Economic Update with Richard D. Wolff

Episode: Efficiency: Capitalist vs Human
Date: April 11, 2016
Host: Richard D. Wolff
Guest: Dr. Harriet Fraad (Second Half)

Episode Overview

This episode critically examines "efficiency" in economic systems—contrasting the typical capitalist focus on profit and productivity with the concept of human-centric efficiency, which values social connection, mental health, and communal well-being. In the first half, Richard D. Wolff explores corporate tax evasion (with a focus on the Panama Papers), falling corporate tax rates, and how austerity policies are mythologized due to deliberate under-taxation of the wealthy and large institutions. In the second half, Dr. Harriet Fraad discusses the profound implications of capitalist efficiency on personal and intimate life, arguing for a humane model of social organization that prioritizes individual and collective happiness.

Key Discussion Points & Insights

I. Tax Evasion, Corporate Taxation, and Public Austerity

(01:00–29:26)

• The Panama Papers & Shell Companies

  • Wolff discusses the Mossack Fonseca leak, revealing global practices of hiding wealth, tax evasion, and the staggering sums involved.
  • Quote:
    "There are trillions, that's with a t—trillions of dollars of wealth in the United States and, and around the world that are hidden." (05:30, Wolff)

• Motivations for Wealth Secrecy

  • Ranges from criminal activity concealment to straightforward tax avoidance.
  • The rich use shell companies and expert legal services to escape fair taxation.

• Consequences for Public Services

  • The supposed lack of funds for social services, education, and public employment is called a political fiction.
  • Quote:
    "What the Panama Papers... show us is that the money is there ... the wealth and the income... would yield the revenue that would make all the austerity everybody is talking about — unnecessary." (12:43, Wolff)

• Corporate Taxation Trends (Statutory vs. Effective Rate)

  • Statutory rates have dropped from 50% (1950) to 35%; effective rates have fallen further to around 16–18%.
  • Legal loopholes allow further reduction of what corporations actually pay.
  • Quote:
    "The truth is... corporations have been paying less and less and less, both the official rate they're supposed to pay and in the actual rate that they do pay." (18:20, Wolff)

• Corporate Tax Inversions

  • Case study: Pfizer and Allergan’s planned inversion (merger to exploit low Irish tax rates) is stopped by changes in Treasury rules.
  • Demonstrates that tax avoidance, not business synergy, drove the merger.

• Yale University’s Tax Exemption

  • Yale, with a $25 billion endowment, refuses to pay property taxes in New Haven (one of the poorest US cities), increasing the burden on ordinary citizens.
  • Quote:
    "One of the richest universities... refuses to pay taxes to support the local government of one of the poorest cities." (25:40, Wolff)

II. Efficiency: Capitalist vs. Human

(29:26–56:56)

A. Capitalist Efficiency vs. Human Wellbeing

Guest: Dr. Harriet Fraad, Mental Health Counselor & Author

• Capitalist Efficiency—A Destructive Focus

  • Efficiency in capitalism means maximizing profit at any cost, often undermining social systems, families, and individual well-being.
  • Quote:
    "Efficiency, in [econ], is all about business efficiency, profit making, profit maximizing. ... You might be getting efficiency in the economic sphere at the cost... of the opposite of efficiency in terms of personal life and relationships." (33:21, Wolff)

• Toll on American Families

  • Deindustrialization, outsourcing, job insecurity, and stagnant wages have upended the "traditional" family, which itself was rooted in inequality.
  • Life has become precarious for workers, especially single mothers and kids.
  • Quote:
    "What has happened is everything is precarious. People's jobs are precarious in the economy and their personal lives are utterly precarious." (32:45, Fraad)

• Mental Health & Social Consequences

  • 1 in 5 to 1 in 8 US children has a mental health disorder; poverty sharply restricts access to care.
  • 42% of US children are born to single mothers, who are the most impoverished demographic.
  • Lack of after-school programs (deemed "inefficient" for profit) drives crime and instability.

B. Pornography & Sex Education—Profit vs. Connection

• Porn as Profit-Driven "Sex Ed"

  • Capitalist logic allows porn to replace comprehensive sex ed, shaping destructive patterns in youth relationships.
  • Cites research linking increased violence and disregard for consent with porn-influenced expectations.
  • Quote:
    "In the most intimate relationship, profit has entered the scene and the government has completely opted out. It’s not efficient to have sexual education... So instead you give it over to profit-making porn, which is in utter disregard of its disastrous influences." (39:27, Fraad)

• Contrast With Other Societies

  • Europe (Netherlands, Scandinavia, France, Germany) provides government-funded, progressive sex education, building social connection and responsible relationships.

