed on the Deepwater Horizon when it blew in the Gulf, he said the same thing.

BP was pushing speed over safety and look at the results. I mean, the same thing was said to us by the railroad workers. They’ve been cutting jobs. They’ve been making the trains longer and heavier. They’ve been making workers be on call twenty four seven, running them into the ground. And it’s only a matter of time until those short-term profits run out and you end up with a massive, massive, dangerous problem that’s going to take years to fix. And that is, again, I really, really want to stress for folks, those are the stakes of what we’re talking about here, not just for frontline workers in these industries, but for fence line communities living near these industries or living near a railroad track, living near the Gulf of Mexico or any coast where your ability to go outside is basically in the hands of wealthy corporations that are making disastrous decisions that could impact you and your family.

But I don’t want to belabor the point because I know we have limited time here. And I wanted to, before we get really into the lockout itself, Eric, I wanted to ask if you could unpack for our listeners the baseline of understanding that we need to have for labor relations in this industry, how this is working with bargaining with BP. I mean, because we had to learn that four years ago when the railroad workers almost went on a national strike. I had to become a PhD in the Railway Labor Act and explain quickly that there are 13 craft unions. There are four major rail carriers. Everyone’s bargaining in sort of different fashion. So listeners of this show are a little familiar with hairy labor questions like that. But I guess just for your average lay listener, what are the things that folks need to understand about how bargaining works in this industry so that they understand everything that we’re going to talk about with the lockout?

Eric Schultz:

Yeah, sure. So in the oil industry, we bargain at a national level. Not every facility, but every USW facility is in one way or another part of the national oil bargaining pattern agreement. And that’s been since the 1960s. Since the 1960s, there’s only been. We haven’t had a national strikes. We had one in 2015. Prior to that, 1980, I believe. So there’s really, yes, how is the labor relations in the industry? National oil bargaining, it’s been a stabilizing influence for both our members and the companies. Usually when we’ve got our final settlement offer on the table, the top table will bargain it and then it gets passed out to everybody else across the country and we put it across the table locally. Typically, you always feel like, “Man, I wish we got more. It wasn’t great, but 90-something percent of the membership votes yes for it.” And that’s probably how good bargaining works is neither party walks away feeling like they absolutely got the whole hog.

Both parties feel like, yeah, we got something, we gave up a little bit of something and we move on. So that’s how it’s typically been. Now this is a lockout, and there’s only been two lockouts in the oil industry in the last 25 years that we’re aware of. And there’s one common denominator between the two lockouts is there’s one guy that was at ExxonMobil on the HR team, on the negotiating team that was part of the lockout in Beaumont, Texas. Again, it was an Exxon refinery in Beaumont, Texas. They were locked out for 10 and a half months. While they were locked out, British Petroleum liked what they saw. They hired one of the guys from that team, his name’s Jordan Marks. They hired him and he came to Whiting and started working in the background. He wasn’t at the table with us in the first round of bargaining, but he had been there looking at the contract and trying to devise a way to do here what he did in Beaumont, Texas.

And so that’s where we’re living right now. Part of the reason that we believe that we filed so many labor board charges is that it was apparent that the company was at best surface bargaining. They had no intent to get an agreement this round of bargaining. Their intent was to push us into a strike. And then eventually if we didn’t strike, then they were just going to lock us up. So this was preordained. The company had this in mind the entire time, and that’s absolutely apparent. Now, national bargaining, everybody else, every other corporation that’s a part of it agreed to the patent. There was only one other site. There’s a site in California that’s having issues too. But the rest of the country, the membership all voted yes, and the companies all voted yes on national oil bargaining. We are in an absolute different spot than our peers.

When we get together with our sisters and our brothers from other locals, people that work for Marathon, people that work for Exxon, Chevron, they don’t have these problems. Most of their negotiations were not contentious. Obviously they didn’t get everything they wanted, but they all got a deal on time. So that’s kind of where we’re at is we’re just in this spot where British Petroleum chose years ago to go down this road in an effort to break the union here, to eliminate the union.

Maximillian Alvarez:

Let’s talk a little more about that. Let’s talk about how we got to this point. And what are the key contract issues and working conditions that you’re fighting with the company over right now? And how far back does this fight go?

Eric Schultz:

So it started, I mean, they kind of tested the waters in our last round of bargaining. So our last contract negotiation period was in 2022. It was another round where the rest of the country, the companies and the unions all agreed to national pattern and moved on down the road. We had to roll our contract for weeks after the expiration of the contract because British Petroleum had a 120-day strike and lockout notice on the table, which is something that they also did. Jordan and his cronies in Beaumont, Texas, there was a little bit less, but they put a strike and lockout notice on the table for them, the previous contract. So again, it’s lazy just bringing the exact same lazy playbook. So that was last round of bargaining. And eventually we had enough people in management that had a spine and could push back against corporate interests that were pushing for that 120-day strike and lockout notice.

And they pulled it off the table and we went down the road. So really it started last round of bargaining where you could see the items on the walls. Our smaller bargaining units, we also represent a plant right across the street called White and Clean Energy, which is a British petroleum plant. We represent our plant guards, our pipeline employees. And we’ve seen the company coming just absolutely trying to gut their contracts. And that’s what we saw this round. I mean, it’s hard to answer what are the issues because it’s everything. They basically took the contract book and went from cover to cover. And they’re proposing to change pretty much anything that benefits a union worker. Again, with the job reclassifications, we have decades of memorandums of agreements, letters of understandings, side agreements that govern how our job classifications work and how they’re policed. They want to eliminate all those and start all over again and then put management’s rights on everything.

Once we ink the deal, their proposal is going forward, the company can make any changes they want that they see fit. So who would sign a contract that the very next day it’s rendered useless because the company could go and change it however they want? And that’s where our job classifications, how we’re trained, what kind of work we have to do, how they can eliminate someone, how they can terminate someone for the company’s, their interpretation of lack of ability. So that elimination of seniority for the bidding into higher positions, elimination of plant seniority for the purpose of layoffs. So right now their proposal is they could basically, once we sign the deal, if they wanted to eliminate one of our groups, our lab, we represent our laboratory employees. As soon as we sign the deal, the company could then give us a piece of paper saying, “Oh, by the way, we’re going to lay off 50 people in the lab.

