Economic Update with Richard D. Wolff

Episode: Public Service vs Private Profit

Date: December 21, 2017

Overview

In this episode, Richard D. Wolff explores the tension between public service and private profit through the lens of recent news events and systemic economic critique. The first half of the show features Wolff's economic updates, focusing on issues such as corporate threats, inequality, and failed regulation, while the second half centers on an in-depth conversation with David Jette, legislative director for Public Bank LA. Together, they delve into the concept, benefits, and feasibility of publicly owned banks as alternatives to extractive private financial institutions.

Key Discussion Points & Insights

1. Banks vs Democracy: The Morgan Stanley–Corbyn Clash

(00:10–09:00)

• Wolff recounts how Morgan Stanley warned clients that a Labour government under Jeremy Corbyn represented as big a risk as Brexit.
• Corbyn’s retort accused Morgan Stanley of being "speculators and gamblers who crashed our economy in 2008," highlighting record CEO pay and massive bonuses while ordinary people suffer.
• Wolff contrasts Corbyn’s bold critique with the silence of most U.S. politicians, except Bernie Sanders, criticizing a common political excuse: if you tax or regulate banks, "they’ll just leave."
• Insight: Banks’ threats to leave are empty; governments have powerful countermeasures they rarely use.
• Quote:

  “A bank that threatens the government when the government is doing its legally entitled taxing and regulating activities...should provoke in a government counterthreats, countersteps. That’s what Mr. Corbyn is suggesting.”
  – Richard D. Wolff (08:40)

2. Consequences of Inequality & Luxurious Outliers

(09:01–12:40)

• Instead of reciting statistics, Wolff illustrates inequality’s effects with examples of ultra-rich consumer products (e.g., $200,000 Range Rovers, $188,000 Porsches).
• As the rich get richer, businesses target them, while 6,500 malls fail.
• Memorable Moment: Wolff’s tongue-in-cheek car reviews spotlight economic absurdity:

  “For those of you with a charming Christmas present perhaps on your mind, the Porsche Panamera Turbo SE hybrid is the world’s most powerful luxury sedan...$188,000 will get you that one. Some people have it and then the rest of us read about it.”

3. Information for Sale: The New York Times Paywall

(12:41–14:10)

• The New York Times halves its free monthly online articles from 10 to 5.
• Insight: Reduction in free access is a dramatic example of public information being subordinated to private profit.
• Quote:

  “If you needed an example of the subordination of the distribution of information...to profit, there it is. Think about it.”

4. Federal Reserve Statements & the Illusion of Financial Security

(14:11–18:44)

• New Fed chair Jerome Powell claims there are no longer any U.S. banks “too big to fail,” despite the growth of mega-banks post-2008 crisis.
• Wolff recalls Ben Bernanke’s infamous 2007 statement, failing to foresee the financial collapse, likening Powell’s overconfidence to Bernanke’s.
• Quote:

  “He [Bernanke] was as wrong as wrong can be. And that’s the case with Mr. Powell. Likely too.”

5. Class Action Bans & Regulatory Futility

(18:45–25:24)

• Congress reverses protections against companies forcing binding arbitration (instead of class actions), making it harder for consumers to challenge corporate harm.
• Insight: Regulating capitalism is Sisyphean—the powerful use money and influence to undermine regulations right after they’re passed.
• Quote:

  “Regulating capitalism is a thankless long-term failure as a strategy...the minute that regulation is passed, after momentous opposition, they then go to work to undo the regulation...It’s only then a matter of time before the regulation is eviscerated.”

6. Corporate Negligence: The Sicilian Oil Dump (ENI Case)

(25:25–28:44)

• Wolff describes ENI secretly dumping toxic waste off Sicily for decades, leaving locals sick.
• Argues the profit imperative, not “monstrous” individuals, drives such behavior.
• Quote:

  “Suppose the workers and the customers together ran such a business. Would they have made themselves sick in this way? Or might they have found a better way?”

Featured Interview: David Jette on Public Banking

(28:45–55:10)

What Is a Public Bank?

(29:03–31:00)

• Definition: Public banks are municipally or state-owned, pursuing social missions alongside financial stability.
• Profits are returned to the public (city budgets, infrastructure).
• Quote:

  “You’re talking about an institution that is owned entirely...by the city of Los Angeles and inures to the benefit of that city.” – David Jette (30:00)

Public Money for Public Good: LA’s Case

(31:01–35:16)

• LA holds ~$8 billion in private banks, paying $100 million annually in bank fees.
• A public bank could recycle these deposits, fund local projects, and save costs.
• Cities could borrow at lower rates, avoid Wall Street’s risky/extractive practices, and reinvest in the community.

