Economic Update with Richard D. Wolff
Episode: Hiding Capitalism's Failures
Date: August 1, 2018
Host: Richard D. Wolff
Guest: Dr. Harriet Fraad
Overview
In this episode, Richard D. Wolff critically explores how capitalist societies, especially in the United States, obscure and misrepresent the system’s failures through misleading narratives and manipulated statistics. The show unpacks several myths used to defend capitalism and delves into real-world examples where neoliberal policies have worsened conditions for ordinary people. In the second half, Dr. Harriet Fraad joins to examine America’s historically low fertility rate, discussing how economic precarity shapes personal decisions about family, and why certain demographic groups are affected differently.
Key Discussion Points & Insights
1. Hiding Capitalism’s Failures through Storytelling
[01:28–09:45]
- Wolff introduces the primary argument: Capitalist societies often tell stories to cover up system failures or distort their true causes.
- Labor Force Participation Rate as a case study:
- The U.S. fares poorly among developed economies, surpassed by most European nations.
- European countries have more generous social supports (education, healthcare, housing), challenging the American right-wing claim that welfare reduces work incentives.
- Quote:
"It turns out that Europe shows us that if you give your people more supports, they work more, not less. So what is the reason that story is told in the United States? It's a cover." — Richard Wolff [04:22]
2. Manipulation in U.S. Political Fundraising
[06:45–08:48]
- Cuomo vs. Nixon Democratic primary: Wolff explains how major campaign donors use multiple $1 donations to create the illusion of grassroots support, masking the reality of big-money backing.
- Quote:
"By having his associates and friends give $1 contributions, he can claim that the average contribution is low and thereby suggest he's somebody supported by average people..." — Richard Wolff [07:48]
- Quote:
3. Shifting Consumer Behavior and Living Standards
[09:00–14:06]
- The decline of malls and rise of delivery reflect underlying economic hardship:
- Americans can’t afford traditional consumption (malls, restaurants), turning to less expensive, less social options (online shopping, food delivery).
- Pressures come from both sides: rising labor (wages for workers) and shrinking consumer spending power.
- Quote:
"It's another contraction of the range of enjoyments you can have in a system that can't provide them to you. So you're going to stay at home and put the food on a paper plate..." — Richard Wolff [12:51]
- Broader trends: Americans’ cars and apartments are shrinking; signals of working-class decline.
4. Housing Crisis and Homelessness
[14:13–16:05]
- Focus on California’s spiraling rents and homelessness:
- A market-driven housing system distributes homes to those who can pay, not those most in need.
- Market logic undermines community, increases displacement, and erodes social fabric.
- Quote:
"Is it unethical to give the stuff that's scarce only to those with the most money? Most systems of ethics and morality would say so. But a market doesn't care." — Richard Wolff [15:18]
5. Persistent Racial Wealth Gaps
[16:06–16:45]
- Federal Reserve studies show racial wealth inequality has worsened, even as African Americans close educational gaps.
- Dispels the myth that education alone can erase systemic economic inequalities.
- Quote:
"Black Americans are rising in the level of education they are able to get relative to whites. But it is not helping them reduce the gap in wealth and income between black and white." — Richard Wolff [16:37]
Special Segment: Fertility Crisis in the United States
Guest: Dr. Harriet Fraad
[16:11–28:22]
1. Why Is the U.S. Fertility Rate So Low?
- Precarity and Insecurity:
- People need financial and emotional stability to have children; “precarity” prevents family formation.
- 60% of Americans lack even $1,000 for emergencies, highlighting widespread insecurity.
- Quote:
"In order to have a child, you have to trust in a future. You're creating a future person... you have to feel, since children are helpless... You have to have some financial and emotional security. Americans have none anymore..." — Harriet Fraad [19:20]
- Breakdown of Marriage:
- Marriage rates decline except among the affluent; marriage has become “a luxury good.”
- Divorce and separation rates are high, compounding instability.
2. Who Is Having Children?
- First-generation immigrants: Initially higher fertility, but rates drop in subsequent generations as they confront U.S. economic realities.
- Immigration crackdowns worsen the fertility issue.
- Quote:
"If one of the few groups in the country that is having children are first generation immigrants, then...expelling immigrants...worsen[s] this fertility problem." — Richard Wolff [22:59]
- Top 1% and 10%: The wealthy continue to have children, supported by nannies and paid help; for them, childrearing is feasible.
- The Middle and Lower Classes: Most affected by unaffordable childcare, lack of support services, and limited access to reproductive healthcare. Even poorer families, unable to access contraception or abortion, now have fewer children (not enough to offset declines elsewhere).
3. The Cost of Childrearing
- Childcare costs are prohibitive — median wages are not nearly sufficient.
- U.S. is one of the only wealthy countries without:
- Paid maternity leave
- Paid vacation
- Subsidized childcare
- Universal health care
- Quote:
"We are one of five countries in the world that doesn’t have paid maternity leave... and the United States, we’re the fifth." — Harriet Fraad [27:05]
4. Consequences of Reduced Fertility
- Threatens the “pay-as-you-go” Social Security system: fewer workers supporting more retirees could drive generational tension.
- Systemic lack of family support policy accelerates the trend, unlike Europe where families are better supported.
- Emotional impact:
- Dr. Fraad references a Bob Dylan lyric:
"That you've hurled the worst curse that you could ever hurl. The fear to bring children into the world. What kind of a society produces conditions and doesn't face them that have this result?" — Richard Wolff [28:22]
- Dr. Fraad references a Bob Dylan lyric:
Notable Quotes & Memorable Moments
-
On welfare and work incentives:
"In Europe... the higher taxes and the higher supports don't make people work less. That's been a lie. That's been a misinformation put out by conservatives for a long time." — Wolff [03:58]
-
On campaign finance manipulation:
"So by having his associates and friends give $1 contributions, he can claim that the average contribution is low and thereby suggest he he's somebody supported by average people..." — Wolff [07:51]
-
On economic precarity and fertility:
"People are very desperate economically... That translates then into a decision either to postpone or... postponed forever..." — Fraad and Wolff [20:00]
-
On consequences for social security:
"If there aren't as many wage earners and Social Security has increased as the population ages, you have the potential for old people being pitted against young people..." — Fraad [17:10]
Timestamps for Key Segments
- 01:28 — Opening theme: Hiding Capitalism’s Failures
- 03:10 — Labor force participation & myth-busting
- 06:45 — Manipulation in political fundraising
- 09:00 — Decline of malls/restaurants & shifting consumer behavior
- 14:13 — Housing crisis and market distribution
- 16:06 — Racial wealth gaps despite increased education
- 16:11 — Introduction of Dr. Harriet Fraad
- 17:08 — Economic precarity and its effect on fertility
- 21:47 — Which groups are (and aren't) having children
- 25:22 — Social consequences and international comparison
- 28:22 — Closing comments with Dylan quote
Conclusion
This episode exposes how capitalist economies, particularly in the U.S., systematically obscure their real shortcomings—from inequality to the erosion of ordinary life—through misleading narratives and selective statistics. Wolff and Fraad conclude that the social structures needed for human flourishing and stability are absent or shrinking, creating an environment so inhospitable that many are fearful of bringing children into the world. The episode calls for a fundamental reevaluation of how society allocates resources, supports families, and tells the story of its own successes and failures.