Podcast Summary: Economic Update with Richard D. Wolff

Episode: Economics of Tax Avoidance

Date: October 20, 2016
Host: Richard D. Wolff, Democracy at Work

Episode Overview

In this episode, Richard D. Wolff examines the pervasive issue of tax avoidance from multiple angles—public education funding, nonprofit institutions, corporate sports subsidies, multinational tax evasion, and more. He unpacks how these dynamics shape economic inequality and blunt the potential of public policy for fostering a fairer society. The show also touches on the impact of corporate consolidation, the entanglement of business and politics, and labor struggles in a globalized economy.

Key Discussion Points & Insights

1. Decline in Public Higher Education Funding

[00:30 - 05:00]

• Wolff begins with a comparison of U.S. public higher education funding:
  • In 2007-08, public higher education received $91 billion.
  • By 2015-16, this dropped to $81 billion, inflation-adjusted.
  • Meanwhile, full-time enrollment increased by 9%.
  • "The state appropriation per student...dropped by 18%, folks. That's staggering." [04:40]
• Significance: All economists agree that investing in education is essential for economic future; underfunding is self-defeating.
• Quote:

  "What kind of a country shoots itself in the foot by dropping the allocation of money to higher education? And not just dropping it a little, dropping it a whopping 18%... That is as badly mismanaged and disorganized as our current political races for president suggest we are when it comes to politics." [04:20]

2. Tax Avoidance by Wealthy Universities

[05:15 - 13:45]

• Case from Princeton, NJ: Residents sued Princeton University for unfairly avoiding taxes on profit-making, commercial activities.
• Example: University partners with corporations on patents and profits, yet avoids local taxes due to ‘non-profit’ status.
• Personal anecdote: Wolff found this common at elite universities, citing everything from university-run film series to computer services.
• Quote:

  "Universities hide a great deal of money-making activity...they evade taxes because they say it happens on the university's land." [10:10]

• The case settled out of court; Princeton paid $10 million to complainants to avoid risking a legal precedent.
• Wolff speculates:

  "My guess is there were intense consultations among the lawyers for Yale and Harvard and Princeton... Much better to spend a few $10 million shutting up the people who are complaining and at least thereby postponing the day of reckoning when finally tax evasion...is made at least a little more difficult." [13:15]

3. Corporate Subsidies: The Oakland Raiders’ Las Vegas Move

[13:45 - 18:35]

• News: Oakland Raiders considering relocation to Las Vegas, with Nevada raising hotel taxes to contribute $750 million toward a new stadium.
• Wolff critically contrasts cutbacks to public services with taxpayer subsidies for stadiums backed by billionaires like Sheldon Adelson.
• Quote:

  "That's what Las Vegas gets for $750 million of taxpayer money... At or below the poverty level in our society. It is...yet another example...of how the capitalist enterprise leans on, depends on and rips off the government taking huge amounts of the tax money paid by all of us in order to fatten their profits." [15:43]

• Notably, this reflects a pattern where the rhetoric of "private enterprise" obscures the reality of government support for corporate interests.

4. The Lifestyles and Investments of the Global Elite

[18:50 - 26:50]

• Wolff highlights Oxfam’s report: 62 richest individuals own more than half the global population.
• Case study: Saudi Prince Al Waleed bin Talal
  • Owned a $300 million yacht, formerly owned by other billionaires including Donald Trump.
  • Major shareholder in Fox News and Citibank; fleet of jets.
• Quote:

  "Who cares that there's hunger...that there are diseases we know how to cure, that there are children needing an education that's not available. We are going to spend the wealth of the world...so he can spend it this way. This is the way capitalism works nowadays." [25:45]

• Wolff’s tone is satirical, blending incredulity with a call for listeners to reflect on systemic inequality.

5. Multinational Tax Avoidance and Corporate Influence

[29:14 - 35:30]

• Reports from Bloomberg: No matter who wins the 2016 presidential election, U.S. multinationals benefit due to political consensus on tax breaks for repatriating overseas profits.
• Quote:

  "Instead of slapping them with the tax they should have paid all along, we are going to induce them by giving them...yet another tax break for corporate profits. And that's why multinationals are going to win no matter who wins the election." [32:16]

• Wolff points out that this narrative is repeated in major financial media owned by billionaires, reinforcing such policy trends.

