Economic Update: How People Change Economies

Podcast: Economic Update with Richard D. Wolff
Date: November 16, 2017
Host: Richard D. Wolff, Democracy at Work

Episode Overview

In this episode, Richard D. Wolff explores how organized people and political movements can transform economies, focusing on real-world examples from the United States and abroad. The episode dives into progressive economic developments underway in Maine, exposes continued inequalities in tax and water policies, analyzes labor’s shrinking economic share, and delivers a comprehensive discussion on migration and the relationship between labor unions and worker co-ops as sources of change in capitalist systems.

Key Discussion Points & Insights

1. Progressive Movements in Maine

[00:15–09:35]

• Unexpected Political Dynamics: Maine stands out for its juxtaposition of a right-wing governor and a progressive legislative agenda, thanks largely to the grassroots organization, the Maine People's Alliance.
• Recent Ballot Initiatives: In 2016, Mainers voted to raise the minimum wage, increase taxes on the wealthy for education, and legalize marijuana.
• Universal Home Care Campaign: Upcoming 2018 ballot initiative aims to fund universal home care for the elderly and disabled, targeting a problem exacerbated by Maine’s high median age and inadequate federal support.
  • Funding: $132 million proposed via a 1.9% payroll tax and a 3.7% investment income tax, both applied only to annual income above $127,000.
  • Rationale: "It struck the people in Maine as reasonable, since those who earn a lot escape much of their income from the taxes of Social Security." (Wolff, 06:48)
• Systemic Change: Maine serves as a test case for whether progressive taxation can fund broad social benefits.

2. Estate Tax Evasion by the Wealthy

[09:35–13:20]

• Senate Finance Committee Report: Recently published report exposes extensive estate tax avoidance by America's wealthiest families—evading a tax that already only applies to multi-million dollar estates.
  • "Here's the name of the report: 'Estate Tax Schemes: How America's most fortunate hide their wealth, flout tax laws, and grow the wealth gap.'" (Wolff, 11:41)
• Political Implications: Despite tax proposals to eliminate the estate tax, existing loopholes already allow the ultra-wealthy to avoid fair tax burdens.

3. Flint vs. Evart, Michigan: Water Crisis and Corporate Privilege

[13:21–17:23]

• Continued Crisis in Flint: Years after the water contamination disaster, many Flint residents lack safe tap water, relying on deliveries instead.
• Nestlé’s Extraction in Evart: Just two hours away, Nestlé pays only $200/year to pump and sell unlimited clean groundwater—even supplying bottled water to Flint itself.
  • "Profit gets the water, and the people get the pollution. A system that works like this has lost its right to continue." (Wolff, 16:55)
• Systemic Critique: Highlights fundamental issues—corporate profit prioritized over essential human rights.

4. European "Social Exclusion" Post-Crisis

[19:59–26:19]

• Definition: Social exclusion refers to populations unable to participate fully in society due to low income (below 60% of national average), e.g., lack of access to basic needs.
• Startling Data:
  • In Greece, social exclusion rose from 28% to 35.5% of the population (2008–2016).
  • Bulgaria and Romania fare worse, at 40.4% and 38.8%.
  • The lowest: Czech Republic (13.3%), followed by Finland and Denmark.
• Call for US Data: Wolff notes the lack of serious social exclusion data for the US and commits to investigating this further.

5. Expiring US Health Programs: CHIP and Health Centers

[26:20–30:56]

• CHIP: The Children’s Health Insurance Program expired as of September 30, 2017, threatening coverage for 8–9 million children unless Congress acts.
• Federally Qualified Health Centers: Serving 27 million people (at 9,500 locations, mostly rural), these are also unfunded past September.
  • "A disproportionate number of these beneficiaries who are now deprived live in states that voted for Donald Trump for president." (Wolff, 29:46)
• Irony: The greatest impact of program expirations affects populations that supported current political leadership.

6. Labor’s Shrinking Share—Root of Growing Inequality

[30:57–37:17]

• Analysis of Labor vs. Profit Share: Automation and outsourcing have caused labor’s share of income to steadily decline, while capital’s share rises, increasing inequality.
  • "More and more of us sharing less and less. It means that the average economic situation of Americans is being pinched, lowered, reduced, squeezed." (Wolff, 33:46)
• Root Cause: Not immigration or scapegoats, but profit-driven business decisions.
  • "It's the profit-driven decision to replace a worker with a machine or...move a job...to someone at a fraction of the wage in China or India...That is at the core of the inequality tearing the society apart." (Wolff, 35:43)
• Alternative Approach: Instead of firing half the workers after automation, halve their hours for the same pay—sharing both productivity gains and leisure.