C. Hypocrisy of "Family Values"

• Political Lip Service vs. Reality

  • Conservatives tout "family values" but their policies suppress wages and force all adults into the workforce, eroding the foundation for healthy families.
  • No meaningful support for domestic labor, child care, or after-school community building.
  • Quote:
    "Those people who are touting family values are denying families a chance to exist." (42:45, Fraad)

• Class Impact of Marital Instability

  • Only the wealthy can now afford domestic help, enabling stable families; working and middle classes face stressed marriages, loss of homeownership, and dissolution.

D. Youth Disenfranchisement and the Political Climate

• Economic Anxiety Drives Political Upheaval
  • Anger among the white working class (e.g., support for Trump) and youth (e.g., support for Sanders) roots in economic dislocation and exclusion.
  • High youth unemployment, student debt, inability to afford housing, all feed alienation.

E. Rethinking Housing and Community: International & Local Models

• Collective and Cooperative Housing

  • Sweden's collective housing facilitates social bonds and connections, improving quality of life.
  • Co-housing models mix age groups and family types, run cooperatively, increasing well-being and reducing costs.

• Potential Policy Solutions

  • Government-subsidized programs for youth to engage in meaningful public work (e.g., arts, subway repair).
  • Social programs fostering community among singles, the elderly, and the young, breaking social isolation.

• Critique: Cost of Ignoring Human Efficiency

  • Prioritizing profit produces massive "collateral damage:" higher health costs, crime, prison populations, and widespread misery.

F. Final Thoughts: Civic Purpose and National Values

• Founding Ideals vs. Practice
  • The Declaration of Independence promises "life, liberty, and the pursuit of happiness"—but current policies betray this by elevating profit over happiness for the many.
  • Quote:
    "If we were running this society for the pursuit of happiness, of the mass of people... we wouldn’t have the collateral damage we have now." (55:53, Fraad)

Notable Quotes & Memorable Moments

• On Political Inaction Regarding Tax Havens:
  “If there were a concerted commitment ... it would take somewhere between 10 and 11 minutes to get this done. ... Anything like a commitment... would bring it to an end. This is not a problem of law... but of political will.” (15:53, Wolff)

• On the "Double Shift" for Women:
  “Women are not any longer willing to come home from work, do all the domestic labor, take care of the children, sexually satisfy their husbands and be attractive. That doesn’t work...” (43:22, Fraad)

• On Housing as Human Connection Infrastructure:
  “They make dinner together, ... have a big collective kitchen and dining area... the social space, so people can connect. ... They’re efficient in human connection, but not in making additional profits for the real estate interests.” (50:00–51:10, Fraad)

• On Generational Damage:
  "The damage that is being done to an entire generation of Americans ... comes back to cost billions of dollars in medical facilities, in prison facilities, in policing costs ... as well as the inhumanity." (55:13, Wolff)

• Closing Statement:
  "We could create efficiency here, efficiency for all of us in our lives for the pursuit of happiness." (56:52, Fraad)

Timestamps for Key Segments

• Introduction and Tax Updates – 01:00–14:30
• Panama Papers & Hidden Wealth – 04:00–11:00
• US Corporate Tax Evasion & Effective Rates – 14:30–21:00
• Pfizer–Allergan Inversion & Treasury Response – 21:00–24:00
• Yale University Taxes & Local Austerity – 24:00–27:00
• French Labor Law Protests – 27:00–29:26
• Introduction to Dr. Harriet Fraad & Recap of Last Interview – 29:26–31:02
• Capitalist Efficiency vs. Human Well-being – 31:02–36:41
• Consequences of Economic Structure on Families and Children – 36:41–42:30
• Pornography, Sex Education, and Relationship Culture – 40:00–43:00
• Marriage, Gender Roles, and Economic Instability – 43:00–47:00
• Youth Disenfranchisement and Political Response – 47:00–49:30
• International Housing and Social Policies – 49:30–53:00
• Policy Suggestions for Social Connection and Youth Engagement – 53:00–55:00
• Final Thoughts and Call for Human Efficiency – 55:00–56:56

Summary

This episode argues that "efficiency" as defined by capitalist logic is fundamentally at odds with the needs of human beings for meaningful connection, health, and happiness. Through an analysis of tax evasion, weakening corporate tax rates, and the austerity myth, Wolff exposes how the rich avoid funding the public good. Dr. Fraad then critiques the toll this system takes on families, youth, and society at large—from the rise of porn in lieu of sex education to the collapse of communal solidarity and support. Drawing on international models, both suggest that a radical reimagining of efficiency, prioritizing the well-being and fulfillment of the majority, is not only possible but more rational and humane.