Economic Update with Richard D. Wolff – “Honest Economics”

Date: May 11, 2015
Host: Richard D. Wolff
Produced by Democracy at Work

Episode Overview

This episode of Economic Update explores the enduring contradictions and injustices in the U.S. and global economy, with a special focus on “honest economics”—a critical examination of mainstream narratives and systemic issues. Professor Wolff provides updates on recent economic news, addresses income inequality's realities, corporate power, the suppression of alternative economic perspectives, and answers listener questions about global capitalism, worker cooperatives, and the challenges facing economic education.

Key Discussion Points & Insights

1. Ben Bernanke and the “Revolving Door” ([00:13]–[03:00])

• Former Fed Chair Ben Bernanke has taken a lucrative job at a major financial firm, illustrating the problematic “revolving door” between regulators and the industries they oversee.
• Bernanke, while earning $200,000 per year as Fed Chair, now reportedly earns the same amount for a single speaking engagement with financial giants.
• Wolff’s Commentary:

  “It is another example of the fox being hired by the chickens he used to regulate. It makes you wonder what might have been in his mind. Makes you wonder about a system that works this way.” ([00:45])

2. General Motors and Legal Immunity Post-Bailout ([03:00]–[05:40])

• Bankruptcy Court Decision: GM was granted blanket immunity from civil lawsuits related to ignition defects, as a result of the 2009 government bailout.
• Billions were spent on the bailout, far more than taxpayers recovered; GM also used the opportunity to lay off workers.
• Wolff’s Analysis:

  “Catch this: gave them a blanket immunity from civil liability suits... after it has now been shown that General Motors, or at least many of its top officials, knew all about the problem of ignitions for years... the company turns out can’t be sued and will save billions more dollars...” ([04:10])

3. Stark Income Inequality & American Myths ([05:40]–[10:30])

• Based on a Scientific American article (Nicholas Fitz), the richest fifth of Americans own 84% of the nation’s wealth—far more than people assume.
  • The bottom 40% own less than 0.5%.
• Mobility Myths: Americans overestimate economic mobility—chances for the poorest to join the rich are significantly less than believed, with the U.S. less mobile than Canada or Europe.
• Memorable Quote (from George Carlin):

  “The reason they call it the American dream... is because you have to be asleep to believe it.” ([09:55])

4. CEO Salary Slash for Wage Equity at Gravity Payments ([10:30]–[13:30])

• Dan Price, CEO of Gravity Payments, cuts his own million-dollar salary to $70,000, raising all employees (over 100 people) to that same figure.
• Price cites struggles faced by low-wage workers as his motivation:

  “My workers were walking me through the math of making 40 grand a year and how hard it was... I want to do something about inequality and not just talk about it.” ([12:10])

• The story “went viral,” showing public interest in radical approaches to workplace equality.

5. Why the IRS Doesn’t Pre-Fill Your Taxes ([13:30]–[15:45])

• The IRS could easily provide Americans with pre-filled tax returns, as most information is already reported.
• Corporate Lobbying: Companies like Intuit (TurboTax) have spent millions lobbying Congress to prevent “return-free” filing, profiting from Americans’ extra time and money spent on tax prep.
• Wolff’s Lament:

  “Our system is just the same [as medieval kingdoms]... It allows companies to make sure that the laws favor them, no matter the expense to the rest of us.” ([15:20])

6. Federal Assistance and the “Working Poor” ([15:45]–[19:20])

• UC Berkeley Study: In 44 states, the majority of public assistance recipients are working families, not the unemployed.
• In Texas, 67% of support goes to working families.
• Adjunct Professors: 25% of adjunct college instructors are on government aid, indicative of widespread underpayment even in higher education.
• Wolff Connects the Dots:

  “We the taxpayers are required to kick in big bucks of taxes to enable corporations to underpay their employees. We subsidize them and they, the corporations, are laughing all the way to the bank...” ([18:50])

7. Corinthian Colleges & Student Debt Activism ([19:20]–[22:15])

• Students from the for-profit Corinthian College chain (fined for fraud) refuse to repay student loans, arguing debts were incurred under false pretenses.
• Legal Backing: Debts acquired through fraud can be invalidated—a small but potent example of direct action against unfair debt.
• Wolff:

  “This kind of activism is a good sign of a healthy society becoming aware of what needs to be changed.” ([21:55])

8. Listener Question: Consumer Boycotts and Corporate Responses ([22:15]–[25:15])

• Listener “Meg” complains to Trader Joe’s about carrying Driscoll’s berries, linked to labor abuses in Mexico.
• Trader Joe's responds with a generic form letter—seen as dismissive.
• Wolff:

  “They probably didn’t even read what she sent them and they could care less. Their hope is that everybody who understands the issue goes away. Hopefully still shopping for those Driscoll berries.” ([24:20])

9. Offshoring, Inequality, and Worker-Controlled Enterprises ([25:15]–[31:00])

• Question: Would ending offshoring hurt workers in countries like China?

