Economic Update with Richard D. Wolff

Episode: Democratize the Enterprise

Date: February 1, 2018

Episode Overview

In this episode, Richard D. Wolff critically examines recent economic policy developments and their real-world effects, highlighting the myths around tax cuts and tariffs, shifts in higher education economics, and ends with a powerful discussion about democratizing enterprises. The second half features an interview with Mary Douglas, Executive Director of Democratize the Enterprise, exploring the emerging movement for worker ownership and economic democracy in response to the challenges posed by the gig economy and the broader capitalist structure.

Key Discussion Points and Insights

1. The Reality Behind Corporate Tax Cuts

[00:10–10:30]

• Main Point: Corporate tax cuts touted by the Trump administration as beneficial for workers have resulted in minimal trickle-down effects.
• Insight:
  • Out of 333 large employers surveyed (over 1,000 employees each), only 4% increased wages or gave bonuses, 3% planned to, and 80% had no plans to share tax cut benefits with workers.
  • The majority of tax cut savings are kept as profit, used for dividends, executive pay, investment abroad, or held as cash.
• Notable Quote
  • “Claims from the president on down that this has produced a significant trickle down effect in rising wages and bonuses is not true.” (Wolff, 09:30)

2. The Truth About Tariffs and Trade Wars

[10:30–18:30]

• Main Point: New tariffs on products like washing machines and solar panels are political theater with uncertain or potentially negative outcomes for American jobs.
• Insights:
  • Tariffs might hurt US exporters due to global supply chains—Chinese goods often have US-made components.
  • China, as a major US creditor, can and likely will retaliate, threatening American industries.
  • Historical trade wars often escalate to broader conflicts.
• Notable Quote
  • “The effect of a tariff on jobs in America is uncertain, unknown, and could just as well be negative as positive.” (Wolff, 16:40)

3. The Changing Economics of Universities

[18:30–27:50]

• Main Points:
  • UK and US universities are facing pension cuts and new taxes, transferring the costs of economic shifts onto educators and students.
  • UK professors plan significant strikes against pension threats.
  • Harvard University now faces a 1.4% tax on endowment investment income and reacts with outrage, ignoring the wider context of public contributions.
  • Johns Hopkins receives a rare $75 million donation to its philosophy department, possibly signaling renewed value for humanities.
• Notable Quotes:
  • “Harvard is doing exactly what people who have much more justification do—complain about the taxes they have to pay and try not to remember what it is their taxes pay for.” (Wolff, 23:24)

4. Revisiting Tariffs on Solar Panels

[27:50–30:45]

• Main Points:
  • The US tariffs on solar panels were championed to support domestic industry, but the companies benefiting (Suniva and SolarWorld) are foreign-owned (Chinese and German, respectively).
  • Chinese manufacturers had already shifted production to lower-wage countries (Vietnam, Malaysia) to circumvent tariffs.
  • Retaliation by China threatens major US exports like Boeings, soybeans, and iPhones.
• Notable Quote:
  • “It’s political theater of the cheapest sort. Economics indicates it’s mostly nonsense and it should be understood for what it is.” (Wolff, 30:30)

5. Tribute to Ursula K. Le Guin

[30:45–31:10]

• Main Point: Celebrating the late Ursula Le Guin’s role as an artist calling for economic system change.
• Memorable Quotes:
  • “We live in capitalism. Its power seems inescapable, but so did the divine right of kings. Any human power can be resisted and changed by human beings.” (Le Guin, National Book Awards, 2014)
  • “When women speak truly, they speak subversively... We are volcanoes.” (Le Guin, Bryn Mawr, 1986)

Interview: Mary Douglas, Democratize the Enterprise

Introduction and Background

[31:10–32:22]

• Mary Douglas, executive director, shares her personal experience in the precarious gig economy, explaining why she's organizing for structural solutions rather than individual fixes.

What Does It Mean to Democratize the Enterprise?

