Economic Update with Richard D. Wolff

Episode: Economic Failures and the Blame Game
Date: June 1, 2017
Host: Richard D. Wolff
Source: Democracy at Work

Overview

In this episode, Richard D. Wolff critically examines recent economic news and longstanding systemic issues. He focuses on the recurring economic scandals among major banks, the misrepresentation of deregulation and tax exemptions, the deepening chasm of income inequality, and the persistent tendency in the US to blame the poor for their poverty while glorifying the rich. Wolff ties these themes together by highlighting the blame game in politics and economics, and the structural realities of capitalism that underpin these narratives.

Key Discussion Points and Insights

1. Bank Manipulation and the Myth of the Free Market

(Begins at 07:00)

• BNP Paribas Fined: Wolff recounts how the French bank BNP Paribas was fined $350 million by New York State for a long-running scheme to manipulate foreign exchange rates (07:00).
  • The misconduct spanned at least 2007–2015, showing it was not isolated or incidental.
  • Lower-level employees lost their jobs, but Wolff contends upper management couldn't have been unaware.
• This Is Systemic, Not Isolated:
  • Six global banks paid $5.6 billion in 2015 for similar foreign exchange rigging.
  • “This illegal activity is normal business for the big banks of the world and has been for more years than most of us can remember.” (Richard D. Wolff, 11:45)
• Social Impact:
  • Manipulation affects everyone—prices of imports, affordability, global wealth distribution.
  • “A tiny group of banks manipulating foreign exchanges for their private profit are thereby costing the world uncalculable amounts of loss, of mistaken preparations, of expectations that don't work out not because of the way the market works, but because of the way they...manipulate that market.” (13:30)
• The Illusion of the ‘Free Market’:
  • Bankers advocate free market ideals publicly, but contradict them through manipulation.
  • “The free market is a fantasy. It's never existed. It doesn't exist now.” (15:00)

2. The Johnson Amendment and Deregulation Myths

(Starts at 16:00)

• The Johnson Amendment Explained:
  • Passed in 1954, bars tax-exempt organizations (including churches) from political activity.
  • Trump pledged to remove it, pandering to certain voter groups.
  • In practice, enforcement is negligible—only one church in 63 years has lost tax-exempt status for political activity.
• Deregulation in Practice:
  • IRS oversight of tax-exempt organizations has been gutted: as organizations increased fivefold (1980–2016), the agents overseeing them dropped.
  • Trump's 2017 budget proposed even more IRS cuts.
• Real Impact:
  • Charities, including major names like Red Cross, often misuse funds; lax oversight allows this.
  • Deregulation is driven by, and benefits, those engaging in questionable activity.
  • “Deregulating makes it easier for them, and that's a large reason why we have it. But as a freedom for churches to be politically expressive, it has not been a serious obstacle...claims to that are fake. You might even call them fake news.” (24:30)

3. CEO Pay and the Expansion of Inequality

(Begins at 25:00)

• Statistical Snapshot (2016, S&P 500):
  • Average CEO pay increase was three times greater than that of the average worker.
  • Median CEO pay: $11.5 million.
  • Female CEOs: only 21 out of 346.
  • CEOs made 347 times what the average production worker earned ($37,600).
• Consequences:
  • “If you want to understand inequality in the United States, that's where it starts, that's where it goes, and that's what it means.” (27:10)
  • Enormous wealth translates to political influence that maintains and deepens inequality.

4. The Blame Game: Blaming the Poor, Glorifying the Rich

(Second Half: 29:42)

a. Blaming the Poor

• HUD Secretary Ben Carson’s Remark:
  • “Poverty is largely or mostly a state of mind.” (31:00)
  • Wolff dismantles this, showing poverty is structurally imposed by wages and distribution, not individual mindset.
  • “They're not poor because of their mindset. They're poor because they aren't paid enough money. Meanwhile, we pay the CEO of the very companies paying them next to nothing, $11.5 million per year on average.” (33:10)
• Political Function of Blame:
  • Blaming individuals for poverty justifies cutting support rather than addressing structural roots.

