Economic Update with Richard D. Wolff

Episode: Employees vs Employers, Endless Tensions
Date: April 26, 2018
Host: Richard D. Wolff (Democracy at Work)

Episode Overview

In this episode, Richard D. Wolff delves into the persistent tension between employees and employers within the capitalist system. He analyzes how different nations—and their economic policies—address or exacerbate these conflicts. Key case studies include Germany’s unique approach to workplace democracy, corporate taxation in the U.S., the realities of economic “recovery,” and evolving conversations around socialism. Wolff also tackles real-world examples from American politics, housing, and social policies, advocating for systemic alternatives and more democratic participation in economic life.

Key Discussion Points and Insights

1. German Co-determination (Mitbestimmung): Workplace Democracy in Action

(00:50 – 08:30)

• Definition: “Mitbestimmung”—translated as co-determination—gives German workers the legal right to elect representatives to corporate boards.
  • In companies with 2,000+ workers: workers elect nearly 50% of the board.
  • In companies with 500-2,000 workers: workers elect one-third of the board.
• Additional Worker Empowerment: German workers also have works councils—elected bodies representing employees in day-to-day decision-making.
  • Trade unions negotiate on wages and conditions, whereas works councils address organizational and informational issues.
• Impact:
  • German capitalism is “one of the most efficient in the world,” outperforming the U.S. on unemployment and wage growth.
  • Workplace democracy leads to fairer treatment, national health insurance, and zero university tuition—even for foreigners.
• Quote:
  • “It is a stunning example that one can have a modern capitalism, perhaps one of the most efficient… and the efficiency has not been compromised by giving workers a role. On the contrary, it's one of the most efficient capitalisms in the world.” (06:03)
• Memorable Moment: Wolff highlights that German capitalists themselves have come to recognize co-determination as beneficial even though they initially resisted.

2. Corporate Tax Evasion & Rebates: The Case of Amazon and Peers

(08:35 – 14:48)

• ITEP Study: The Institute on Taxation and Economic Policy (ITEP) found 15 major U.S. corporations collectively made $24.5 billion in profits (2017) but paid $0 in federal taxes.
  • Instead, they received $1.4 billion in rebates. Their effective tax rate: -5.6%.
  • Example: Amazon made $5.4 billion in profit, paid no tax, and received a $137 million rebate (effective tax rate: -2.5%).
• Explanation:
  • These outcomes result from complex legal loopholes and tax code gimmicks, pre-dating even the most recent Republican tax cuts.
• Quote:
  • “Amazon made $5.4 billion in profit. It paid no tax whatsoever… But on top of it, they got a rebate of $137 million. And where did the government get the 137 to give to Amazon…? I want to thank all of you. Because you paid the taxes that allowed Amazon to have a negative tax rate. Your tax rate is positive. Amazon's isn't.” (13:45)

3. Capitalism and Politics: Kentucky’s Black Lung Disease Law

(14:50 – 18:12)

• Law Change: Kentucky mandated only one kind of doctor (typically tied to coal companies) could assess black lung disease claims.
• Result: Coal-connected doctors can deny claims, saving companies insurance payouts at the expense of sick miners.
• Insight: Wolff calls it “a remarkably ugly example of the mixture of capitalism and politics.” (17:39)

4. Involuntary Part-Time Work: The Reality Behind ‘Recovery’

(20:34 – 25:08)

• Fed Reserve Research: Despite claims of economic recovery, involuntary part-time employment in 2017 was millions higher than before the 2007-08 crash.
• Takeaway: Most of the so-called “recovery” is concentrated among a small elite; many Americans have worse jobs, lower pay, and less security.
• Quote:
  • “Even if they got a job after being unemployed, the job was lower paid, fewer benefits, less security, or in the case of the statistics… you were more likely to be an involuntarily part time employee than before. That’s not a recovery, folks.” (24:37)

5. The U.S. Eviction Crisis: Housing as a Faultline

(25:10 – 32:43)

• Matthew Desmond’s Research:
  • 1 in 50 renter households (overall), 1 in 25 in Milwaukee, and 1 in 9 in Richmond, VA, experience eviction.
  • In Richmond, 1 in 5 households faced eviction threats in 2016.
  • Median back rent owed by evicted families: $686. (Half evicted for less!)
• Deeper Analysis:
  • Evictions traumatize families for relatively negligible sums, reflecting deep structural problems—not just tenant or landlord failings.
• Quote:
  • “To subject a family of fellow American citizens to the trauma of an eviction… to resolve a matter of $686… What kind of a society puts people through that kind of trauma for that amount of money?” (31:52)
• Memorable Analogy: Wolff points out that a small portion of a billionaire’s assets could prevent all U.S. evictions for years, questioning “what morality, what commitment to family values allows that.”

