Economic Update with Richard D. Wolff

Episode: Austerity's Social Costs
Release Date: December 7, 2015
Host: Richard D. Wolff / Democracy at Work

Episode Overview

In this episode, Richard D. Wolff sheds light on the global and domestic social costs of austerity policies. He critically examines how austerity shifts the burden of economic crisis onto ordinary people, using recent developments in Greece, Portugal, Puerto Rico, Illinois, and the broader United States as case studies. Wolff also explores how profit-driven capitalism undermines meaningful holidays, the climate crisis, the refugee situation in Europe, and manipulative practices in the airline industry. He advocates for alternative economic arrangements that prioritize people over profit, such as worker cooperatives and public banking.

Key Discussion Points & Insights

1. The European Anti-Austerity Movement

(04:13 – 09:17)

• Greece:
  • Greece led the charge with massive opposition to austerity imposed after the 2008 crisis, including strikes and the rise of Syriza, a left-wing, anti-austerity party.
  • Although Syriza eventually enforced austerity, popular resistance persists: “Demonstrations in major Greek cities twice in the last month. And the message is always the same—we resent, we oppose and we will not tolerate shifting the burden of a crisis of capitalism onto the mass of people...” (06:49 – 07:12)
• Portugal:
  • Portugal’s new coalition government (Socialist Party, Communist Party, Green Party) committed to ending austerity, signaling a growing tide in Europe: “The tide of opposition to austerity keeps growing. It is only a matter of time before governments in the rest of Europe will be facing very similar challenges.” (08:34 – 08:56)

2. Austerity in the U.S.: Economic Mechanisms & Social Impact

(09:17 – 19:45)

• Wages stagnated from the 1970s to 2008, while profits soared due to increased productivity without wage gains, offshoring jobs, and tax cuts for the wealthy.
• “This was great for the rich and corporations... But along the way it bankrupted the government.” (10:56 – 11:04)
• Case studies:
  • Puerto Rico:
    • US corporations exploited tax breaks and cheap labor; most profits left the island, and little benefit reached the broader population.
    • Now, Puerto Rico faces unpayable debts and proposed austerity (cutting pensions & public programs): “...the crisis of a system that doesn’t work being resolved on the backs of the mass of people who are not responsible...” (15:38 – 16:29)
  • Illinois:
    • Illinois' fiscal woes result from tax breaks for the wealthy and borrowing, leading to threats of cuts to essential services and pensions.
    • Political power concentrated as Governor Rauner, a wealthy businessman, spent record sums to secure office: “He bought the government... They’re going to make sure that what the government does is cut workers’ pensions, cut government services, rather than tax people like them. It’s worth it to spend millions to capture the politics because they’ll save many millions more by burdening average people. That’s austerity perfectly illustrated in the United States.” (18:19 – 19:45)

3. Regulatory Theater & Banking Corruption

(19:45 – 22:38)

• Critique of Governor Cuomo’s call for more anti-money laundering rules targeting big banks in New York, despite numerous existing (and ineffective) laws.
• Wolff challenges private banking and advocates for public banks: “The real issue ought to be, do we allow banking to be a private enterprise when it has proved itself to be unethical and illegal over and over again?” (21:39 – 22:11)

4. Climate Summit & Systemic Inaction

(22:43 – 26:46)

• Discusses the Paris climate summit: politicians offer “glowing words” but no meaningful action due to influence from profit-driven corporations, especially fossil fuels and automobile makers.
• Notable quote: “It's profits and capitalism versus the environment—that’s the problem. And pretending otherwise only postpones the solution.” (25:44 – 25:56)
• Highlights public transportation as a rational solution blocked by corporate opposition.