[32:22–33:43]

• The goal: A political and social movement lobbying for economic democracy—laws to incentivize full worker ownership and control.
• Emphasis on a legislative approach to empower employees, undermining exploitative labor practices inherent in current capitalist systems.
• Notable Quote:
  • “The only way to change it is to change the capitalist structure to be more of a bottom up democratic structure.” (Douglas, 32:55)

Types of Cooperatives & The Vision

[33:43–35:45]

• Clarification of different co-op models: consumer co-ops vs. worker co-ops.
• The focus: 100% employee ownership and democratic voting rights, “from janitor to CEO.”
• Existing models lack full voting rights; their proposed model eliminates outside shareholders and empowers workers with real control.

Cultural Readiness for Worker Ownership

[35:45–38:01]

• Douglas argues the US is ready for a shift due to worsening inequality and declining prospects for millennials compared to previous generations.
• There’s a growing audience for this kind of substantial, democratic change.

Policy Initiative and Strategy

[38:01–40:26]

• The centerpiece: A model bill offering a 100% capital gains tax exemption to retiring business owners who sell to employees—and a loan guarantee to finance such sales.
• Strategy mirrors ALEC (American Legislative Exchange Council) tactics but for citizens, not corporations.
• Model legislation already passed in some form in New Jersey and New York, and introduced in Wisconsin.

Overcoming Skepticism & Gaining Political Support

[40:26–42:57]

• Common pushback is cynicism over political corruption or system “rigging.”
• Douglas responds: “The government is us…It belongs to us. My representative works for me, so I'm going to take this to him.”
• Some politicians, especially from deindustrialized areas, are already receptive.

International Inspiration: UK Labour Party’s Co-op Policy

[42:57–45:33]

• The British Labour Party has committed to legislating workers’ right of first refusal to buy companies and government loans to facilitate this—a model similar to Douglas’s proposed reforms.
• Douglas views the US pathway as offering carrots (tax exemptions) and potentially, in the future, sticks (mandated worker right of first refusal).

Why This Matters for Business Owners and the Economy

[45:33–50:45]

• Many retiring owners want to preserve their legacy and protect their employees and community.
• Selling to workers, incentivized by tax relief, is preferable to closure, sale to outsiders, or absorption by monopolistic giants like Amazon.
• Notable Quote:
  • “If you don't have employed people, you don't have a consumer economy. It's as simple as that.” (Douglas, 50:29)

Call to Action: Building a Citizen-Powered Movement

[52:04–54:22]

• Douglas encourages listeners to:
  • Visit DemocratizeTheEnterprise.org, download the model bill, and deliver it to their local legislator.
  • Join the member site to connect with others and organize locally.
• The solution requires group action and direct democratic engagement with public officials.
• Notable Quote:
  • “We just need to flip that on its head and we need to really get involved and just kind of take ownership of it. If we want the system to change, we have to band together, create a citizen funded ALEC of sorts and really get these bills passed in all 50 states.” (Douglas, 52:25)

Memorable Closing Exchanges

[54:22–54:30]

• Wolff: “What I like about the way you talk about it is…you've gone that step beyond the individual to make it a group process, which is the only way that this is going to work.”
• Douglas: “They only listen to you when you come at them with pitchforks.” (54:25)

Useful Links Mentioned

• DemocratizeTheEnterprise.org
• Social Media: @emocratizeit

Episode Timestamps for Key Segments

• 00:10 – Tax cut realities
• 10:30 – Tariffs and trade policy
• 18:30 – University economics
• 27:50 – Tariffs on solar panels
• 30:45 – Ursula K. Le Guin tribute
• 31:10 – Interview with Mary Douglas begins
• 32:22 – Purpose of democratizing the enterprise
• 38:01 – Policy and legislation details
• 40:26 – Political alliances and pushback
• 42:57 – UK Labour Party example
• 50:29 – The consumer economy dilemma
• 52:04 – How listeners can get involved

Summary

This episode breaks down popular economic myths, exposes the self-interest and failures of recent policy changes, and uplifts grassroots solutions aimed at systemic change through workplace democracy. The interview with Mary Douglas is an inspiring blueprint for action, arguing that only direct, organized grassroots pressure—transforming the ownership and operation of businesses—is the path to a more equitable and resilient society.