And then it would just go by that. Whereas right now we have plant seniority. If they wanted to lay off 50 people, it’s the 50 junior people, which makes it painful on the company. But what it does is it forces them to come sit down and be reasonable and have a conversation about how can, okay, you have to reduce headcount. We don’t want to talk about it, but we will. We’re not afraid to have hard conversations. And then we’ll work out a way to try to help them meet their goals, but at the same time protect our members. They want to eliminate that. I mean, it just goes on and on and on. Management’s rights for the use of AI. Their original proposal was that the contract language would survive the life cycle of the contract. They said it would go into perpetuity, meaning you’re going to agree to something that forever you’ve given up your rights, your local, state and federal rights to bargain over the use of artificial intelligence forever.

And that’s just ridiculous, absolute ridiculous language. But again, it just goes on and on and on. Any one of these issues during a regular year would’ve been a very contentuous issue that could have led to a strike or a lockup. And instead, they decided to throw the entire kitchen sink at it.

Maximillian Alvarez:

And the way that they’re trying to sweeten this deal is offer one time payments to you guys. Basically blood money to say like, “Hey, take this couple thousand dollars and sign away your collective bargaining rights.” I mean, that’s nuts. And that’s me speaking. That’s just me editorializing, but this is kind of making my head spin. And I know I could talk to you guys for hours, but we don’t have that long. And so with the time that we have, I wanted to go back around the table and just ask if you guys could sort of tell listeners how this whole lockout situation has unfolded as you’ve experienced it. Give us a worker’s eye view breakdown of events on the ground since the lockout began to now. How are you guys holding up after five months of this?

Tim Powell:

Well, with me being on the assistance committee, we’re meeting at least three days a week, sometimes more, usually six to seven hours a day. And everybody brings in their necessity bills. They bring in your mortgage, your rent, your car note, your car lease, your medical bills if they’re broken down in the monthly things, insurance, our medical insurance. The things we need to live that we can no longer provide for ourselves because BP took away our paychecks. We on the assistance committee hear the sad stories every day of like, “Well, we had to cut this back. We weren’t able to do this with the kids this summer. We weren’t able to do this. I had to sell this.” And you get jaded to it because you’re hearing it all the time, but every day there’s another heartbreaking story that you’re hearing because this person put in between.

I’ve got guys who have put in two years, I’ve had families that have come in, the guys have been here 25 years and they can’t provide how they’ve been providing for their family for the last 25 years. It’s crazy.

Leno Miller:

Yeah, it hurts. And that’s by design. I mean, that’s what BP is the company that we’ve, all three of us have been here on average close to 20 years. And by design, the company that we’ve. I mean, we’ve all missed holidays, birthdays. We’ve been dedicated workers for 20 years. And in order for short-term gains to be able to take from us, this company just posted in three months they made $5.7 billion and they’re paying a bigger dividend. We’ve been here sacrificing our personal lives for 20 years and they are intentionally hurting us and our families. So it’s shameful.

Tim Powell:

Now just are the holidays we’ve missed, but you mentioned 12 hour shifts, 16, 18 hour shifts, 12 to 19 shifts in a row. I mean, yeah, it’s great money when we’re working, but you don’t see your family for 19 days. You go home and you say hey to the wife and you fall asleep. For them not to think that this is a sacrifice every day that what we’re doing for them to then make a sacrifice even farther on this, it just drives you out of your mind.

Leno Miller:

That goes back to you asked the benefits of a union. We’re the union. The union is its workforce. The union is voted by us. It represents us. It is us. It’s the workforce. A Fortune 500 company, the workers are a line item. You’re a number on a spreadsheet. You mean absolutely nothing to them. Nothing at all. So Bernie’s Petroleum has no loyalty to us whatsoever. The only thing they care about is their shareholders. That’s it. It’s short-term value. Like I said, they made $5.7 billion in three months and increased their dividend while we were locked out.

Maximillian Alvarez:

So where do things stand now? Like what can be done and what can folks listening to this do to stand in solidarity with y’all and the other 800 folks who have been locked out here?

Eric Schultz:

So unfortunately, we’re at a standstill right now. Again, as Leno just mentioned, that’s by design. They didn’t lock us out with the intent to hurry up and get a deal. They locked us out knowing that they have a number in their mind. They know how many months that they wanted this to go. They’re going to want to put as much economic stress and pain on families as possible with the intent that eventually will crack. Eventually enough of the membership will be. When they’re visiting the assistance committee asking for help, those conversations will turn from uncomfortable right now, painful, turn to hostile and panicked. That’s what the company wants. We’re not there yet. We’re not even close to there yet, but that’s their design. We don’t foresee, unfortunately, this ending anytime soon. The things that we’re trying to do, we’re hoping to make some headway is public pressure, try to make sure that the community understands what’s going on and then try to ask the community to be vocal, to stand up and support us and tell British Petroleum to end the lockout and get back to the table.

And for the first time, actually come seriously with the desire to bargain. We’re asking the same of our local leaders, whether it’s political leaders or community leaders. We’re asking the same of state officials, federal officials. We feel like if we can get enough public pressure, enough political pressure, enough economic pressure on maybe somebody in London will finally say, “All right, enough’s enough. Let’s go. Go get a deal.” So that’s kind of where we’re at right now is just in this holding pattern and doing everything we can to keep our membership and their families propped up. Just yesterday, one of our representatives, Carolina Ramsey, she’s also the one that runs our. She oversees our entire assistance committee. She helped organize a school supply giveaway and backpack giveaway. That was really well attended. We had a lot of local political leaders pitched in and put the word out to get these supplies sent in, book bags and everything that would be needed to go inside of them.

So between things like that, the food pantry, we’ve had our local food bank, Northwest Indiana Food Bank, teamed up with the United Way and we had four mobile distributions where they came out to the union hall and dropped off food. Like Tim was talking with our assistance committee. We’ had our assistance committee up and running since about maybe a month into this. And we’ve given out quite a bit of money, and we’ll continue to do so. And everything we’re doing is with the intent to try to make sure that people stay calm, that people have at least their basic needs met and just kind of supplement them while at the same time asking them to go out and find work because that’s how we’re going to win this is by being able to withhold. And we’ve had numerous people go out of state to find jobs.