6. Tariffs and Hypocrisy: U.S.–China Trade Tensions

(32:45 – 35:23)

• Political Theater:
  • Trump criticized China’s 25% auto tariffs, ignoring the U.S.’s own 25% tariff on imported trucks since 1963.
  • Wolff calls it “pure theater” with no economic basis, designed to appeal to political bases—not address real economic issues.
• Quote:
  • “Here’s the truth, folks… It's all about looking a certain way to the media and to Mr. Trump's political base. It makes no economic sense. It isn’t justified.” (34:27)

7. Socialism: Definitions, History, and Contemporary Meanings

(35:40 – 49:19)

• Origins:
  • Socialism started as a critique of capitalism and its focus on “individualism,” advocating instead for social cooperation and equity.
  • Capitalism, which emerged after slavery and feudalism, promised social mobility—but mostly delivered inequality.
• Socialist Strategy:
  • Historically, socialists sought to capture state power (either electorally or via revolution) to redistribute wealth and democratize economic life.
  • After 1917, the socialist camp split:
    • Communists: Favored revolutions (e.g., Russia), direct state ownership.
    • Social Democrats: Gradual reforms, regulated private enterprise.
• Evolving Socialism:
  • Modern socialists reflect on past failures (e.g., lack of democracy in Soviet/Chinese models) and advocate bottom-up democracy—especially democratizing the workplace (one worker, one vote).
• Quote:
  • "Socialism is the shadow of capitalism. As long as there's capitalism and there are people who are critical of it, there will be socialism, which means it's going to be around a long time.” (49:11)

8. State Budgets & Austerity: The Myth of ‘No Money’

(49:20 – 58:45)

• Case Study: Connecticut Paid Family Leave
  • The state’s newspaper and politicians claim paid family leave is impossible “because we don’t have the money.”
  • Excuses focus on pension obligations but ignore low taxes on the wealthy.
• Wolff’s Analysis:
  • Pension promises were often made instead of real wage increases; now governments blame workers for liabilities.
  • Largest omission: No discussion of increasing revenue by taxing the state’s abundant rich.
  • Claims that “if taxed, the rich will leave” are exaggerated and used to perpetuate inequality.
  • If states taxed the recent windfall from federal corporate tax cuts, they could fund needed services.
• Quote:
  • “Don’t tell us you don’t have the money. The money is there, but you as politicians are in the pockets of the money, which is why you don’t go after it.” (57:22)
• Emphasis:
  • The money for decent social policy is available, but political priorities (influenced by the wealthy) keep public needs underfunded.

Notable Quotes (with Timestamps)

• “German capitalism has a better record over the last 20 years than American capitalism has. Much lower unemployment rate, has a much greater real growth of wages and so on.” (05:53)
• "Amazon made $5.4 billion in profit…paid no tax whatsoever. [...] I want to thank all of you. Because you paid the taxes that allowed Amazon to have a negative tax rate. Your tax rate is positive. Amazon's isn't." (13:45)
• “A law was passed that allowed only one kind of doctor with one kind of specialty to evaluate the illnesses of miners suffering from black lung disease. [...] The doctors in question are connected to coal companies. Oh, goodness.” (15:53)
• "Even if they got a job after being unemployed, the job was lower paid, fewer benefits, less security, or in the case of the statistics… you were more likely to be an involuntarily part time employee than before. That’s not a recovery, folks." (24:37)
• “To subject a family of fellow American citizens to the trauma of an eviction… to resolve a matter of $686… What kind of a society puts people through that kind of trauma for that amount of money?” (31:52)
• “Here’s the truth, folks… It's all about looking a certain way to the media and to Mr. Trump's political base. It makes no economic sense. It isn’t justified. It's kind of nonsense, pure theater for the votes…” (34:27)
• "Socialism is the shadow of capitalism. As long as there's capitalism and there are people who are critical of it, there will be socialism, which means it's going to be around a long time.” (49:11)
• “Don’t tell us you don’t have the money. The money is there, but you as politicians are in the pockets of the money, which is why you don’t go after it.” (57:22)

Timestamps for Important Segments

• German Co-determination / Mitbestimmung: 00:50 – 08:30
• ITEP Tax Study & Amazon Example: 08:35 – 14:48
• Kentucky Black Lung Law: 14:50 – 18:12
• Involuntary Part-Time Employment: 20:34 – 25:08
• U.S. Eviction Crisis: 25:10 – 32:43
• Tariff Contradictions (U.S.–China): 32:45 – 35:23
• Socialism: Origins and Evolutions: 35:40 – 49:19
• State Budget Myths / Connecticut Example: 49:20 – 58:45

Summary Tone & Takeaway

Richard D. Wolff's analysis is accessible, critical, and occasionally caustic, pairing economic facts with moral and political reflections. He demystifies economic jargon, names contradictions, and challenges listeners to consider the root causes—and solutions—to persistent tensions between labor, capital, and the broader society.

Listeners gain a renewed perspective on why employee–employer tensions are endemic in capitalism, how other countries mitigate these conflicts, and the need for more democratic solutions—at work and in society. Wolff’s call to action: don’t believe the myth that “there just isn’t any money.” System change is possible, but only if the underlying power structures are confronted and transformed.