Economic Update with Richard D. Wolff
Episode: Challenging Markets and their Results
Date: October 27, 2016
Host: Richard D. Wolff
Episode Overview
In this episode, Richard D. Wolff critically examines the functioning of markets and their real-life outcomes, especially under capitalism. He analyzes current stories related to vaccines, labor disputes, gender pay equity, mega-corporate mergers, healthcare ("Obamacare"), and the concept of markets as presented by prominent economists. The episode concludes with a listener question about the viability of worker cooperatives in large enterprises such as UPS.
Key Discussion Points & Insights
1. UNICEF's Vaccine Negotiation: Bulk Buying vs. Market Pricing
- [06:01] UNICEF negotiated with six vaccine manufacturers to halve the price of a vaccine that safeguards children against five deadly diseases, saving an estimated 5 million lives by 2020.
- Economic Lesson: Centralized, non-profit purchases (bulk buying) can secure much lower prices than the fragmented market for life-saving goods.
- Quote:
"It's a lesson in economics that the way to get drugs to people who need them... is much cheaper for the mass of people if a major national or, even better, international institution... purchases in bulk." (08:35)
- Implication: This model could be adopted by governments like the U.S., but the prevailing system prioritizes profit over wide accessibility, resulting in preventable suffering.
2. Harvard University: Inequality in Action
- [13:00] Harvard's food workers, earning $30,000 a year, went on strike for higher pay. Meanwhile, Harvard pays its top eleven investment managers $242 million over a few years, while resisting a $3.75 million annual increase for 750 cafeteria workers.
- Quote:
"Harvard paid 11 people who manage their money $242 million. But it cannot find it in its heart and soul... to come up with 3 1/4 million dollars for 750 people who work full time for them. That's as gross an inequality as one can find in our culture." (16:50)
- Quote:
- Further Context: While raising $7 billion in a record fundraising drive, Harvard effectively "nickel and dimes" its lowest-paid staff.
3. Icelandic Women’s Strike for Equal Pay
- [21:00] On October 24, women across Iceland staged a strike at precisely 2:38pm—the time after which they work “for free” compared to men due to the pay gap (14–18% less).
- Quote:
"They calculated that works out to that every minute after 2:38 each day, they're working for free." (22:30)
- Iceland has the smallest gender gap in pay globally due to such actions, yet women are still dissatisfied with persistent inequality.
- Quote:
4. Mega-Corporate Mergers: Capitalism’s Inevitable Concentration
- [25:15] Discussion on AT&T’s proposed merger with Time Warner, and other mega-mergers (Walgreens-Rite Aid, Dow-DuPont).
- Monopoly and Oligopoly:
Wolff explains that capitalism tends toward monopoly—the extinction of competition through winner-take-all dynamics. - Research Insight:
Recent scholarly work shows mergers do little for efficiency but significantly increase market power and profits—primarily by limiting competition. - Quote:
"Bottom line, it didn't do much for efficiency, but it did do a lot for market power. In plain English: mergers are not about becoming more efficient... Mergers are to make one company more powerful..." (33:15)
- Monopoly and Oligopoly:
Second Half Highlights
5. Obamacare: Progress and Persistent Failings
- [38:30] Obamacare is a modest advance, but the U.S. still trails most industrial nations in both the quality and accessibility of healthcare.
- Only 48% can get same-day or next-day care; the U.S. is near the bottom of comparable countries.
- Quote:
"The United States has many fewer general practitioners... For example, in France and Germany, the number is five times... per person." (41:50)
- The U.S. rations scarce health care via price, not need.
- Quote from Source:
"Access to was a problem before, access is a problem now. Americans can't seem to have a discussion on how to make that better." — Prof. Aaron Carroll, NYT, Oct 26 2016 (43:15, cited in episode)
6. Markets as Celebrated by Mainstream Economists: The Hamilton Ticket Story
- [44:20] Wolff critiques Harvard economist N. Gregory Mankiw’s NYT column lauding the market's ability to secure “last minute” $2,500 Hamilton theater tickets (five times face value).
- Quote:
"He celebrates markets... that paying $2,500 for tickets, and from the story you can guess for at least three persons... That's $7,500 for an hour and a half in the theater in New York is no problem for Professor Mankiw. And that's probably the biggest clue to how and why he thinks like this." (46:00)
- Wolff emphasizes that markets allocate scarce goods to those with most money, not those with greatest need or merit.
- Wolff’s Critique:
"Markets are a way of pandering to the richest amongst us... They get to buy by jacking up the price what no one else can afford. They lead the producers to make more of what is going up in price, thereby depriving other outputs from ever being produced..." (51:05)
- Quote:
7. Worker Cooperatives: Imagining a Democratic UPS
- [53:30] Responding to a UPS driver’s question: Can big companies become worker co-ops?
- Yes. Wolff outlines a process by which workers, frustrated with constant erosion of wages and benefits, could demand conversion (possibly via eminent domain) from corporate to cooperative ownership.
- Workers would prepare by learning management and planning, and appeal to public interest to transition to a collectively-run enterprise.
- Quote:
"The only way to answer the question, 'Can we do better than capitalism?' is to make the effort to see how it works." (56:30)
Notable Quotes & Memorable Moments
-
On non-profit bargaining:
"Having that institution buy in bulk and thereby realize a much lower price is a way of helping everybody. This should be done everywhere." (09:05)
-
On inequality at Harvard:
"Shame on Harvard. But this additional information—shame squared." (19:00)
-
On Iceland’s activism:
"They demand, they want, equal pay for equal work and they won't rest until they get it." (23:10)
-
On mergers and market power:
"Mergers like this reduce the number of people from the already small minority that control our economy to an even smaller one." (29:24)
-
On health care rationing:
"The market rations. It gives scarce things to the people with the most money." (43:55)
-
On 'voluntary' markets:
"This is not a voluntary choice in any meaningful sense of the word voluntary. Because the condition of keeping people so desperate that they're willing to work for you under awful conditions... that's not a successful outcome." (49:00)
-
On transition to cooperatives:
"We don't want to bargain with you. We want to run the thing ourselves." (54:30)
Timestamps for Key Segments
- UNICEF Vaccine Deal: 06:01 – 12:30
- Harvard Labor & Endowment: 13:00 – 20:45
- Icelandic Women's Strike: 21:00 – 24:45
- Corporate Mergers (AT&T-Time Warner): 25:15 – 35:39
- Obamacare and Healthcare Rationing: 38:30 – 44:00
- Markets & Hamilton Ticket Story: 44:20 – 52:50
- Worker Co-op at UPS: 53:30 – 57:10
Episode Tone and Style
Richard Wolff’s tone remains direct, analytical, and critical, frequently employing illustrative stories and drawing sharp attention to economic inequities. His language is accessible but incisive, aiming to empower listeners to question mainstream narratives and consider systemic alternatives.
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