It’s an interesting spot to be in. Some people had no problem right away going to find a job. It depends what field you came from. If you were in the local pipe fitters union before you came and worked here and you still paid your dues in the background and still kept your car, you probably went right back to work. Same thing if you were in the electrician’s union, carpenter’s union. But some of our operators are in a much different spot because this is such a niche field. Where do you go to the next refinery to go find a job? And that’s where people are having to go out of state to go find work. And a lot of people can’t because we’re almost, it’s like we’re toxic to them because they know, “Oh, well, why would I waste money to hire this guy or gal if they’re going to leave and go right back to British Petroleum once the lockout’s over?” So we’ve had a lot of people say, “They told me they loved me.

They loved everything about the interview and my resume. They’d hire me, but they ask that I commit to I’m not going to go back to the refinery when the lockout ends.” And when people would honestly tell them, “I can’t promise that,” then they’d say, “Well, thanks. If you change your mind, let us know.”

Maximillian Alvarez:

Well, and what you’re talking about goes the other way as well. I mean, for folks out there listening, the question of why should anyone stand in solidarity with 800 union workers who’ve been locked out by their employers? Because you stand with your fellow worker. I mean, you do it because it’s what’s right to do. That’s our policy on this show. It’s been our policies from the beginning. But on top of that, I think anyone living near this facility in Indiana or Illinois would want to know that that dangerous, complex facility is being operated by undertrained scab workers right now. And we don’t ever want to punch down and say your fellow worker is your enemy. I mean, those people who have taken those jobs have their own bargain with God that they’re going to have to kind of deal with. But the point of fact is, is that the trained specialists that you’re talking about are not operating the specialized machinery in that oil refinery right now.

Leno Miller:

Yeah. To expand on that too, one of their proposals that’s a sticking point for us, as Eric mentioned, that they brought to the table last time as well is the strike and lockout. Right now we can serve 24-hour strike notice. Currently, they want 150 days. Their BP stance publicly that they keep repeating over and over is that they need that. They need at least that 120 to 150 day strike notice to be able to continue to operate the refinery safely in the event of a work stoppage. How much notice did they give us when they locked us out? 24 hours. So both things can’t be true. Either you don’t need it or you’re lying, right? Or you are operating unsafely currently in the community. If it’s unsafe to operate without that much of a notice and preparation, then that’s how you’re currently operating unsafely.

Eric Schultz:

And to point out the 24-hour notice that we have, that’s not Wildcat 24-hour notice. That’s not mid-contract. That’s only after the contract expires. So I think a lot of people in the community don’t see that, don’t understand that. So they think just on any random Tuesday, I could just wake up in a bad mood and serve the company 24-hour strike notice. No, no. This is after you’ve spent months negotiating a contract. You knew that February 1st was the contract expiration. And our goal is to be as early as possible to hash out any issues so that by February 1st, you got a deal. You get that national agreement comes down from the top table. You take it to membership, you vote on it, and you move on. What they want to do is make that February 1st where we’re now that once February 1st comes, now we can serve notice.

And it’s something that we don’t take lightly. We could have done it this round of bargaining. And a lot of our members were upset that we weren’t serving strike notice when the contract expired because of all the ridiculous proposals that the company had on the table. So it’s something that we’re not going to just flippantly serve strike notice. We understand that people, it’s painful for us to be on strike. We’re willing to do it, just we don’t take it lightly. Well, so February 1st comes, now what they want to do with this 150-day strike and lockout notice is they won’t even start really bargaining, seriously bargaining until about 148 days into that 150-day strike and lockout notice, because that’s how they’re working it now. Our contract expires February 1st. They’re not serious about the proposals until the end of January. They just keep wanting to play mess around and they want to do this art of the deal stuff where they just put crazy things on the table knowing that, hey, we’re going to pull them off and we’ll meet in the middle type of thing.

So that’s all they’re going to do. They’re going to shift us 148 days down the road. Now maybe they’ll start to bargain. Meanwhile, the rest of the country, the national pattern folks all went back to work.

Maximillian Alvarez:

Well, and Tim, I wanted to toss it to you to have the final word here. Being a volunteer for the lockout assistance committee, any final notes that you wanted to give for folks out there listening? Folks in the area or folks listening from around the country, anything that they can do to help?

Tim Powell:

You touched on a point about not punching down on your fellow workers, whether it’s in your union or out in the community. This is 800 families who don’t have the money right now to go out to eat. They’re cutting down on all of their summer projects, their summer vacations. Things aren’t getting the jobs that you normally do around the house during the summer, like doing your deck, your fence, and that kind of stuff. We’re not able to spend that. We’re not able to employ a contractor. We’re not able to tip the waitress at the restaurant because we’re not even going to the restaurants. Everybody is seeing a reduction in the wages because we are cut out. We have a couple of websites. I’m sure that we can share those, but I can’t remember all of them right off the top of my head right now, but Eric can get to that.

But we gladly appreciate any donation that we can get. Any help is helping. I was here yesterday handing out backpacks and notebooks and all the school supplies yesterday. It’s not just taking that money off the people’s hands. It was also like your wife isn’t having to freak out at the store trying to figure out how she’s going to buy the stuff.

Eric Schultz:

Yeah, I will say to your point, the website, you ask how people can help. The easiest way is we propped up a website specifically for what we’re dealing with. It’s called supportoilworkers.com. On that website, it answers all those questions. If you wanted to send a check to help our assistance committee help pay bills or that money also goes to help just run the hall on a day-to-day basis, making sure that we have food for picketers, making sure that we’ve got the toiletries and things like that at the hall. So there’s an address and a way to send a check there. There was a link to an Amazon store for us, and that’s been fantastic. Every day we get shipments in here of diapers, formula, non-perishable food items, toiletries, things like that. They go, we stock them on the shelves and then members are free to come and take anything that they need.

