Podcast Summary: Economic Update with Richard D. Wolff

Episode: Big vs Small Business
Date: November 23, 2015
Host: Richard D. Wolff

Overview

This episode of Economic Update explores the tensions and structural dynamics between big and small businesses in the U.S. economy. Richard D. Wolff, professor of economics, critiques the power of large corporations, discusses systemic issues like monopolistic behavior and globalization, and contrasts them with the struggles and potential virtues of small businesses. The episode also covers current economic events, issues in healthcare and education, and presents alternative economic models from abroad and American history.

Key Discussion Points and Insights

Current Economic Updates

Japanese Recession and Global Interdependence

• Japan has fallen back into recession, reflecting broader global economic troubles.
• Wolf criticizes the idea that economic events are like weather: "Economics is not like the weather. We are not, in fact, sitting here waiting to see what will happen… The economy is something we have a great deal of influence and control over if we wish to exercise it." (02:15)
• He argues that power and decisions are excessively concentrated: "We allow ourselves to be dependent on whether the tiny number of individuals who head the big corporations... are going to make a profit or not." (03:31)

Corporate Malfeasance: The Supplements Industry

• Highlights a federal investigation into nutritional supplement fraud (USP Labs), noting a recurring theme of illegal or dangerous behavior for profit:

  "The sad reality of our capitalist system is that the profit motive drives companies—sooner or later, in virtually every industry... to resort to Lord knows what in the search for more profits." (06:11)

• Points out analogous scandals across industries—VW, GM, Whole Foods—emphasizing this is a systemic issue.

Economic Struggles in New York City

• Reports a poll showing half of New Yorkers are struggling to make ends meet and worry about the future, challenging the narrative of economic recovery:

  "Half the people… are having trouble making ends meet and are anxious about the future. What kind of society refers to such a condition as economic recovery?" (09:55)

Health Care: High Deductibles and the ACA

• Notes the rise in deductibles even as ACA made insurance premiums more affordable; many remain underinsured.

  "The promises of President Obama… that the Affordable Care Act would make the insurance premium affordable has been reasonably true. But what wasn't discussed and negates the effect of a low cost premium is if you have to pay vast amounts of money out of pocket for the deductible portion." (12:19)

Million Student March and Education Crisis

• Details the high cost and declining value of a bachelor's degree, as well as growing student debt.
• Applauds the November 12th Million Student March and its three demands:
  1. Cancel student debt
  2. Make public college tuition free
  3. $15 minimum wage for campus workers

"Making the cost rise while the quality of what you get for a degree shrinks… is outrageous self destructiveness." (14:58)

Big vs Small Business: Main Theme (Second Half)

Structural Advantages of Big Business

• Big businesses’ size grants them superior access to finance, supply, and political lobbying.
• Small businesses struggle to survive, only sometimes winning brief victories via collective action—e.g., creating the Small Business Administration for support.

Ways Big Business Undermines Small Business

• Trade Agreements: Big businesses shape deals like the Trans Pacific Partnership (TPP) to their benefit, frequently at the expense of smaller firms.
• "Too Big To Fail": During financial crises, large corporations use their size as leverage to demand bailouts, growing even larger and more powerful post-crisis:

  "Almost all of the companies that told us they were too big to fail in 2008 are bigger today than they were then." (27:09)

• Monopoly Power: Ability to dominate markets (e.g., cable, utilities), influence regulators, and stifle competition.
• Economies of Scale: Large firms enjoy better loan terms and supply rates, increasing their competitive edge.
• Globalization: Only big businesses can afford to locate and bribe for advantages abroad, further marginalizing smaller rivals.

Social and Cultural Implications

• Big businesses foster anonymous, top-down, undemocratic institutions, while small businesses offer relationships, transparency, and local accountability.

  "A society dominated by big business is a fundamentally different society from one that says, 'No. We want our factories and stores and offices to be relatively small, where people know each other and know the clientele they serve.'" (33:11)

• Critiques U.S. "celebration" of small business as mostly rhetorical, since policies overwhelmingly favor conglomerates.

Societal Choice and Public Discourse

• U.S. has the right to decide between an economy of giant corporations or smaller, community-based enterprises.
• Suggests more robust debate about the structure of business, favoring policies that could protect and promote small businesses.

Alternatives and Broader Solutions

Public vs. Private Enterprise

• Responds to the dogma that private enterprise is inherently more efficient:

  "The blunt answer to that is no, that isn't true. That's silly. We have had public enterprises and private enterprises that have done well and poorly." (19:57)

• Points out that, e.g., banking failures exemplified the dangers of private control over inherently public functions—proposes public banking.

International and Historical Alternatives

• Italy’s Marcora Law: Offers unemployed workers a lump sum to form worker cooperatives with others in the same situation, turning mass unemployment into an opportunity and fueling Italy’s co-op sector.

  "During that time… you are a burden on your family… there's a lot of bad things that we can avoid if instead… you were busy building a new industry… with other people in the same boat." (42:34)

• U.S. New Deal–Era Public Employment: The government directly created millions of jobs in the 1930s, supporting both the unemployed and cultural life (e.g., WPA arts programs), paid for by taxing corporations and the wealthy.

  "15 million people who weren’t unemployed because they got a government job, they got a government paycheck… What a powerful, lasting monument to what creative programs during unemployment can be." (47:02)

• Criticizes the lack of such discussions in today’s policy and presidential debates:

  "It is shameful that in the United States no discussion of this option and what it might mean for the millions of Americans that are now unemployed." (45:11)

Notable Quotes & Memorable Moments

• On Economic Agency:

  "Economics is not like the weather. The economy is something we have a great deal of influence and control over if we wish to exercise it. But we don’t." (02:15)

• On Systemic Fraud:

  "The profit motive that we are taught… to celebrate as a paragon of efficiency… is likewise extremely complicit in producing dangerous, fraudulent, illegal behavior..." (07:07)

• On Structural Inequality:

  "For half the people, the game is over. For half the people, they know that there’s no recovery for them." (11:20)

• On Big vs Small Business:

  "Big businesses have all kinds of advantages in their competition with little businesses, and they systematically… crush, destroy, or buy out or absorb small businesses." (25:20)

• On Public vs Private Provision:

  "We make our parks public. We make our police departments public. We understand the fire department. We need social services from social, governmental enterprises." (24:55)

• On Alternative Models:

  "The Marcora Law… gives people who are unemployed… a plan B… a nice pot of money… to become the startup capital of a cooperative enterprise." (44:22)

Key Timestamps

| Timestamp | Topic | |-----------|------------------------------------------------| | 00:30 | Japan's recession and the illusion of control | | 06:00 | Supplement industry fraud and systemic dangers | | 09:55 | New York poll: half struggling economically | | 12:19 | High deductibles under the ACA | | 14:55 | The education crisis and Million Student March | | 19:57 | Public vs. private enterprise efficiency | | 25:20 | Big business vs. small business dynamics | | 27:09 | "Too Big to Fail" concept critiqued | | 33:11 | Social implications of big vs small business | | 42:34 | Italy’s Marcora Law explained | | 47:02 | New Deal-era public employment history |

Conclusion

Professor Wolff's episode is a sweeping critique of the concentration of economic power, the persistent favoring of big business over small, and the deepening divides in American society. He encourages listeners to consider not just legislative tweaks but profound alternatives demonstrated abroad and throughout American history. The dominant economic structure, he argues, is neither inevitable nor optimal, and robust public discussion and activism—especially around small business, co-ops, and public enterprise—are our way forward.