• Answer:

  • The main winners of relocation are the global rich, not ordinary workers.
  • A shift toward worker self-directed enterprises could redistribute income, boost domestic purchasing power, and benefit both U.S. and foreign workers in the long term.

• On Worker Self-Directed Enterprises:

  “If you give workers the control of enterprise, they will distribute income differently and that will mean a surge of buying from all the people who now get a decent income... a demand for goods and services.” ([30:00])

Main Discussion: Honest Economics & the Need for Pluralism in Economic Thought

10. The Myth That Higher Wages Mean Higher Prices ([32:00]–[35:10])

• It’s a fallacy that wage increases necessarily drive up consumer prices.
  • Prices include wages, management salaries, profits, and shareholder dividends.
  • If pay increases for workers are offset by lower management pay, profit, or dividends, prices need not rise.
• Wolff’s Argument:

  “We can raise wages without raising the price of anything by making other folks who get paid out of the price of goods take a bit of a hit, couldn’t we?” ([33:50])

11. The Intellectual Monoculture in Economics Education ([35:10]–[39:30])

• Professor Hugh Goodacre’s critique: Only neoclassical economics is taught in most Western universities, ignoring alternative schools (Keynesian, Marxian, Austrian, institutionalism).
• Wolff’s Personal Testimony:

  “I was never required on the way to getting my PhD in economics to read one word of Marx’s mature economic analysis...” ([38:10])

• Analogy: Teaching only one kind of Lutheranism in a course labeled “Religion.”
• Call to Action: Demand diverse perspectives in economics education to better understand and address real-world issues.

12. Essentials of Marxian Economics ([39:30]–[46:45])

• Clarification: Marxism is not simply about government intervention or “socialist states”; it analyzes capitalism’s internal dynamics, especially at the workplace.
• The crux: The employer-employee relation is inherently exploitative—workers produce more value than the wages they receive, with the difference (surplus/profit) going to the capitalist.
• Wolff emphasizes:

  “Marx... was interested in capitalism as an economic system... and not at all in how the state relates. He didn’t think the big debate was having more or less government intervention in the economy—not important for Marx.” ([41:30])

• It’s negligent for economics education to exclude such a critical, global perspective.

13. Global Resource Inequality & Environmental Hypocrisy ([46:45]–[49:30])

• Energy Use Data:
  • U.S. per capita electricity use is 13,250 kWh (2011)
  • Germany and Japan: ~7,000 kWh
  • Ghana: 340 kWh
• The global poor want higher living standards, which will require increased energy use.
• Western Hypocrisy: The U.S. now resists aiding those upgrades—citing environmental concerns after reaching affluence themselves.
• Wolff:

  “Are we really going to pretend that we have the moral, ethical right to go to the rest of the world and say, you can’t have the standard of living we have because we won’t enable you to... do the damage to the environment that we finished doing over the last 200 years?” ([48:30])

Notable Quotes & Memorable Moments

• On systemic inequality:

  “The Walton family... has more wealth than 42% of American families combined. That’s right. A small handful of people own more than nearly half of the American people own.” ([08:15])

• On addressing inequality:

  “I want to do something about inequality and not just talk about it.” — Dan Price, Gravity Payments ([12:10])

• Wolff’s closing thought on honest economics:

  “There is no excuse for an economics training system that systematically keeps students who will become journalists, political leaders, and academics from an awareness of a critical perspective.” ([44:50])

Key Timestamps & Segments

• Ben Bernanke & revolving door: [00:13]–[03:00]
• GM legal immunity & bailouts: [03:00]–[05:40]
• U.S. wealth inequality statistics: [05:40]–[10:30]
• Gravity Payments wage story: [10:30]–[13:30]
• IRS return-free filing, Intuit lobbying: [13:30]–[15:45]
• Federal assistance to working poor: [15:45]–[19:20]
• Corinthian Colleges student strike: [19:20]–[22:15]
• Consumer activism, Driscoll’s boycotts: [22:15]–[25:15]
• Offshoring and global inequality: [25:15]–[31:00]
• Wage increases & pricing myths: [32:00]–[35:10]
• Economic education and pluralism: [35:10]–[39:30]
• Marxian economics summary: [39:30]–[46:45]
• Global energy use & environment: [46:45]–[49:30]

Concluding Thoughts

Richard Wolff’s “Honest Economics” challenges economic orthodoxy, exposes the realities of wealth, power, and policy in America and the world, and makes a compelling case for greater pluralism in understanding how economies really work. With humor, clear analogies, and a critical perspective, Wolff encourages not just awareness but action: demanding fairness, rethinking enterprise, and insisting on genuinely comprehensive education as pathways to economic democracy and justice.