So support oilworkers.com. And then today, hopefully today it’s going to start. We’ve been working with a company that we’ve used for years for all of our swag, our t-shirts and hats, ImagePoint. And today, hopefully we’ll have this store up and running. We’re going to have a pop-up store. There’s two shirts that people can pick from, and it’s going to be nationwide. We’ll be blasting this out every which way we can. It’s only going to be up for two weeks. And you can pick either of these shirt designs and a multitude of colors and styles, anything from a hooded sweatshirt to a tank top to a regular t-shirt. And then the proceeds for that will go help our strike and defense fund. So again, today I will send you that link once we get it up and running. We’re just getting the bugs ironed out of it.

There’ll be a couple of shirts. It’ll run for two weeks, then it’ll shut down. They’ll print, they’ll go into production, and they’ll start mailing out all the shirts to whoever purchased one. And then a couple weeks later, we’re going to pop up a second store with two different shirts. So all in, there’s going to be four different shirt designs for people to pick from. And we’re kind of hoping that some people that if you have the means and you really want to show some support, we hope that some people will choose to try to collect all four of those shirts.

Maximillian Alvarez:

Alright, gang, that’s going to wrap things up for us today. I want to thank our guests, Eric Schultz, President of United Steel Workers Local 7.1, Leno Miller, Assistant Griever for USW Local 7.1, and Tim Powell, a 19-year member of USW Local 7.1, and a volunteer for the Lockout Assistance Committee. And of course, I want to thank you all for listening, and I want to thank you for caring. We’ll see you all back here next time for another episode of Working People. And in the meantime, go explore all the great work that we’re doing at the Real News Network, where we do grassroots reporting that lifts up the voices and stories from the front lines of struggle. Check us out across our YouTube channel, our podcast feeds, our website, and our different social media pages, and help us do more work like this by going to therealnews.com/donate and becoming a supporter today.

I promise you guys, it really does make a difference. I’m Maximillian Alvarez. Take care of yourselves. Take care of each other. Solidarity forever.

The following is a rushed transcript and may contain errors. It will be updated.

Taya Graham:

Hello, my name is Taya Graham and welcome to the Inequality Watch Report, a show that examines government policy and action through the lens of extreme economic inequality, the existential issue of our time. Today, we’re going to discuss a technology which we’ve been told will transform our lives, an invention that has been touted as the ultimate arbiter of our collective futures, whether we like it or not. Of course, I’m talking about artificial intelligence, but with the promise also comes doubt and questions and most of all, a lack of clarity on how we’ll impact the working people of this country. AI leaders have casually warned us that their products could eliminate 40 to 50% of white collar jobs more than the losses in the Great Depression. They’ve promised that technology will be so disruptive that even staunch capitalists have discussed providing a UBI or universal basic income for Americans who will be left out.

They’ve borrowed money at such predigious rates to fund data centers that even Wall Street is beginning to just say no. And now some of the biggest names are saying it’s not working out as planned and an America’s already historic wealth imbalance and government hamstrung by the self-interested impulses of a single man. And you have a situation that could brew a toxic stew of making the already rich even richer and leaving the rest of us even further behind amid all the societal chaos and upheaval. And are the cracks just starting to show? Just this week, one of technology’s greatest apostles made accusations that AI has become a nemesis for his business and others. And capitalists who have gladly loaned billions to build data centers throughout the country are now starting to push back at the ever increasing demand for cash. Of course, the point of this show is to examine this topic through the lens of inequality and how it affects our political and social institutions and what it means for working people.

And to do so, we are about to be joined by an economist who has been thinking and writing about this very topic with insight and clarity, Dean Baker. But first, I want to check in with my co-host, Stephen.

Stephen Janis:

Oh, hey Taya, how you doing?

Taya Graham:

Steve and Janice, it’s great to have you. Thank

Stephen Janis:

You for having me on.

Taya Graham:

Now first, can you give us a broad overview of how inequality and AI are teaming up?

Stephen Janis:

I think in a way, this is the greatest American kind of ripoff in the sense that they’ve spent about the past four or five years mining all our data, taking everything we posted online, and they’re regurgitating it back to us and want to charge us for it in some way. And so to me, I think what is most missing for me besides the promise of huge economic disruption is what the value proposition is for the American people. I mean, they took everything that we wrote and now they want to repackage it and sell it as some sort of deity that we have to worship. And so I’m a little worried, a little worried, a lot worried that we’re all going to be casualties of a great wealth concentrator, which remember, OpenAI was supposed to be a nonprofit. Now it’s a for-profit company. All these huge IPOs, I’m afraid they’re just taking everything we’ve created, sell it back to us and become even richer, and there’ll be a greater concentrate of wealth and power.

So it’s just a bit concerning to me.

Taya Graham:

Actually, Steven, when you mentioned it turning into a deity, we already have some issues with AI psychosis. Maybe we should discuss that on our next show. Yeah,

Stephen Janis:

We’re just going to be praying to the AI deity and offering 19.95 a month to it. So yeah.

Taya Graham:

Actually, that’s about right. And now I want to introduce our guest, Dean Baker. Dean Baker is the co-founder and senior economist at the Center for Economic and Policy Research. For decades, he’s written about inequality, labor markets, financial bubbles, corporate power, and economic policy. He’s also written extensively about AI and how it’ll affect everyday workers and even journalists just like us. He wrote the book Rigged: How Globalization and the Rules of the Modern Economy were structured to make the rich richer, and its newest project is the AI Bubble Monitor. Dean Baker, thank you so much for joining us.

Dean Baker:

Thanks a lot for having me on.

Taya Graham:

Well, we’re glad to have you. Yeah, absolutely. And I have the honor of doing the first question. And so my first question for you is this. Artificial intelligence has been described as the biggest technological revolution since the internet, and yet you’ve argued that the economic data simply doesn’t support a lot of the claims being made. What are people missing here?

Dean Baker:

Yeah, so I think to a very large extent, we have people who are really good at hype. People like Sam Altman, of course, Elon Musk, absolute master of hype. These are the Donald Trumps of the business world. They’re selling this stuff and they’ve been very successful. I mean, Elon Musk just had his SpaceX initial public offering, which is primarily AI. I mean, that’s their own assessment. I’m not trying to attribute things to them. If you read their registration statement, they say 90% of their expected market is in AI. So SpaceX is an AI company. So they’re looking to get rich by this. And I don’t mean necessarily because they’re going to have huge profits. They have huge stock prices. So Elon Musk became a trillionaire, not because SpaceX has enormous profits. It actually loses money hand over fist. He became a trillionaire because the stock price is ridiculously high.

