Editor's Note: This article was updated to correct the word “expansive” to “expensive” in the sentence, “AlterNet had an expansive conversation with Wolff.”

President Donald Trump has permanently damaged the U.S. working class and the country’s standing in the global community, according to economist Richard D. Wolff, professor emeritus of economics at the University of Massachusetts Amherst.

In an interview with AlterNet on Thursday afternoon, Wolff said American elites and ordinary citizens alike were engaged in widespread denial about country’s economic and geopolitical position. He warned that continuing to ignore those realities would carry consequences.

Wolff said Trump’s disruption of long-standing trade alliances had encouraged former U.S. partners to seek better arrangements elsewhere, gradually and permanently reshaping the global economy in ways that work against U.S. interests. He also criticized what he described as the Republican Party’s indifference to working-class concerns, citing Trump’s focus on issues of personal interest to himself and his supporters—including adding his name to the Kennedy Center and building a White House ballroom—while dismissing efforts to expand affordable housing as a “yawn.”

Two threads from the exchange are worth watching as the dynamics Wolff describes play out: whether Congress advances the affordable housing legislation Trump dismissed in June, and whether Canada redirects lumber and energy exports toward European and Asian buyers, as he expects. Both would test his central claim that tariff pressure is pushing longtime partners to build trade routes around the United States, with the costs flowing back to American households through rent, construction and energy prices.

The following interview has been lightly edited for clarity, context and length.

ROZSA: I want to start with a comment President Trump made in June. Reporters asked whether he would sign affordable housing legislation, and his exact words were: “It hasn't been sent to me yet. It's coming. I understand. And then I'll make a de - Here's what I would like to say. It's a yawn.” What are your thoughts on Trump describing affordable housing legislation as a “yawn”? To what extent does that reflect the Republican Party as a whole?

WOLFF: I think the Republican Party, like Mr. Trump when it is convenient for him to go along with it, often has the same position. Sometimes, in a very demonstrable way, he does not. He has his own agenda, which is not exactly the same. But in this case, it is.

The idea is that the private sector—in this case, the companies that construct housing—should decide whether to build homes for the American people and, if so, for which people. But we face a hard economic reality that the president no doubt knows: For the last 14 years, inequality in the United States, the gap between rich and poor, has become steadily more extreme.

Markets follow wealth. That is how markets work. Production is directed toward the areas where the greatest profit can be made. Wealthy people can afford expensive housing, so that is what the private sector builds. It does not build housing that middle- and low-income people can afford because that housing is either less profitable or not profitable at all.

At a time when interest rates are at record highs, corporations must pay more to borrow money. Lumber, much of which comes from Canada, has also become more expensive, in part because of tariffs imposed by Mr. Trump. The reorganization of the Canadian economy to rely less on the U.S. economy is increasing the cost of lumber as well.

The result is a situation in which housing costs are rising and developers must charge more, limiting access largely to wealthy buyers. The country has inadequate housing, rapidly rising rents and higher costs for people who want to buy homes.

Mortgage rates are now at a record-high level and, according to the interview, were expected to rise further after the Federal Reserve raised interest rates the previous day. Mortgage rates above 7% were expected to become the norm. The private sector is therefore concentrating on expensive condominiums in wealthy areas such as New York and San Francisco, while housing for middle- and low-income people is becoming increasingly limited and costly.

Young people in particular cannot afford homes, so many have become renters, yet insufficient rental housing is being built. There is no coordinated government planning to address the situation. It is an unholy mess.

The Republican response, including Mr. Trump’s response, is to wait for the market to resolve the problem. The market may eventually do so, but it could shift most Americans from homeownership to renting. I believe that process is already underway, and it will continue as long as current conditions remain in place.

The more the president speaks this way, the more he signals that the government is unlikely to do much, even if Congress passes a bill containing provisions intended to improve the situation. The housing problem has existed for many years and requires massive intervention. None of that appears to be on the horizon. I think Mr. Trump is essentially making that clear.