7. Migration: History, Economics, and Social Conflict

[38:10–53:32]

• Migration’s Historical Role: Mass migration has been fundamental to building cities, the American labor force, and modern economies.
• Push & Pull Factors: People migrate out of need or desire for opportunity—driven usually by economic necessity.
• Employer Incentives and Social Tensions: Migrants are often hired for jobs and conditions locals reject, creating downward pressure on wages and fueling resentment.
  • "The entrance of the migrant is, of course, immediately contested. Why? Because the employer will be ready, willing, and able to fire the person he's paying $20 an hour, to substitute an immigrant whom he can pay $15 an hour." (Wolff, 49:39)
• Misdirected Blame: Critique of blaming immigrants rather than the capitalist system that exploits both migrants and locals.
• Vision for Decency: If a society welcomes immigrants, it should ensure both natives and newcomers have decent wages and conditions, avoiding social division.

8. Labor Unions and Worker Co-ops: Toward a Transformative Alliance

[53:33–67:18]

• Role of Unions: Historically, unions function to collectively bargain for better wages/conditions under capitalism—a constant struggle since employers always seek to erode gains.
  • "Unions have a double problem. They have to get the improvement and then they have to safeguard the improvement." (Wolff, 58:34)
• Worker Co-ops as Next Step: In worker co-ops, workers are their own bosses, eliminating adversarial labor relations and securing gains as owners.
• Logical Alliance: Unions, as collectives advocating for labor, and co-ops, as workplaces run by workers, are natural allies. Unions can “train” workers for cooperative workplace democracy.
• Historical Precedents: The 1930s saw unions allied with socialist and communist parties—producing big gains for working people. Wolff argues for a new alliance: unions and worker co-ops.
  • "The ultimate achievement of a union is to have a worker co-op—to convert the enterprise they live in from the adversarial...Instead of that, the workers become their own employers." (Wolff, 1:00:13)
• European Lessons: Persistent alliances between unions and left parties helped maintain gains, but even there, capitalist pressures are eroding social protections—emphasizing the need for deeper change.

Notable Quotes & Memorable Moments

• On inequality in water access:
  "Profit gets the water and the people get the pollution. A system that works like this has lost its right to continue."
  – Richard D. Wolff [16:55]

• On declining labor share:
  "More and more of us sharing less and less...the average economic situation of Americans is being pinched, lowered, reduced, squeezed..."
  – Richard D. Wolff [33:45]

• On immigration and social tension:
  "...the employer will be ready, willing, and able to fire the person he's paying $20 an hour to substitute an immigrant whom he can pay $15 an hour to..."
  – Richard D. Wolff [49:39]

• On the solution to automation job loss:
  "You don't fire half the workers. You put all the workers on halftime...It's more leisure for every worker."
  – Richard D. Wolff [36:30]

• On unions and co-ops:
  "The ultimate achievement of a union is to have a worker co-op, to convert the enterprise they live in from the adversarial...the workers become their own employers..."
  – Richard D. Wolff [1:00:13]

Key Timestamps

• 00:15–09:35: Maine’s progressive politics and universal home care campaign
• 09:35–13:20: Estate tax evasion and Senate report
• 13:21–17:23: Flint water crisis versus corporate water rights
• 19:59–26:19: Social exclusion: Europe post-crisis
• 26:20–30:56: CHIP and health centers' defunding
• 30:57–37:17: Labor’s shrinking share, automation, outsourcing
• 38:10–53:32: Migration, economic causes, and policy implications
• 53:33–67:18: Unions, worker co-ops, and the case for alliance

Takeaway

Richard D. Wolff argues powerfully that ordinary people, when organized and educated, can drive fundamental economic change—whether through grassroots movements, ballot measures, or workplace democracy. He connects the historic struggles of labor unions to the potential of worker co-ops and highlights how policy failures and profit motives foster inequality and social conflict. Ultimately, he encourages alliances and systemic alternatives to build more inclusive, secure, and just economies.