Economic Update: Capitalism in Trouble

Host: Richard D. Wolff
Date: March 30, 2017
Podcast: Economic Update (Democracy at Work)

Episode Overview

In this insightful episode, economist Richard D. Wolff explores the mounting crises facing capitalist economies in the U.S. and Europe. He interprets recent political shocks—notably in the U.S., U.K., and France—as signs of deeper economic problems, rooted in an unresolved fallout from the 2008 financial crisis. The episode covers political upheaval, shifting public attitudes, and policy changes, while emphasizing the need for systemic solutions such as worker co-ops. Wolff also delivers brief updates on tax proposals, labor trends, renter advocacy, education policy, age discrimination, subprime loans, and immigration. The show’s second half delves deeply into the economics of immigration and the structural advantages of worker cooperatives over traditional capitalist enterprises.

Key Discussion Points & Insights

1. Political Shocks Reveal Economic Fault Lines

[01:00-13:00]

• Trump’s Policy Failures: President Trump faced two major defeats—the failed Muslim travel ban and the unsuccessful repeal of Obamacare. Wolff connects these losses to plummeting investor confidence and a sharp downturn in the stock market.
  • Quote (Wolff, 02:30): "A sharp downturn in the stock market as investors began to wonder whether bidding up stocks since Mr. Trump's election may have been a big mistake."
• Brexit Initiation: The U.K. officially begins Brexit, threatening the cohesion of Western Europe’s economic bloc and signaling a growing fracture in global capitalism.
  • Quote (Wolff, 04:15): "It also means that one of the three great capitalist centers of the world...are now going to be reduced to North America and the Far East."
• French Political Crisis: France faces electoral upheaval, with the disintegration of center-left and traditional right politics, and the rise of extremes—a mirror of U.S. trends.
  • Quote (Wolff, 07:22): "The middle is falling apart. The conventional rules of politics and economics don't work."

2. Noteworthy Social and Political Shifts

[13:00-25:00]

• Rising Popularity of Socialism in the U.S.: Bernie Sanders is named the most admired political figure in a recent poll, signifying changing American sentiment.
  • Quote (Wolff, 12:55): "The answer has been Bernie Sanders, far and away. Tells you something about American society— that a man who calls himself a socialist… is the most popular political candidate on the horizon."
• Rich Asking to Be Taxed More: Wealthy New Yorkers request higher taxes on themselves to support public infrastructure, but most of their peers remain absent from such initiatives.
  • Quote (Wolff, 15:38): "The richest… are asking Governor Cuomo to tax them more heavily than he currently does… It's a sign of the times."
• Ford’s Minimal Job Creation: Trump claims credit for a $1.2 billion Ford investment, but the real outcome is just 130 retained or new jobs.
  • Quote (Wolff, 18:05): "This investment will either… retain or create 130 jobs… That's the reality. The rest is political hype."
• Empowerment of Renters in Seattle: Seattle forms a renters’ commission to counterbalance the influence of landlords and homeowners—a rare move in U.S. cities.
  • Quote (Wolff, 20:21): "They've taken an interesting tack in Seattle. You're beginning to see this kind of fighting back against long standing injustices…"
• Student Loan Penalties Intensified: Education Secretary Betsy DeVos allows lenders to hit students with penalties on loan defaults more quickly, removing a previous two-month grace period.
  • Quote (Wolff, 24:03): "This, in an age of growing difficulty for students, is a contribution clearly to making America great again, so that the bankers and the lenders can hit the students up for 16%..."

3. Structural Economic Issues and Looming Crises

[25:00-28:55]

• Age Discrimination Case: The Supreme Court hears Villarreal vs. R.J. Reynolds Tobacco Company, which exposes loopholes in age discrimination enforcement and broader issues in labor markets.
  • Quote (Wolff, 26:12): "Their defense is that he didn't pursue the denial of a job... so he didn’t really suffer. I’m no lawyer, but sounds like a strange defense…"
• Subprime Auto Loan Crisis: Signs of a new crisis surface, this time in auto loans—paralleling the 2008 subprime housing disaster.
  • Quote (Wolff, 27:37): "It does leave you with this sense—very little was learned by our great banking community in the last crash and they're busy gearing up for the next one."