So step one, is it creating inequality? Absolutely. By a stock bubble, bloated bubble. Now, in terms of what it delivers, they’re saying this, is it going to have massive impact? I’m sure it will. And the model I look to is the internet. Had massive impact. Does that mean that it’s going to lead to mass unemployment? Well, a lot of people lost their jobs to the internet. I mean, Amazon put a lot of small sellers out of retailers out of business.

Taya Graham:

Absolutely.

Dean Baker:

But you still have a lot of retailers there and everyone didn’t lose their job. I think think of AI the similar way. It will change the economy in a lot of different ways, but that doesn’t mean everyone’s going to lose their job. And if we look at the data, we look at productivity, which is what that means. If people are losing jobs, that means we’re producing more in an hour of output. They’ve actually been very weak the last three quarters. Now it’s erratic. So I’ve followed the data for a long time. So I know you could have real weak quarter and next quarter could be really weak. And then we’ll come around the second half of 226 and who knows, be 5%. Very rapid productivity growth. Could happen. But the point is we’re not seeing it. And there have been a number of economists I’ve tried to look through this very carefully and look at sector by sector, look at retail, look at healthcare, look at the different sectors of the economy.

And invariably, they find relatively modest impact of the studies I’ve seen. And I’m sure we missed some, but these are credible studies. The highest number was a half percent a year increase, half a percentage point a year increase in annual productivity growth, which matters. I mean, that’s noticeable, but that’s not massive unemployment. And one of the leading economists in the world, Darin Asamiglu, Nobel Prize winner, he had it at just seven hundredths of 1%.

Taya Graham:

Wow.

Dean Baker:

These people could all be wrong, but they’ve tried to be very careful in it and they find very modest impacts. I shouldn’t say very modest. I mean, again, a half percentage point a year. If you had that, that would be a big deal. But the internet, when we had the internet in the ’90s, the internet boom is about one and a half percentage points a year. So we’ve seen this.

Stephen Janis:

Wow. Dean, that’s kind of. But these people are hyping valuations. They’re borrowing billions and billions of dollars, I think, based on a higher rate of return. I mean, is this like a house of cards? I mean, they’re hyping this over and over again saying it’s going to be transformative. But now you’re saying the impact so far has not been. Does that put at risk all these billions of dollars they’ve thrown at this problem?

Dean Baker:

Absolutely. And this is why I’m calling it a bubble. I’m old enough, I’ve been through two really big economy moving bubbles. In the ’90s, we had the tech bubble. And I was out there saying, “This is bad news. It’s going to burst. It’s going to burst.” And it did. It burst in 2001. The S&P 500 big stock index fell 50% from peak to trough. The NASDAQ where you had most of the tech stocks, that fell 80%. And it had a huge impact on the economy. I mean, for stock investors, I go, “You should know what you’re doing. Many don’t, but you should know what you’re doing. So I can’t cry too much.” But it had a big impact on the economy. We lost jobs into the 2000 recession. We didn’t get them back till 2005. That was the longest period with our positive job growth since the Great Depression.

We had a longer one after the Great Recession. But that was a big recession from the standpoint of the labor market. Also, real wage growth just stopped. We’d been seeing good real wage growth in the late ’90s, just stopped almost instantly. So that was a really bad story. And then we had the housing bubble. Again, same story. And that town in turn was more severe. We had close to 10 million people lose their home to foreclosure. The unemployment rate peaked at near 10% in 2009.

So bubbles can have very bad consequences. So that’s why I’m very worried about this one. They’re selling this and Elon Musk undoubtedly is stuffing his pockets. And Sam Altman and the others, they’re stuffing their pockets. But no, I don’t see that these stock prices make sense. And when does the music stop? I don’t know. Both those bubbles went way longer than I expected them to. But all I could say is the sooner it bursts, the better it will be for the country.

Taya Graham:

It was really interesting that you compared the AI investment boom to the dot-com bubble. Maybe you could just go into a little bit more depth about some of the similarities that really concern you. Yeah.

Dean Baker:

Well, there are two things there. One, from the standpoint of the firms, that you started to see companies that were just pushing nonsense in essence. I’m going back to the dot-com. So it became almost a joke. And I shouldn’t say almost a joke. It was a joke. And this was in the business press. So the Wall Street Journal used to highlight the most ridiculous initial public offerings. So people were coming up with crazy public offerings and they could still raise hundreds of millions, even billions of dollars in their first issue. There was one company even that took the cake. I wish I could remember the name. They said, “We don’t know how we can make a profit.” So you work from the assumption, okay, they’re not profitable today, but they have this great plan, software, whatever it is. And two years, three years, four years, they’re going to be a next Microsoft.

That’s what people were betting on. And of course they weren’t. But you had one literally said, “We don’t even know how we’ll make a profit.” So you had a huge amount of misdirected capital. And that was, of course, a huge voice for the economy. But the standpoint of the stock market, again, I was saying we want stock investors or we think they should be knowledgeable. They aren’t. And people were spending based on their stock wealth. So you had a lot of people that were saying, “Oh, I had money in the NASDAQ and just doubled,” which it might well have. A lot of people owned stocks in the NASDAQ and over two years they would’ve doubled. So they said, “Oh, I’m going to buy a new car, get a bigger house, go on a big vacation.” Well, when those prices plummeted, that consumption stopped. So it was a very, very big hit to the economy.

And I worry very. I should add one more thing on the craziness that companies discovered that if they added dot-com to their name, their stock price would go up five or 10%. We’re seeing that today. If you add AI to your name, and someone did that, I’m trying to remember what it was. I think it was- Was it like

Stephen Janis:

Diapers.com? I think, wasn’t there like diapers.com or something or something?

Dean Baker:

Yeah. And their stock price went up five or 10%, which tells you. I mean, it’s utterly nuts. You’re the same company. It doesn’t matter whether you call yourself. Com AI or anything. You’re the same company. It shouldn’t make any sense.

