Economic Update with Richard D. Wolff

Episode: Capitalism's Craziness
Date: August 26, 2016
Host: Richard D. Wolff

Overview

This episode of Economic Update delves into the "craziness" and contradictions of capitalism as manifested in the U.S. and global economy. Richard D. Wolff critically examines contemporary issues, including for-profit universities, inequality, manipulation of defense budgets, pharmaceutical price gouging, and the function of unemployment and insurance. He argues that current economic practices benefit a tiny elite while imposing irrational costs on society at large, and explores both the roots and possible solutions to these systemic problems.

Key Discussion Points & Insights

1. For-Profit Universities and Political Corruption

(01:30–09:40)

• Hillary Clinton, Bill Clinton, and Laureate University:

  • Laureate, a massive for-profit university, is under investigation in multiple countries for corruption. Significant donations link its founder Doug Becker to Democratic political campaigns and the Clinton Foundation.
  • Bill Clinton made $17.6 million as honorary chancellor while Hillary Clinton was Secretary of State, raising "pay-to-play" concerns.
  • “The connection, therefore, between the State Department’s money and the Clintons, both of them, and this university smells. It smells of influence peddling. It smells of pay to play. It smells universities for profit and politics.” —Richard D. Wolff (07:30)

• Donald Trump and Trump University:

  • Trump University is also entangled in legal scrutiny over exploitative practices, highlighting a bipartisan pattern: “Two candidates, two for-profit universities. It doesn’t really get any smellier than this, does it?” (09:05)

2. Graduate Student Unionization Victory

(09:40–16:45)

• National Labor Relations Board (NLRB) Ruling:
  • The NLRB rules that graduate students at private universities can organize unions. This expands labor rights and could mark the start of broader academic labor organizing.
  • Universities historically resisted, claiming unionization would undermine “control.”
  • “The real fear of the administrators is that the model of the graduate students doing it will be a spark that finally overcomes the hesitancy of the professors to do the same thing. [...] Then, imagine an administration that has to deal with an organized graduate student workforce and an organized professor workforce.” —Richard D. Wolff (14:55)

3. Pentagon Budget Fraud

(16:45–19:10)

• Massive Fudging of Defense Budgets:
  • The Defense Department’s Inspector General reports $6.5 trillion in questionable adjustments in Army accounting in 2015.
  • Wolff argues that the military-industrial complex and capitalism both escape scrutiny, fostering systemic rot:
    • “When you don’t subject any system to criticism, to the light of debate and argument, then you see rot set in. [...] That’s our economic system. That’s our military.” (18:35)

4. Inequality and Wealth Concentration

(19:10–24:25)

• Bill Gates as Case Study:
  • Gates’ fortune went from $60B to $90B (2012–2016) without productive work, but through financial asset appreciation in a recovery that only enriched the ultra-wealthy.
  • “Did your income not go up? Did your wealth not go up by 50% over the last four years?” (20:50)
• Congressional Budget Office Report:
  • From 1989–2013, the top 10% of Americans’ wealth doubled, while the bottom 50% saw a decline.
  • Wolff: “You want to understand our political chaos, everything from Trump to Bernie Sanders to Black Lives Matter to Occupy Wall Street—all of it—then you’re looking at probably the single most powerful statistic of the grotesque, unconscionable inequality that our capitalist system is imposing on us.” (23:55)

5. Pharmaceutical Price Gouging

(24:25–26:25)

• EpiPen Price Hike by Mylan:
  • Mylan raised EpiPen prices from $56 to $318 per injection (2007–2016), boosting CEO pay and profits.
  • Political attention brought a partial price rollback.
  • “But there is a lesson: if there’s a mass movement, particularly if it’s led by our political leaders, turns out you can unroll a lot of things that the corporations would like to do to us.” (26:18)

6. Corporate Accountability and Token Fines

(26:25–27:35)

• Harley-Davidson’s Pollution Fine:
  • The motorcycle company fined $12 million for illegal emissions devices—a trivial penalty relative to its $6.5 billion in annual revenue.

7. Immigration and Border Walls

(27:35–28:35)

• Trump’s Border Wall Proposal:
  • Wolff points out that building physical barriers on the southern border pre-dates Trump, questioning the narrative of novelty and effectiveness.

8. Whistleblowing and Tax Evasion

(28:35–29:10)

• New Book:
  • The upcoming book Lucifer’s Banker details how UBS helped clients evade taxes. Wolff highlights the contradiction: the whistleblower served prison time, but was rewarded over $100 million by the IRS for exposing tax dodgers.