[Second Half] Thematic Deep Dive: Immigration & Worker Co-ops

[29:52-58:00]

4. The Real Economics of Immigration

• Debunking Myths of Public Burden: Immigrants, including undocumented, pay substantial taxes (sales, excise, and, through rent, property taxes). Their presence revitalizes declining neighborhoods and props up municipal finances.
  • Quote (Wolff, 32:55): "Immigrants... pay and pay a lot. Let me give you just a few. Sales taxes... excise taxes... And it's precisely because the immigrants... fill those dilapidated buildings... that the landlords begin to have the rental income that enables them to pay taxes."
• Consequences of Deportation: Large-scale deportations damage neighborhoods and local economies; landlords lose tenants, stop paying taxes, and buildings decay.
  • Quote (Wolff, 37:43): "We all suffered because of the economic consequences of expelling immigrants... Kicking out the last 2 or 3 million wrecked their lives; it did not solve the economic problems of the United States..."

5. Worker Co-ops: Structural Alternative to Capitalism

• How Capitalist Corporations Work: Decisions are made by a tiny minority (major shareholders, board), leaving most workers with no say.
  • Quote (Wolff, 42:32): "A tiny group of people who make all the key decisions... Everybody works there, but it's a tiny group... including what's done with the profits that all the workers help to produce."
• Democratic Enterprise Model: Worker co-ops allow one person, one vote; workers control decisions and the distribution of profits.
  • Quote (Wolff, 44:04): "A worker co-op is different. It's a democratically organized enterprise... All the workers decide together what the company will produce..."
• On Offshoring and Local Impact: Capitalist firms seek profit by relocating production, hurting local workers and communities. Worker co-ops, by contrast, would prioritize local jobs and community welfare.
  • Quote (Wolff, 48:48): "Workers... would never destroy their own jobs, would never deprive the community where they live of the tax revenue..."
• Ecological Consequences: Capitalist pursuit of profit drives environmental damage. Worker co-ops would weigh such decisions differently, as workers and their families live in the affected communities.
  • Quote (Wolff, 53:07): "They would also have to weigh... what the pollution of the air and the water [means], because it's the pollution they will live with..."
• Need for Systemic Alternatives: Wolff calls for a robust worker co-op sector, drawing on international models from Spain and Italy, to offer Americans real choice in workplace democracy and economic organization.
  • Quote (Wolff, 56:06): "An economy like ours ought to give people at least the choice. Let's have a large worker co op sector of the American economy. Everywhere in America there should be... competing capitalist and worker co op enterprises."

Memorable Quotes

• On Political Upheaval:
  "It's not politics as usual, because it's not capitalism as usual." — Richard Wolff [11:32]
• On the Failure to Learn from Financial Crises:
  "Very little was learned by our great banking community in the last crash and they're busy gearing up for the next one." — Richard Wolff [27:37]
• On Immigrants’ Contribution:
  "The occupation of sometimes huge portions of cities by immigrants paying rent enables those landlords to pay their taxes... We all benefit who live in American cities from the enormous contribution made by large populations of immigrants..." — Richard Wolff [34:50]
• On Worker Co-ops:
  "A worker co-op is different. It's a democratically organized enterprise... That choice we don't have. We could, but we don't have it. Think about it, folks..." — Richard Wolff [56:49]

Notable Timestamps (MM:SS)

• 01:00–13:00 — Political shocks: Trump defeats, Brexit, French election instability
• 15:38 — "Please Tax Us": Progressive wealthy New Yorkers’ plea to Cuomo
• 18:05 — Ford’s $1.2B investment yields just 130 jobs: hype vs. reality
• 20:21 — Seattle’s renters’ commission
• 24:03 — Student loan penalties toughened under Secretary DeVos
• 26:12 — Age discrimination lawsuit against RJ Reynolds
• 27:37 — Subprime auto loan crisis warning
• 29:52–39:00 — Immigration economics explained
• 42:32–56:49 — Worker co-ops as alternative enterprises
• 56:49–58:00 — Closing: The case for workplace democracy and American economic choice

Tone

Richard Wolff’s tone is critical, urgent, and educational. He uses relatable analogies and vivid examples to demystify economic theory and critique capitalist systems. He encourages empowerment and systemic change, often using a slightly sardonic edge when confronting political hype or policy cynicism.

Summary Takeaway

Wolff argues that ongoing political and social crises are manifestations of deep problems in global capitalism, particularly since the 2008 crash. He highlights the disconnect between reality and political rhetoric, exposes the economic contributions of immigrants, and advocates for democratizing workplaces through worker co-ops as a promising systemic alternative.