Stephen Janis:

Well, now speaking of a bubble, Palantir CEO, Alex Carp, had kind of a meltdown on CNBC. Let me play a little bit of it so you can watch it. And maybe you can explain what he saw. It sounded to me like he was panicking, but it was hard to figure out what he was talking about. David, if you could play that clip and we’ll just watch it and we come back, we’ll talk about it.

Alex Carp:

Everyone who uses LLMs on the battlefield runs on top of our ontology. And our clients are just, to say they’re unhappy with the Frontier Labs is to say I’m welcome at the Berkeley faculty. It’s like there’s just a level of discomfort and loss of trust that also made it really, really –

Stephen Janis:

Okay. Unpack that. What do you mean by that?

Alex Carp:

Well, you have, okay, so when you’re using large language models, at this point, everyone technical realizes they’re like a critical resource. To make them valuable in an enterprise like battlefield context or regulated context or manufacturing, you have to have what’s called an application layer. We have this thing called ontology that now everyone’s copying, but defacto, it takes a large language model. It makes it safe and useful and precise. So safe because it doesn’t touch your unlearning data, safe because it prevents the large language model from caching your data and replicating your business. Safe because it doesn’t transfer your IP of how to fight secret data, top secret data or in a clinical context. So the general way these things were sold, and again, these people are. Sam and Dario, there’s nothing more fun than debating Dario in private. So I’m not throwing shade at them,

Taya Graham:

But

Alex Carp:

Something has gone completely wrong. And the basic view among enterprises in this country is I’m going to chill lax and waste my time with tokens. I’m going to get no value and they’re going to get my IP.

Stephen Janis:

Okay, Dean, like I said, I haven’t heard the word ontology since my religious studies class in undergraduate, but it sounds to me like there’s buyers remorse or panicking among the top people, including Mr. Carp. What’s your take on what he’s saying? Does he sound like he’s panicking?

Dean Baker:

He sounds panicking. And just to be clear, I don’t know Alex Carp, never met him. But as best I could tell, he’s an odd guy. But as best I can tell, his complaints are first and foremost that you have companies spending a lot of money on AI and you had a lot of companies that were spending literally hundreds of millions a month. And they weren’t getting anything obvious for that. So they were actually encouraging their staff, their mid-level staff. So I was mentioning, I was talking about Amazon, where they literally had a leaderboard where people were posting how much AI they were using. And I don’t know if they got a bonus or whatever it was exactly, but the more AI, the better off you were. And just like to me, Amazon’s obviously a big business in any ways very successful, at least from their vantage point of profits.

Why would you ever encourage people to use AI for the sake of using AI? And the analogy I’ve

Taya Graham:

Made is

Dean Baker:

It’s like using paper. Oh, I used five reams of paper today. And you go, okay, great. What’d you do? I mean, that’s kind of nuts, but that’s what they were literally doing. So you’ve had companies looking to cut back hugely on the AI they use because they want to see that they’re actually getting something for it. And in many cases, their conclusion was that they weren’t. The other part of the story that he’s raising, Carp is raising, is they’re worried. They don’t know what’s happening with their data. So when you’re running your programs through Anthropic, through OpenAI and whoever else, they have your data. So using the example of Amazon, that data’s worth a huge amount. We know, we complain about that. Amazon, they know everything we’ve purchased, what we’ve looked at. They have an enormous amount of data on us. That’s a lot of money to them.

They don’t want to give that away for nothing to Anthropic, to OpenAI, whoever. And they don’t know whether they are or they aren’t. So that’s what he was talking about. He’s saying you need software that regulates the usage. And as it is, a lot of companies don’t have that. Again, I’m not going to advertise for your software. I have no idea what it does, but you probably don’t want to give these AI companies all your data.

Taya Graham:

Actually, Steven and I go and cover Capitol Hill, and we saw Senator Bernie Sanders arguing that if AI creates extraordinary wealth, then the public deserves a share of that wealth. And he announced an AI sovereign wealth fund proposal. And I think he’s talking about a 50% stake for Americans. Now at first glance, this sounds like a progressive idea, but I read your article. Why do you disagree?

Dean Baker:

Yeah, I’m a big Bernie Sanders fan, known him for years. I have enormous respect for him, but I really think this goes down the wrong path. To start with, just from the word go, if you’re giving the US government a large stake in the AI companies, you’re giving Donald Trump a large stake in AI companies. I know that’s not Bernie’s intention, but look at what the Supreme Court has been saying. I’ll guarantee you, this isn’t even a debatable point given the recent Supreme Court rulings. If we get the ability through an ownership stake to put people in top positions in Anthropic and OpenAI, whoever else we might buy a stake in or take a stake in, Donald Trump is going to pick those people. It doesn’t matter how they wrote in the law. That’s what the Supreme Court has said. The unitary executive, he decides, I can’t imagine in the current environment wanting to give more power to Donald Trump.

In general, I’m not sure I want the government to have a 50% stake, but certainly not Donald Trump. So that to my mind’s a no-brainer. Secondly, from the standpoint of regulation, we know there’s all sorts of ways we need to regulate AI. It’s not an option. They want to build data centers everywhere. Do you want a data center in your backyard? Should we be able to tear down Grand Canyon to put a data? That’s their dream. That’s what they want to do. We already are having massive battles on this. I don’t trust that with the government having a direct stake that we would get the right outcomes. I don’t trust we’d get the right outcomes anyhow. But I think we really tilt the playing field and just the environmental issues, that’s just one of them. When you’re talking about ownership of data, access to privacy, there’s a whole range of issues that come up with AI that are unavoidable.

I mean, it’s not a question, oh, we should leave it to the market. There is no market. We’re setting the rules. So I worry very much about that. The third point is just what I was saying before. A huge amount of this is hype. And unfortunately, I think Bernie’s feeding the hype. Oh, they’re going to have massive wealth. I don’t see that. I think there’ll be big profitable companies here, just like going back to the ’90s. You look at the providers of internet, Cisco and Verizon and Comcast, they’re big companies. They’re profitable. They aren’t earth shaking. They aren’t the biggest companies in the world. So why are we contributing to the hype? I don’t think that’s a productive thing to do.

Stephen Janis:

Yeah. Yeah, go ahead, Ed. No, go ahead.