5. Worker Ownership at Publix

(26:46 – 27:56)

• Praises Publix supermarket’s employee ownership structure:
  • After a year and 1,000 hours worked, employees receive stock and bonuses.
  • “This is an important example of how giving workers more control, more involvement, more at stake in an enterprise, makes it more successful and and more profitable than others.” (27:35 – 27:53)

Extended Discussion (Second Half)

6. Holidays Under Capitalism: Thanksgiving Case Study

(30:10 – 37:24)

• Holidays intended for community are undermined by profit-driven capitalism:
  • Airlines hike prices and cut service at Thanksgiving, excluding poorer Americans.
  • Organic turkeys are priced beyond the reach of many, dividing society even during supposed unity: “...if you want a Thanksgiving...to be healthy...you’re going to have to spend a bundle of money which large numbers of Americans cannot do.” (35:10 – 36:00)
  • Concludes: “What would it take in a society that took Thanksgiving seriously to suspend capitalism just for a day so that we could all get together with a healthy turkey in a subsidized transportation...?”

7. Germany, the Refugee Crisis, and Economic Motives

(37:24 – 46:15)

• Germany’s acceptance of refugees seen as both an economic strategy (addressing labor shortages) and a reputational tactic after negative press (VW scandal, austerity in Greece).
• Concern among German workers about wage suppression due to incoming refugees.
• “...it's all nice and good if you take in refugees, but where is the protection for Germans already there from the consequences that capitalism usually dumps on local working classes? And the answer is there's no protection...” (40:40 – 41:08)
• The root cause of the Syrian exodus is linked to bombing campaigns by Western powers, not just the Assad regime.

8. France: Terror and Political Response

(46:15 – 51:18)

• After terrorist attacks, France's socialist government resorts to increased bombing, despite no evidence linking Syria to the attacks.
• Hollande criticized for broken promises to end austerity and tax the rich:
  • “He had promised to prevent austerity in France. He had promised to tax the rich... He failed on all counts.” (47:40 – 47:42)
• These crisis responses are seen as distractions from domestic political failings.

9. Manipulation in the Airline Industry

(51:18 – 55:51)

• Airlines have artificially lengthened scheduled flight times to improve on-time performance statistics.
• “This is fakery, this is phony, this is dishonest, this is unethical. Why would an airline play such a game?... They want us to believe that the statistics are a reliable way to decide which airline is going to get you there on time...Rather than play by the rules...the companies play with, manipulate the rules.” (53:24 – 54:40)
• Emphasizes the systemic prioritization of profit, even if it means misleading consumers.

Notable Quotes & Memorable Moments

• “Austerity is the name of the policy that shifts the cost of the crisis onto the backs of the mass of people so that not only did they suffer the unemployment and the lost livelihoods of that crisis since 2008, but now they have to suffer a government policy that burdens them...” (05:19 – 05:38)
• “We suffer austerity without the massive pushback by the people that Portugal and that Greece show us the way toward.” (19:41 – 19:45)
• On capitalist manipulation of holidays:
  “It is a chance to get us together that is hampered, reduced, undermined, compromised by the profit-driven needs of capitalist enterprises which trump the holiday even if their glitzy ads wish us a good one.” (33:04 – 33:31)
• “Are we forever going to be shocked when it turns out profit-driven enterprises do what they do for their priority and their bottom line at our expense? Not if we’re adults.” (55:42 – 55:51)

Timestamps for Important Segments

• European austerity movements: 04:13 – 09:17
• Austerity in U.S. (Puerto Rico & Illinois): 13:23 – 19:45
• Cuomo & banking laws: 19:45 – 22:38
• Climate summit critique: 22:43 – 26:46
• Publix worker-ownership example: 26:46 – 27:56
• Thanksgiving & capitalism: 30:10 – 37:24
• Germany & refugees: 37:24 – 46:15
• France post-terror response: 46:15 – 51:18
• Airline flight time manipulation: 51:18 – 55:51

Conclusion: Episode’s Tone and Perspective

Wolff's tone is incisive and unapologetic, blending economic analysis with social critique and advocacy for systemic change. He frames austerity not as a political inevitability, but as the calculated outcome of profit-driven policy choices—choices that can and must be challenged. From exposing the failures of elite-driven crisis management in Europe and the U.S. to the capitalist compromise of cultural traditions and environmental action, he insists on alternatives that democratize economic power and put collective well-being above corporate gain.