Economic Update with Richard D. Wolff

Episode: Convention Economics
Date: July 25, 2016
Host: Richard D. Wolff
Producer: Democracy at Work

Episode Overview

In this episode, Richard D. Wolff takes a critical look at the economic narratives and realities underlying the 2016 Republican National Convention. He dissects the contradictions present in campaign platforms—especially around the minimum wage, immigration, and trade policy—then turns to larger questions of accountability for corporate malfeasance (with Volkswagen as a case study). The episode also explores systemic problems such as rising consumer debt, ballooning CEO pay, European banking crises, and the logic of lotteries as an extractive "tax" on lower-income Americans. Wolff ends by reflecting on the evolving relationship between socialism and worker cooperatives, advocating for more democratic forms of economic organization.

Key Discussion Points & Insights

1. Convention Economics & Political Fakery

(00:52 - 04:30)

• Wolff highlights the "revitalization" of Cleveland presented during the RNC, calling out its selective focus on an over-invested downtown while most of the city suffers urban decay.
• Quote:

  "The fakery of presenting Cleveland with this one perspective of this small part that has been over invested in to match the under investment in the rest of it tells you something about American politics that you will not see at the convention." — Richard D. Wolff (01:49)

• Points listeners to community wealth-building efforts in Cleveland, particularly worker cooperatives, as a less-publicized but more meaningful development ("not going to be there in any of the official presentations").

2. Contradictions in Republican Economic Policy

Minimum Wage & Immigration

(04:30 - 08:30)

• Trump opposes a minimum wage increase, while Clinton proposes a modest raise. Yet, Trump's hardline immigration stance would inadvertently force minimum wages higher by reducing the pool of low-wage workers.
• Quote:

  "If you radically reduce the number of immigrants available competing for low wage jobs, it will force employers. Yep, you guessed it. To raise the minimum wage that they have to pay to get any workers at all. So you're not in favor of the minimum wage being raised legally, but your anti immigration stance will have exactly the same effect." — Richard D. Wolff (07:18)

Trade, Tariffs, and Corporate Profits

(08:30 - 11:30)

• Trump seeks to lower corporate taxes but proposes high tariffs (up to 45%) on imports, which would damage U.S. multinational profits by undermining three decades of global investment.

• Quote:

  "You slap a tariff of 45% on their effort to do this. You have undermined their investments for 30 years. ... What good is it if you cut the profits by means of this import tax?" — Richard D. Wolff (09:56)

• Wolff notes both parties have platforms filled with vague or contradictory promises, and these "platforms don't in fact matter much" because real decisions are made by legislators and lobbyists in back rooms—not on the convention floor.

3. Corporate Crime: The Volkswagen Scandal

(13:50 - 20:00)

• Three U.S. states file suit against VW executives for 12 years of emission-test fraud. Over 11 million cars were fitted with "cheat devices" worldwide.

• Quote:

  "They enhanced their profits at the expense of the health and the very lives of the millions of people their behavior put at risk. That's something that ought to be talked about, not just because VW does it, but because other car companies are now known to have done it..." — Richard D. Wolff (17:00)

• No legal or financial accountability for top executives, who received €63 million in bonuses in 2015.

• Notable quote from Massachusetts Attorney General Maura Healy:

  "This conduct reflects a corporate culture that had no regard for the law, no respect for the American people, and no regard for the environment or people's health." (18:54)

• Wolff calls for a national debate over the logic of permitting such private power in the hands of corporations driven by profit at public expense, questioning whether such entities should even remain private.

4. Economic Updates: Debt, Inequality, and Banking Crisis

Exploding Consumer Debt

(20:15 - 22:40)

• U.S. auto loan debt surpasses $1 trillion, on top of $1+ trillion in consumer credit card debt and $1.2 trillion in student loans.
• Average new auto loan: $30,000; average monthly payment: $500.
• Quote:

  "Americans are falling into a deeper and deeper debt, moving higher in their indebtedness at a much higher rate than their income is increasing. That's where we were before people when we collapsed in 2008." — Richard D. Wolff (22:09)

CEO Pay vs. Worker Compensation

(22:40 - 24:00)

• CEO compensation (inflation-adjusted) rose 940.9% from 1978 to 2015, far outpacing the stock market (and typical worker pay, which grew by only 10.3%).
• Quote:

  "The CEO at the top, his income went up 940%. And you and me, ours went up 10%. You want to know why the gap between rich and poor in the United States is exploding? Well, I just told you." — Richard D. Wolff (23:52)

Italian Banking Crisis

(24:05 - 28:30)

• Hundreds of billions in bad loans remain on Italy's bank books despite post-2008 bailouts.
• New "bail-in" rules require losses for bank owners and creditors—including ordinary depositors reclassified as “lenders”—before public funds can be used.
• Quote:

  "Italy is therefore caught. It is either going to screw its people to bail out the banks by using government money, or screw its people by a bail in in which millions of Italians innocently lending money to their banks at the invitation of the banks are wiped out." — Richard D. Wolff (27:55)

Listener Q&A & Extended Analyses

5. Economic Critique of Lotteries

(29:45 - 35:30)

• Lotteries serve as a metaphor for capitalism, redistributing money from the many (mostly working class) to a lucky few.
• Quote:

  "The lottery is a metaphor for capitalism, because here's what it does: It takes a little bit of money from lots of people in order to make a tiny number of people very rich. No wonder capitalism invented lotteries." — Richard D. Wolff (30:30)

• Lotteries harm the overall economy by diverting consumer spending away from goods and services (reducing jobs).
• For governments, the lottery acts as a regressive tax—a politically easier way to raise revenue than taxing corporations or the rich.

6. Racial Discrimination in Lending

(35:45 - 39:45)

• Study in St. Louis finds banks deny mortgages to Black families at the same income level as whites.
• Wolff points out that profitability is often cited as a justification for such discrimination, but he questions why "profit" should override social values like equality.
• Quote:

  "Allowing profit to be used as some sort of final arbiter, as the bottom line, as the thing that has to be governing our decisions, puts the profit of the few ahead of the social needs of all of us. And that's why we don't solve problems like racism." — Richard D. Wolff (39:12)

7. Socialism, State Intervention, and Worker Cooperatives

(40:20 - end)

• Reviews the history of socialism as critique and alternative to capitalism, often via state intervention (minimum wage, health care, education, etc.).
• Notes that full state control (e.g., in USSR/China) brought both achievements (universal needs met) and problems (authoritarianism).
• Contemporary interest in worker cooperatives ("worker self-directed enterprises") is a response to the failings of both unfettered capitalism and statist socialism.
• Quote:

  "Let's democratize the enterprise. Let's turn the enterprises over to all the people who work there together democratically to make the basic decisions in coordination with the communities in which they live and work..." — Richard D. Wolff (43:18)

• Wolff sees worker co-ops as a way to capture the beneficial aspects of past socialist experiments while avoiding concentration of power in the state.

Notable Quotes & Timestamps

• On the Republican platform:

  • "Who in the end pays much attention to all of these things? ...The platform is a vague document that not more than a tiny percentage of the public even reads, let alone thinks about or debates." (11:30)

• On VW and regulatory failure:

  • "We ought to be questioning the capitalist way of organizing enterprises... It's the logical inference from this story of what these people did." (20:00)

• On debt:

  • "We're lending more people more money to buy a car than ever before. And the reason is they can't afford to buy it. ...We are doing it all over again." (22:05)

• On rising inequality:

  • "The gap between rich and poor in the United States is exploding? Well, I just told you." (23:52)

• On Italian banks:

  • "This is a sign that we're not out of the collapse of capitalism since 2008. We are right deep in it." (27:41)

• On social values vs. profitability:

  • "Profit isn't the beginning and the end of the story. That's the logic of capitalism. But it isn't and shouldn't be the logic of a decent society, democratically organized..." (39:13)

• On worker cooperatives:

  • "Workers cooperatives is a way of redefining what socialism means that learns from the past and offers a new direction into the future." (45:30)

Conclusion

Throughout the episode, Richard D. Wolff exposes the contradictions and failures in mainstream economic narratives from both major political parties. He consistently returns to the need for deeper systemic change, highlighting worker cooperatives as a promising alternative that might reunite the egalitarian aims of socialism with democratic participation. Wolff's sharp critiques—fueled by specific contemporary examples—challenge listeners to question who benefits and who loses from prevailing economic arrangements, and to consider more just and democratic alternatives.