Extended Commentary & Structural Critiques

9. Capitalism’s Contradictions: Automation & Offshoring

(30:00–38:30)

• Roots of Inequality:
  • Automation (machines replacing workers) and relocation (offshoring to low-wage regions) are main drivers of rising inequality.
  • Paradox: These strategies cut wage costs, boosting profits for capitalists, but ultimately “the mass of people have had harder and harder economic times” and thus less purchasing power.
  • “The joke on capitalism is, its own decisions to automate, its own decisions to relocate to low wage places, is coming back to haunt the system—because they can’t sell what they have geared up to produce.” (34:25)

10. The Social Cost of Unemployment

(38:30–42:40)

• Unemployment as Societal Irrationality:
  • Firing a worker may save an employer $5,000, but imposes many times that amount in negative social costs.
  • “There’s a fundamental craziness in our system in which a decision by a private employer to save $5,000 can have society incur costs of $50,000 or $20,000. That’s irrational.” (40:50)
  • Historical solution: government job programs as in the 1930s (New Deal).
• Alternative: Work Sharing for Efficiency Gains
  • Instead of layoffs due to increased productivity, reduce the workweek for all—everyone keeps a job and a secure income:
    • “Shared unemployment means we all have leisure. [...] The way technology helps us be efficient rewards us all with leisure rather than rewarding a few with profits and subjecting many to unemployment.” (42:13)

11. The Illogic of Private Insurance

(42:40–46:50)

• Public vs. Private Insurance:
  • Social insurance could deliver security efficiently and at lower collective cost. Instead, private insurance brings profit-driven bureaucracy and inflated costs.
  • “The end result is that insurance costs much more for all of us to have peace of mind than it would if a single authority did it. Wow. Why then do we have it? Because it’s privately profitable, and the folks in the insurance business don’t want the competition from a government...” (45:27)
  • Analogy: Like fire and police departments, insurance would be more rational as a public good.

12. Ubiquity of Subsidies to Capitalism

(46:50–End)

• Government Subsidies:
  • Myth: Capitalism is independent and self-sustaining. Reality: Business is deeply subsidized.
  • Historical shift: After WWII, corporate taxes fell relative to individual taxes, shifting the burden onto ordinary people and subsidizing business.
  • “The notion of a capitalism without massive government subsidy is a fantasy, one entertained by people who like to call themselves libertarians, among other names.” (47:20)
  • Examples: government-built infrastructure, low minimum wage, “cost plus” defense contracts, public financing for sports stadiums.
• Worker Cooperatives and Government Aid:
  • Wolff argues new economic models would rely on government support—just as capitalism has always done.

Notable Quotes

• “The connection... between the State Department’s money and the Clintons... and this university smells. It smells of influence peddling. It smells of pay to play. It smells universities for profit and politics.” —Richard D. Wolff (07:30)
• “The real fear of the administrators is that the model of the graduate students doing it will be a spark that finally overcomes the hesitancy of the professors to do the same thing.” (14:55)
• “When you don’t subject any system to criticism... then you see rot set in.” (18:35)
• “You want to understand our political chaos... you’re looking at probably the single most powerful statistic of the grotesque, unconscionable inequality that our capitalist system is imposing on us.” (23:55)
• “Shared unemployment means we all have leisure. [...] That the way technology helps us be efficient rewards us all with leisure rather than rewarding a few with profits and subjecting many to unemployment.” (42:13)
• “The notion of a capitalism without massive government subsidy is a fantasy, one entertained by people who like to call themselves libertarians, among other names.” (47:20)

Timestamps for Major Segments

• 00:00–01:30 — Welcomes, book and website mentions, setup
• 01:30–09:40 — For-profit universities, Clintons and Trump
• 09:40–16:45 — Graduate students and unionization
• 16:45–19:10 — Defense budget fraud
• 19:10–24:25 — Gates, inequality, Congressional Budget Office report
• 24:25–26:25 — Pharmaceutical pricing (EpiPen)
• 26:25–27:35 — Harley-Davidson fine
• 27:35–28:35 — Border wall politics
• 28:35–29:10 — UBS, tax evasion, whistleblower
• 30:00–38:30 — Automation, offshoring, inequality causes
• 38:30–42:40 — Unemployment as irrational cost to society
• 42:40–46:50 — Private vs. public insurance
• 46:50–End — Government subsidies to capitalism; reflection and closing

Tone and Delivery

Wolff’s style is critical, accessible, occasionally witty, and always engaged with the emotional and ethical implications of economic policy. He often repeats “Wow” and “Isn’t it crazy?” to sharpen the sense of absurdity and injustice.

Summary

Richard Wolff’s episode “Capitalism’s Craziness” argues that widespread economic irrationalities—such as growing inequality, fraudulent military spending, exploitative healthcare, and environmentally destructive business practices—are not accidental, but systemic features of capitalism. He challenges listeners to recognize the failures of “market logic” and points to collective solutions, like unionization, public goods, government job creation, and worker cooperatives, as both necessary and achievable alternatives.