6. Wall Street Deals: Goldman Sachs and the Libyan Sovereign Wealth Fund

[35:35 - 39:35]

• Wolff explains the concept of a sovereign wealth fund using Libya’s case.
• Goldman Sachs encouraged Libya to invest in complex derivatives, resulting in a $1.2 billion loss for the Libyan fund.
• Court testimony suggests gifts, trips, internships—even prostitutes—were offered to influence Libyan officials.
• The court sided with Goldman, but the loss exposes the predatory culture of global finance.

7. Regulatory Capture: The American Airlines–US Airways Merger

[39:45 - 44:35]

• Recap: Obama’s Department of Justice opposed, then quickly dropped opposition to the American Airlines–US Air merger, despite antitrust concerns.
• Behind the scenes:
  • Political lobbying from Chicago's Rahm Emanuel and top airline executives.
  • Donations from airline executives to Emanuel’s campaign.
  • Lobbying by Tony Podesta (brother of Clinton campaign chair John Podesta).
  • Large law teams, many with prior government ties, overwhelmed the DOJ.
• Quote:

  "If bells don't go off for you now, I don't know what it will take." [42:51]

• Result: reduced competition, higher fares, stronger corporate profits.

8. Labor and Ownership: Jim Beam Strike and Corporate Democracy

[44:40 - End]

• Jim Beam workers strike in Kentucky over long hours, low pay for new and temp workers.
• Irony: Jim Beam, an American whiskey icon, is wholly owned by Japanese conglomerate Suntory.
• Quote:

  "It's a wonderful example of what it means to allow small numbers of people to have the kind of power that the corporate capitalist structure conveys on them." [46:40]

• Wolff advocates for worker co-ops as an alternative, arguing strike actions would be unnecessary if workers ran enterprises democratically.

Notable Quotes (with Timestamps)

• “The state appropriation per student...dropped by 18%, folks. That's staggering.”
  —Richard D. Wolff [04:40]

• "Universities hide a great deal of money-making activity...they evade taxes because they say it happens on the university's land."
  —Richard D. Wolff [10:10]

• "That's what Las Vegas gets for $750 million of taxpayer money... At or below the poverty level in our society."
  —Richard D. Wolff [15:43]

• "Who cares that there's hunger...that there are diseases we know how to cure...We are going to spend the wealth of the world...so he can spend it this way."
  —Richard D. Wolff [25:45]

• "Instead of slapping them with the tax they should have paid all along, we are going to induce them by giving them...yet another tax break for corporate profits."
  —Richard D. Wolff [32:16]

• "If bells don't go off for you now, I don't know what it will take."
  —Richard D. Wolff [42:51]

Structure and Tone

Wolff is clear, analytic, and often sardonic, moving between data, anecdotes, and big-picture critique. The tone is critical, informed by a Marxian economic perspective, and invites listeners to question the status quo and consider alternatives like workplace democracy and stronger public investment.

Timestamps for Major Segments

• 00:00 – 05:00: Public higher education funding crisis
• 05:15 – 13:45: University tax avoidance (Princeton case)
• 13:45 – 18:35: Public subsidies for private sports teams (Oakland Raiders)
• 18:50 – 26:50: Wealth concentration and billionaire lifestyles
• 29:14 – 35:30: Corporate tax avoidance and bipartisan consensus
• 35:35 – 39:35: Goldman Sachs & the Libyan sovereign wealth fund
• 39:45 – 44:35: Regulatory capture – Airlines merger case
• 44:40 – end: Labor organizing, multinational ownership, and economic democracy (Jim Beam strike)

Final Thoughts

This episode lays bare how tax avoidance—in its many forms—deeply distorts economic priorities, perpetuates inequality, and undermines democracy. From universities to multinational corporations, the wealthy and powerful leverage law and politics to minimize their tax burden and maximize profit—often at public expense. Wolff’s analysis urges listeners to move beyond outrage and envision democratic alternatives for economic organization.