Taya Graham:

I was going to say, when I was reading your article on your substack, Dean Baker, that your first objection wasn’t really economic, that was more political. And I was just wondering why you think having a government-owned AI investment fund would be particularly dangerous under the Trump administration? Or could you just not trust any administration with it?

Dean Baker:

I’d have problems with any administration, but let’s just focus on Donald Trump. Donald Trump has made it clear. He sees the government as his tool to enrich himself, to enrich his friends. So he will put his friends in top positions there. He will have his friends, people contribute to his campaign or give him kickbacks. They will be the ones that get contracts from these companies. He’s anti – DEI. Well, women in top positions, forget it. Blacks in top positions, forget it. He’s applied that through government as much as he could. You’re just giving them a whole new area to apply this in. And again, if AI, I don’t think it’ll be the massive thing, at least these companies will be the massive things that they’re hyping. But again, I don’t want to give Donald Trump yet more power.

Stephen Janis:

Wow. Well, listen, to your idea of Bubble Watch, which I think is kind of fascinating, well, also terrifying. So for example, in the private credit markets, people started to panic and private credit is lending a lot of money for these data centers. Last week, IBM lost 20.% of its value in one day because people were panicking about software. Where do you see this starting to unravel? I mean, we’re not economists, but we’re people that read. What should we be looking at? What should anyone be looking at actually to see where this bubble’s going to start to unravel if indeed it does?

Dean Baker:

Okay. Well, let me be as honest I can be on this. I didn’t know until this date, I can’t tell you what caused the collapse of the stock bubble or for that matter, the housing bubble. I mean, I could all point to all sorts of vulnerabilities, but when they collapsed and why? Both went on much longer than I ever thought they would. I’ll say that. So I’m saying that now what I have been looking to and will continue to look to is increasingly the companies, and these are big companies, these are Meta, Alphabet, the biggest companies in the world. They’re having to borrow. So even though they’re very profitable, they’re undertaking such massive investments that they’re having to borrow. And you’re seeing a very interesting story here that investors in bonds are starting to get worried. We actually saw this with SpaceX. It was really striking.

One of my AI bubble monitors was about this, that SpaceX bonds are being sold at a discount, meaning that bond buyers see a risk that it actually could default, that they might actually go bankrupt. So here on the one hand, you have stock investors going, “Oh, SpaceX is going to be the most profitable company in the history of the world.” You have bond investors going, “It might go bankrupt. It might not be able to pay its bills.” So I would look at the bond market and it seems to be. I recently saw some data showing that there’s much less interest in Alphabet, Meta, the hyperscalers are called, that are involved in building the data centers for AI. There’s much less interest in their bonds than for other investment grade debt. And that’s who I’d look to first, because if it ends up being the case that you can’t get the bond issues to finance it, then it’s going to fall apart.

We may be seeing the beginnings of that. I mean, it’s a little early, but we may be seeing the beginnings of that. So if they start to cut back their lending, this thing could collapse fairly quickly.

Taya Graham:

If we can, I just would like to pivot for a moment to affordability. I’m pretty sure I’m not the only one out there seeing their gas, their car insurance, their groceries going through the roof. There are so many Americans that are struggling with housing costs and healthcare costs and groceries and childcare and utility bills. And I was just wondering how much of today’s affordability crisis has to do with AI, will be impacted by AI, and how much stems from our much broader economic policy?

Dean Baker:

I would say most of it is broader economic problems, but I will say one that I can pin on AI, and that’s a housing market, particularly in areas like the Bay Area. So you actually saw this when you had the SpaceX, their initial public offering, you suddenly had all these people that were doing well, obviously, were highly paid engineers in positions at SpaceX, but they’re maybe getting hundreds of thousands a year. Maybe some are getting low millions. They suddenly have 10, 20, 30 million because there’s SpaceX stock, and that’s what the evaluation would be. They suddenly turn around and go, “Oh, I want a really big house.” Well, there’s only so many really big, really nice houses in the Bay Area. So those go through the roof. And there is a trickle down here. Trickle down not in a good way. So if you’re a lawyer, you’re doing well, you make three or 400,000 a year.

Well, suddenly the home that you were looking to buy, which would’ve been a million you might have been able to afford, now it’s two or three or four million. So you look at a middle-class house and you’re suddenly prepared to pay one and a half million for that. So then the person who’s a teacher or a firefighter that maybe, maybe, maybe could have scraped together enough to buy that for five or 600,000,

No way on earth they could pay one and a half million for that. So there is a direct impact on housing, not necessarily nationwide. I don’t know how much it affects things in Ames, Iowa, but certainly in tech centers like in the Bay Area, like Seattle, other places where there are likely a lot of people involved in the AI economy.

Stephen Janis:

Dean, when the Great Recession hit, even though it was caused by bankers’ greed, a lot of it really the working class suffered. Do you think AI could have the same impact if it does start to collapse, that it will hurt working people and that the bankers will catch a cold and will catch the flu or whatever? Do you see it trickling down again to people who had nothing to do with this, what I would call a mess at this point?

Dean Baker:

Yeah, because that’s the problem with bubbles when they start driving the economy, because our economy does not turn well. So what happened in the ’90s, we were being driven by the tech bubble. Tech bubble collapses. Nothing else to come in its place. In fact, what came in its place, it took a couple years to do it, a few years to do it, the housing bubble. And then that collapsed and well, that took a long time to recover from it. We really didn’t get back to a strong labor market, lower levels unemployment till 2016, 2017. So what I worry is that the AI bubble’s definitely driving the economy, both through investment in AI stuff, AI related stuff, and then also the consumption effect that people go, “Oh wow, I now have five million in the stock market,” which some of these people do. And then they go out and spend a lot of money, housing being one thing, they get cars.

So those stocks go through the floor. Suddenly nothing’s driving the economy and we start to see the unemployment rate rise. Wages don’t keep pace with prices. It’s a bad picture.

Taya Graham:

I actually just went to a doctor’s appointment to go to radiology, just getting exams, and they said to me, “Oh, would you like to get the AI version of this and pay an extra $40?” And I said, “Well, how’s it different than my normal exam?” And they said, “Well, actually, technology is pretty much the same.” So I’m wondering how much are they overselling how beneficial this technology actually is and how much of it is just pure hype?