ROZSA: I want to ask about something you said to me recently regarding the trade war with Canada. You said you were not surprised that the U.S. government was surprised by Canada standing up for itself. You added: “Our government is busy strong-arming people around the world in every way that it can, militarily, economically, politically, and discovering time after time to their amazement if you take them seriously that the folks are going to resist.” As Canada, the European Union, China and nations in the Middle East resist what you called America’s bullying, how will that affect ordinary Americans economically?

WOLFF: It will cause Americans one kind of grief after another. Let’s go back and make sure everybody understands the history. The United States helped allied countries recover from the war through the Marshall Plan and similar programs. The beneficiary countries, including Western Europe and Japan, were sharply contrasted with countries that received no such assistance—Russia and China being the leading examples because of communist control in Russia and, after 1949, in China.

Those countries had to recover on their own from horrific war-related damage. Russia and China probably ranked first and second among countries in the amount of destruction caused by World War II, before, during and after the conflict. After the war, they had to rely on themselves.

There is a lesson in that. China is now the economic success story of this period of human history. No country has grown faster over the past 35 years than the People’s Republic of China. The preparation for that growth occurred during the decades between the 1949 revolution and the economic takeoff in the 1980s and 1990s that made China the colossus it is today.\nIf you do not establish relationships with other parts of the world, those countries do not simply go to sleep or accept poverty forever. They work to replicate and, hopefully, surpass what you have accomplished. China, and now Russia as well, are demonstrating that this is a possible response. That has had an enormous effect on what used to be called the third world and is now often called the global south.

The United States does not want to confront that reality. As it bullies other countries, demands that they invest in the United States and imposes tariffs that raise the cost to Americans of imported goods, it encourages the rest of the world to work around the difficulties Washington has created. That is what Russia and China had to do during the Cold War, and other countries are now doing the same.

Consider Canada. The country has been hit with tariffs and threatened with additional tariffs by Mr. Trump, along with possible outright bans on Canadian goods entering the United States. The U.S.-Canada trade relationship was the most important trade relationship for both countries; their trade with one another exceeded their trade with any other country.

By forcing Canada under Mr. Carney to respond as Russia and China did decades ago, the United States is encouraging it to redirect commerce. One result is that Canada will sell lumber to European countries that need it. If Canadian lumber no longer flows south into the United States, the price of lumber will increase, making virtually every U.S. construction project more expensive. That will raise rents.

In the northern United States, much of the electricity comes from Canada. It is generated by hydropower as well as by gas and oil found beneath Canadian soil. If that energy is no longer sent to the United States and is instead sold to China and other markets, the energy reaching the United States will either come from Canada in reduced quantities or be replaced by more expensive supplies from elsewhere.

That will increase heating and gasoline costs. The U.S. effort to impose rules on the Middle East has already shown what can happen to the price of gasoline and diesel in the United States. Diesel was selling for approximately twice what it had cost eight months earlier, while gasoline had experienced an almost comparable increase, according to Wolff.

These policies affect Americans in thousands of ways. Cutting the United States off from the rest of the world is an expensive proposition. The United States became involved around the world because it was profitable for American companies. They could increase profits by obtaining oil from the Middle East and raw materials from Latin America, Asia and elsewhere.

If companies can no longer do business in countries that have been alienated by U.S. pressure, they will have to seek supplies and markets elsewhere, and those arrangements will become more expensive. This is a dead end, and it is a bad story. It does not end well.

The United States is now becoming isolated after two or three centuries devoted to integrating the world. Ten years ago, people boasted that global supply chains had made the world highly efficient. Now it has become clear that an advantage can become an albatross when conditions change.

The world economy, constructed by capitalism over the past three centuries, is now threatening to throttle capitalism as tensions among capitalist countries intensify.

ROZSA: It is interesting that you describe the world economy as being restructured by capitalism and simultaneously restructured against capitalism. President Trump is, in some ways, destroying the free market by deciding which industries should win or lose through tariff policies. President Grover Cleveland called that approach a “communism of pelf.” Trump is offering $5,000 checks to every adult as long as he wins the midterm elections. He openly allows his allies to benefit, demonstrating that we are as far removed from free-market capitalism as possible. If I were a sincere free-market capitalist, I would be horrified because he is engaged in crony capitalism. Would you agree?

