Podcast Summary: Economic Update with Richard D. Wolff

Episode: Doing Better Than Capitalism
Date: July 26, 2018
Host: Richard D. Wolff
Guests: Cheryl Claude (former Toys R Us Assistant Manager), Charles Kahn (Strong Economy for All Coalition)

Episode Overview

This episode of Economic Update centers on the argument that modern economic systems can outperform capitalism in meeting people’s needs. Host Richard Wolff shares real-world examples highlighting alternatives—ranging from work reforms in New Zealand to public housing in Vienna, labor victories in academia, the failings of corporate practices, and the devastation wrought by private equity on employers like Toys R Us. The second half features a detailed discussion with two guests deeply engaged in the fight for justice after the Toys R Us collapse.

Main theme: How and why we can do better than capitalism as a system.

Key Discussion Points & Insights

1. Real-World Examples Demonstrating "Better Than Capitalism"

New Zealand's Four-Day Work Week (00:43)

• Perpetual Guardian, a New Zealand financial company, shifted from a five-day to a four-day workweek with no reduction in pay.
  • Result: Improved work-life balance, higher productivity, and greater worker satisfaction.
  • Wolff: "The company loves it. The company reported better results that way than in the old five day week." (01:22)

Vienna’s Public Housing Model (04:24)

• 62% of Vienna's residents live in high-quality, city-owned housing with below-market rents and excellent maintenance.
• Comparison: "The percentage of your income you have to spend for rent is twice in New York City what it is in the capital of Austria." (05:41)

Fordham University Adjunct Contract Victory (08:10)

• Adjunct faculty, historically underpaid, won raises of 67-90% per course (to $7,000-$8,000).
• "They decided it's wiser to come to terms than to try to defeat something when workers are that unified and that determined." (08:51)

Wasteful Practices: Burberry’s Product Destruction (10:59)

• Burberry burned tens of millions in unsold clothing to "protect the brand," a symptom of profit-first logic overriding social utility.
  • "The fault here isn’t Burberry. The fault is a system that makes that irrational action, destroying brand new clothing logical." (12:06)

Economic Distress and Early Death (13:37)

• Rising alcohol-related deaths among young adults (25-34) are linked to economic insecurity.
  • "Capitalism can kill." (14:23)

Airlines’ Shrinking Lavatories to Maximize Profits (15:00)

• US airlines reduce bathroom size to add more seats—profit for shareholders at the expense of passenger comfort.
  • "If you have enough money to sit in business class or first class, rest easy, those bathrooms aren't being shrunken." (16:08)

2. Case Study: Toys R Us Collapse and the Impact of Private Equity

Introduction to Guests (16:17)

• Cheryl Claude: 33-year Toys R Us employee, laid off without severance; now advocating for 33,000 affected colleagues.
• Charles Kahn: Organizer focusing on the damage caused by private equity and hedge funds.

The Story of Toys R Us (16:35)

• Wolff: "Tell us what happened to the Toys R Us Corporation and what it meant for you."

  • Cheryl: "When 2005, when KKR Vernado and Bain Capital took over our company, they just drained us. They just took all our money, invested it and just drained it." (16:38)
  • "They took everything from us. I mean everything. Including my job itself, and made us go bankrupt." (16:52)

• Toys R Us was profitable up to the buyout.

  • "Leading up to this, Toys R Us was profitable. They made $11 billion last year." (17:09)

• After Bain, KKR, and Vornado took control, employee benefits declined, communication disappeared, and debt soared.

  • Charles: "Instead of investing in their workers, they decided to charge exorbitant fees and enrich themselves." (17:44)

The Mechanics of Destruction (18:28)

• Wolff explains the leveraged buyout model—private equity loads a profitable company with debt for gain, with workers and communities bearing the loss.

Human Toll (21:14)

• Cheryl: "I stayed till the June 30. I was the one that locked that door... I worked very hard for that company to walk away with nothing." (21:14–21:39)

• No real severance: "They gave us 60 days to work. And that was our severance pay." (22:33)

• Psychological impact on employees:

  • "They didn't even want to work anymore... They didn't have the will to work." (21:57)

Lack of Accountability, Regulatory Response (25:45)

• No meaningful support from company or government at the local or national level.

• After the bankruptcy, politicians express support, and some call for law reform:

  • Outlawing leveraged buyouts that saddle companies with debt.
  • Holding private equity as joint employers.
  • Some states like Minnesota cut off public pension investments with KKR.

  Charles: "These elected officials that we've been working with, like Bernie Sanders... Cory Booker... they're talking about changing laws." (26:35)

Worker Control as an Alternative (27:59)

• Wolff: "If the workers themselves owned and operated Toys R Us, you would never have sold it to KKR?"
• Cheryl: "Absolutely... Absolutely." (28:14–28:22)

Notable Quotes & Memorable Moments

• On public housing:

  “If housing isn't a profit making business, you can do much better for people.” (05:06, Wolff)

• On brand destruction:

  “The system is the problem.” (12:06, Wolff)

• On personal loss:

  “I worked very hard for that company to walk away with nothing.” (21:37, Cheryl Claude)

• On the need for laws:

  “In a number of European countries, there are strict laws that require an employer to notify six months or a year in advance... in this country, they don't have to do hardly anything. And so the chips fall and it's a social disaster.” (24:10, Wolff)

• On worker ownership:

  “If the workers themselves owned and operated Toys R Us, you would never have sold it to KKR? Absolutely.” (27:59–28:14, Wolff/Cheryl)

Important Timestamps

• 00:43 — New Zealand's four-day workweek experiment
• 04:24 — Vienna public housing discussion
• 08:10 — Fordham adjunct contract win
• 10:59 — Burberry burning new clothes for profit
• 13:37 — Alcohol-related deaths and economic stress
• 15:00 — Airline bathroom shrinking for profit
• 16:17 — Introduction of Toys R Us segment and guests
• 16:35–22:26 — Cheryl’s account of the Toys R Us collapse
• 22:47–27:59 — Union pushback, lack of government support, and potential legislative solutions
• 27:59–28:22 — Discussion on worker ownership as an alternative

Episode Tone and Language

• Authoritative but accessible, with direct criticism of capitalist logic.
• Personal, empathetic accounts from affected workers.
• Candid, pointed remarks about systemic issues: “The system is the problem.”
• Advocacy and urgency: clear call for alternatives and reforms.

Final Thoughts

“Doing Better Than Capitalism” offers a clear, structurally sound argument—with real examples and emotional testimony—that other models can be not only possible, but preferable. Richard Wolff and his guests illustrate how policy, worker power, and public ownership might shape a more equitable economy, while exposing the deep flaws—and human costs—of extractive capitalism. The episode concludes by challenging listeners to think about what structures could deliver better outcomes for society at large.