Dean Baker:

They’re hugely overselling it. Again, I’m not down on the ground in all these businesses, but you hear accounts of this. So you have a lot of companies where software coding, where it’s probably at the biggest impact, where they do AI and it’s often very useful, but the problem is it makes mistakes. So you still need someone who really knows the coding to check it. And I think that’s a good story really everywhere. You could use the AI, it could be very helpful, but you still have to check it. I know my own usage, which is very limited. I had it do a reference section for me. I was writing a paper and I was going, I can type up. I’m sure there’s software that could do it too, but I was going, okay, if I type it up, it’s going to take me two or three hours and I’ll make mistakes because I’m a sloppy typist.

So I’ll have AI do it and did it for me in, I don’t know, 20 seconds or something. I still had to review it because it had some references that were improper, but it was certainly much, much faster than if I had to type it myself. So I think there’s going to be a learning process. We will be able to use AI, use it beneficially, and there will be a productivity gain, but nothing like what they’re telling us.

Stephen Janis:

Dean, why do, in your estimation, we’ve heard all the incredible stories about tax incentives for data centers. If these companies are going to be so profitable and so amazing and going to create all this value, why do they need whopping tax incentives to build out these data centers? I just don’t get it. I don’t understand. And I’m not asking you to explain for them, but what do you think is the operative motive here of having all these tax breaks?

Dean Baker:

Well, there’s a crude joke with the punchline I could use because they can.

But there is a logic that from the standpoint of a state or county, they’re saying, look, we have people lined up that want our data center and we’re taking bids from all of them. So you have to beat the others. And from the standpoint of the county or state, they’re going, “Well, this will create some number of jobs.” They lie about the number. And it’ll create some amount of tax revenue. And they might go, “Well, we’re better off even giving them an incentive. Give them 50 million off on their taxes.” And you can’t say that’s necessarily wrong because in some cases it probably is right. In many cases it will be wrong. And certainly if they end up going under, it almost certainly will be wrong because having a big data center sitting there that does nothing is not going to make your county or state more attractive for people to live in or for other businesses to come and invest in.

Taya Graham:

We’ve talked about a wealth fund and even a UBI. What do policymakers need to do to protect workers and make sure that if this actually really makes generational wealth, that working people can benefit? Or maybe I should just say, if you have a magic wand and you could design your own AI policy, what would you want it to look like? Or what do you want policymakers to do?

Dean Baker:

Well, I’d go into the old bag of tricks and just start using them and ramping them up. So one of the things we used to do shorten the work week. We haven’t done that. We had the Fair Labor Cancan Act 1937. It’s almost a hundred years now. We’re getting close. So we thought 40 hours was right then. How about making it 36, 32? That would be a great thing to do. Raising minimum wage, make it easier for workers to organize. We have it so stacked against workers organizing unions now it’s become near impossible because employers could. It’s illegal to fire people, but what’s the sanction? What’s the punishment? So someone’s organizing a union. Elon Musk says you’re out the door. You could file a National Labor Relations Board complaint. Good luck. Maybe they’ll rule for you two years later, you’ll get your job back.

Kind of moot at that point. So we have a basket of things. Also, again, finishing the welfare state. Every other country in the world has universal healthcare. We should have universal Medicare. So those are some good steps. Again, I’m not opposed to UBI, but I just think back to under President Biden, he wanted to have the expanded child tax card. He put it in as a pandemic measure. He wanted to extend it and he couldn’t get that. He had Democrats opposing him. So the idea, this is children. We’re talking about a relatively small sum of money for children. He couldn’t get that through. So can we get a UBI through? Yeah, maybe, but that looks like a real uphill battle for me. I’d rather stick to the old favorites that we know work. And there’s a Well, lot of political support for them.

Taya Graham:

Okay, Steven. Well, obviously I’m in the wrong line of work because it turns out that you can lose millions or even billions of dollars and somehow make money. Is this dystopian enough for you? I mean, what are your thoughts here? I’m obviously in the wrong line of work. Well,

Stephen Janis:

Like I was kind of alluding to before, I feel like we’re kind of participating in new theology. The value here is purely theocratic, that there’s some divine power that is being burked in a lab that we’re going to have to pay penance to, whether or not it makes our lives better or not, and whether it has any influence on anything we do. So I was really glad to hear Dean kind of cut through all that BS and give us sort of a pragmatic view of what’s actually going on. And one thing, I don’t want to refer to the Tower of Babel, but that was an awfully tall tower of cards. And when AI comes bursting down on all top of us, I think it’s going to be quite cataclysmic. So yeah, apocalyptic is probably in line there.

Taya Graham:

That’s a great point. I mean, everyone is so excited. They’re hoping for artificial general intelligence where they’re going to be curing cancer and saving the world. Which would be great. And all I just do is see people losing jobs.

Stephen Janis:

Yeah. I’m waiting for the cure for cancer. I

Taya Graham:

Would be so happy to see it. I would be so happy to have AI genuinely help people. Not just help students cheat on their home.

Stephen Janis:

Or not just create 100,000 songs on Spotify every day. I think it would be more useful for humanity. Just my opinion.

Taya Graham:

Steven, you know me, as always, whether it’s on our show, the Police Accountability Report or our coverage on Capitol Hill, my concern is the working people of this country. And just like with all the other tech upheavals, the elite who taught them, forget those who are going to be impacted by them. And this particular iteration could really be devastating. And that’s why we have to remain vigilant. If AI actually lives up to the hype, the concentrated power it would confer would be absolutely death to a democracy. I mean, that much wealth in so few hands is simply unsustainable. I mean, it will literally adulterate the process of governance with self-interest, and it’s going to warp accountability around the curvature of a technology that seems more and more singular in its appetite for resources. And I do mean a literal appetite for land and water. And that is why we’ll continue to report on it and have discussions with innovative thinkers like Dean Baker.

And that’s why we will continue to report to you from the nation’s capital, asking questions about how the government by and for the people will actually protect them from the ravages of AI Avaris. And that’s why independent journalists like Steven and I will continue to investigate and try to comprehend and share with you the truth because that’s all we have in the end, for better or worse. Thank you for joining us for our inequality watch report. And as always, we’re reporting for you.