b. Glorifying the Rich

• The Zuckerberg Example:
  • Society mythologizes billionaires like Zuckerberg, ignoring the multitude of social and technological supports that underpin their success.
  • “Facebook isn't the creation of Mr. Zuckerberg. It's actually the creation of the whole society...” (38:02)
  • The wealth resulting from collective effort is funneled to a single individual, then justified by recasting it as personal genius.

c. Economic Structure Overlooked:

- “To reward and then justify the reward of unconscionable wealth to one person at the expense of all the others who contributed is as crazy as blaming poverty on the poor.” (*39:50*)

5. US–Germany Economic Disputes: The System, Not the Players

(Begins at 42:20)

• Trump’s Criticism of Germany:
  • Focused on US/Germany trade imbalance and NATO contributions.
  • Wolff points out such imbalances are systemic; all countries try to manipulate trade for their benefit.
  • US trade deficits are driven by corporate policies (e.g., Walmart’s sourcing from lower-wage countries) and a long-term wage squeeze on workers.
• Key Point:
  • “The problem isn't with the players. The problem is with the game. We have a winner take all, dog eat dog global capitalist system. Profit is everything. Everybody's at everybody else's throats...The struggle between Mr. Trump and Ms. Merkel, between the US and Germany is a falling out, if not among thieves, then among capitalists struggling as they always have with winners and losers, depending on how cleverly each government can collaborate…” (49:00)

6. Oil Prices: Another Rigged Market

(Starts at 52:20)

• Manipulation by Oil Cartels:
  • Oil-producing countries and companies openly collude to set oil supply and manipulate prices to their benefit.
  • This affects costs for fuel, heating, plastics, fertilizers worldwide.
  • “The most fundamental qualities of our lives, the price of them...is being determined by a tiny number of people whose goal is not what we need, but the profits they wish to maximize.” (53:30)
• Core Message:
  • The power to determine fundamental economic realities rests, undemocratically, in the hands of a tiny elite.
  • “It's like putting your fate in the hands of an emperor or a czar or a king. I really had thought we had gotten beyond that as a modern civilization.” (54:45)

Notable Quotes by Richard D. Wolff

• On Bank Manipulation:
  “Big private capitalist enterprises using their position in the economy to make money for themselves at the expense of the whole world.” (13:00)

• On Deregulation:
  “Deregulating makes it easier for them, and that's a large reason why we have it...claims to that are fake. You might even call them fake news.” (24:30)

• On Inequality:
  “Inequality deepens like the beat of a drum that can't stop drumming.” (26:15)

• On Blame:
  “Blaming poverty on [mindset] takes a small part of the story, makes it the whole story, and that's done with an ulterior to leave the poor poor and devote even fewer resources and all that will do was increase the misery of the poor and their number as well.” (36:50)

• On Glorifying Billionaires:
  “It is a bizarre society that gives to one person...the last guy on the chain of creativity...the big bucks and everybody else, nada, nothing.” (38:23)

• On Global Capitalism:
  “The problem isn't with the players. The problem is with the game. We have a winner take all, dog eat dog global capitalist system.” (48:55)

Timestamps for Key Segments

• 07:00 – 15:30: Bank misconduct, foreign exchange manipulation, and the myth of the free market.
• 16:00 – 25:00: Johnson Amendment, church tax exemptions, IRS deregulation, and the misuse of charity funds.
• 25:00 – 29:42: CEO pay statistics and deepening US inequality.
• 29:42 – 39:50: The “blame the poor” narrative, glorification of the rich, and systemic causes of poverty.
• 42:20 – 52:20: US-Germany trade dispute, how global capitalism shapes trade relations and deficits.
• 52:20 – 54:45: Oil markets, elite price manipulation, and their impact on daily life.

Conclusion

Richard D. Wolff’s analysis in this episode demolishes comforting myths about free markets, opportunity, and personal responsibility. Repeatedly, he demonstrates that systemic manipulation—by banks, corporations, and government policies—shapes economic outcomes far more than individual mindset or merit. The “blame game” serves to obscure these realities, keeping meaningful solutions out of reach while deepening inequality and consolidating power among the economic elite.

If you want a clear, critical perspective into how economic failures are perpetuated and excused, this episode is essential listening.