WOLFF: I think most people who pay attention would agree. I do not think it is very controversial anymore. The statements of the United States Chamber of Commerce show that its members are very agitated and worried.

They see Mr. Trump buying shares of Intel Corporation on behalf of the government, taking positions in a dozen other major corporations and moving so close to high technology, artificial intelligence and related industries that it is becoming difficult to know where government ends and the private sector begins.

For the Chamber of Commerce, that is anathema, apostasy and a departure from the idea that a free-market system is the best system. If it were the best system, Trump would leave not only the rental business but also Intel Corporation to live or die according to its own private-market decisions. Instead, he is funding the company and giving the government a say in its affairs because the government has become an owner.

This is not unusual historically. The 17th, 18th and 19th centuries were the period when capitalism’s major achievement was the creation of a world economy. European countries, North America and Japan organized every corner of the globe into colonies and created a deeply unequal global economy. They nevertheless connected the economy, creating a center where wealth was collected and a periphery from which wealth was extracted.

The process did not end well. Colonial powers went to war in World War I and again in World War II, destroying every one of them in the process except the United States. The United States benefited because air power had not developed far enough for the Atlantic and Pacific oceans to fail to protect it from the mutual destruction imposed by European countries and Japan.

The end of capitalist colonialism was also the end of colonialism. Soon after 1945, the old empires were gone. Britain lost India, France lost Indochina and other colonial powers lost their territories. The irony was that the United States inherited the results of the global empire.

Three centuries of colonialism were handed over when the former colonial powers could no longer hold their colonies. The United States was the one country able to attempt to run a unified global empire, larger than anything the British, French, German or Spanish empires had been able to create.

That was the period into which we were born: a moment when the United States was the singular global colonial power. It replaced the other colonial authorities with nominally independent governments that were, in reality—particularly economically—dependent on the United States. After 1945, the United States dominated the globe in a way no other country had done.

We are now experiencing the end of what should have been understood as an artificial and temporary period of American history. If people had recognized that, they would not be as without solutions as they are now while this singular empire dissolves around them.

ROZSA: To what extent is the dissolution of America’s supremacy the direct result of Trump’s policies, and to what extent was it the inevitable consequence of developments that preceded his rise?

WOLFF: Mostly the latter. Mr. Trump is not that powerful and never was. He is the latest in a long line. He is interesting because, being near the end of this process, he is somewhat more honest, blunt and transparent about it than his predecessors. That is partly why he was elected.

Even now, the leadership of the Democratic Party lives in the fantasy that the United States occupies the same position it held in the 1980s and 1990s. It does not. That period is over. The empire is dissolving.

The United States cannot win in Iran. This desperately poor Middle Eastern country has stalemated the country that is ostensibly the world’s most powerful. The same process could have occurred elsewhere. The point is that it is happening, and that poor countries—particularly through their alliances with Russia and China—now have the capacity to tell the United States that it cannot have everything it wants and must share political and economic power.

Mr. Trump will try to reverse the process by acting as a tough guy and using bombing and genocide. It will not happen because it is beyond the capability of the United States. That reality is becoming clear, but it is accompanied by massive denial.

What population has experienced the decline of an empire without a long period of denying the inevitable and denying the decline that was shaking it to the core? That happened in Greece, Rome, the Ottoman Empire and the Persian Empire. It is happening to the American Empire.

Chuck Schumer, I cannot imagine, would say what I have just said to you. He would consider it unpatriotic, or something similar, and would instead say whatever helped him reach his current position. European leaders are doing the same thing—the Macrons, Merzes and Starmers. They speak as though their countries remain the center of the world.

That era is over. Those countries have not been the center of the world for a hundred years, yet their leaders continue to hold on to that delusion. Americans mock them for it without recognizing that they are repeating the same mistake.

Source: AlterNet