Fragility & Ethics of Private Banks

(35:17–38:21)

• LA struggled to find a bank not embroiled in legal or ethical scandals for public deposits.
• Private banks (e.g., Wells Fargo) have histories of fraud, unethical investments (e.g., Dakota Access Pipeline), and low accountability to the public.
• Public banks confer democratic accountability via governance by elected/appointed officials and community representation.

The Bank of North Dakota: Proof of Concept

(39:36–43:26)

• Only U.S. public bank, founded 1919 to serve local farmers.
• Successes: More resilient local banks, profits returned to the state, insulating North Dakota from financial crises.
• Quote:

  “North Dakota has the best community banking industry out of all the other states in the United States...and that independent spirit insulated them from a lot of the turmoil on Wall Street.” – David Jette (41:10)

Broader Feasibility and International Models

(44:16–48:07)

• Any city or state could create a public bank; politics and legislation are the only hurdles.
• Germany’s Sparkasse system: around 400 regional public banks finance clean energy and infrastructure, demonstrating profitability and popularity.
• Quote:

  “That network of banks has been largely responsible for financing the green energy revolution in Germany...” – David Jette (47:00)

Opposition from Private Banks & Public Support

(48:08–51:34)

• Private banks resist public banking, lobbying against it.
• However, public banking is popular because it promises to lower costs and reduce taxes without sacrificing services.

Governance: Toward More Democratic Banking

(51:35–53:50)

• Discussion of possible governance models—ideally, a mix of community, workers, and political officials.
• Emphasis on transparency, democratic input, and keeping public banks accountable to their communities.

How to Get Involved

(53:51–55:10)

• Start with a local divestment campaign to push cities to stop investing public money in harmful or extractive industries.
• Build public understanding that “the people’s money needs to be invested to the people’s benefit.”

Notable Quotes & Timestamps

• “Speculators and gamblers who crashed our economy in 2008... nurses, teachers, shop workers, builders. Just about everyone is finding it harder to get by. While Morgan Stanley’s CEO paid himself 21.5 million pounds last year... You are right to feel threatened. We are going to change things.”
  – Jeremy Corbyn (quoted by Wolff, 01:45)

• “A bank that threatens the government when the government is doing its legally entitled taxing and regulating activities...should provoke in a government counterthreats.”
  – Wolff (08:40)

• “The most important thing to understand here is that municipalities already use banks...our proposition...is that we stop lending that money to banks at zero interest and we start lending it to ourselves.”
  – David Jette (33:00)

• “Regulating capitalism is a thankless long-term failure as a strategy.”
  – Wolff (24:50)

Important Segments & Timestamps

• Banks vs Government: Morgan Stanley vs Corbyn — 00:10–09:00
• Inequality & Luxury Products — 09:01–12:40
• NYT Paywall as Profit Motive — 12:41–14:10
• Fed's “No More Too Big to Fail” Claim — 14:11–18:44
• Class Action, Regulation & Arbitration — 18:45–25:24
• Italian Oil Dump Scandal & Systemic Critique — 25:25–28:44
• Public Bank LA Intro & Foundations — 28:45–31:00
• LA Public Bank Practical Benefits — 31:01–35:16
• Private Banking’s Scandals & Limits — 35:17–38:21
• Bank of North Dakota as Model — 39:36–43:26
• International Public Banking (Germany’s Sparkassen) — 46:13–48:07
• Private Bank Opposition — 48:08–51:34
• Democratizing Public Bank Governance — 51:35–53:50
• Getting Involved in Public Banking — 53:51–55:10

Tone and Style

• Wolff’s style is trenchant, critical, and dryly humorous.
• Jette is earnest and fact-laden, providing clear explanations for lay listeners.
• The episode balances policy analysis, real-world examples, and “big picture” system critique.

Summary

“Public Service vs Private Profit” lays bare the failures of profit-dominated financial systems and points to public banking as a potent, democratic alternative. Through sharp critique of bank power and insightful real-world case studies, Wolff and Jette advance a vision of finance that re-centers community needs, accountability, and a public purpose, leaving listeners with both hard questions about the status quo and a practical framework for change.