Economic Update with Richard D. Wolff

Episode: Listen, Prof. Krugman

Date: May 29, 2016

Episode Overview

In this episode, Richard D. Wolff critically examines recent economic developments and challenges public narratives about economic progress in the U.S. and abroad. He specifically addresses statements made by prominent economist Paul Krugman regarding income inequality during the Obama administration, rebuts Krugman’s optimism with data and examples, and also delves into systemic issues such as labor exploitation, prisoner strikes, worker co-ops, and the enduring crisis in Greece. Wolff’s tone is incisive, critical, and accessible, seeking to empower listeners to question mainstream economic discourse.

Key Discussion Points & Insights

1. Car Companies and the Economics of Ride-Sharing (02:55-10:32)

• Major car companies (Toyota, GM, Volkswagen) are investing billions in ridesharing platforms like Uber, Lyft, Get, and Didi.
• Insight: This signals that traditional car ownership is becoming less affordable for the masses due to economic stagnation in developed countries; car companies are adapting by shifting focus from selling to the masses to dominating fleets used for ridesharing.
• Memorable Analogy:
  “We are going to be more and more in a world where we will deal with the automobile the way we already deal with the airplane. That’s right. Only rich people have their own airplanes. The rest of us share the airplanes with other people.” – Richard Wolff (08:55)

2. Pope Francis on Exploitative Labor Practices (10:33-14:21)

• Pope Francis condemns “bloodsuckers” who profit by exploiting workers, often through unfair contracts, lack of pensions, and poor wages.
• Notable Quote:
  “This is starving the people with their work for my own profit. It is living on the blood of the people and this is a mortal sin.” – Pope Francis (quoted by Wolff, 12:36)
• Wolff’s Commentary: Such wage slavery is increasingly common and even described by religious leaders as morally unacceptable.

3. Challenging Paul Krugman on U.S. Inequality (14:22-36:53)

• Krugman’s Claim: President Obama narrowed the income gap and would have done more were it not for congressional opposition.
• Wolff’s Rebuttal:
  • Presents multiple forms of evidence showing that inequality and poverty have worsened or stagnated during Obama’s tenure.
  • Critiques the narrative that congress alone obstructs progress, noting the president’s lack of direct engagement with grassroots movements like Occupy Wall Street:

    “Did the President say, congratulations? Did the President facilitate, help, lead, support the Occupy Wall Street movement? And the answer is an unqualified no, he did not.” (18:22)

• Supporting Examples:
  • Miami-Dade County: No real wage growth since 2010; poverty is up 15% locally, 17% nationally (22:29).
  • Prison Labor Strikes: Inmates in Texas and elsewhere striking over low or no wages; flashpoint example of “modern slavery” (24:08).

    “In the case of Colorado, prisoners were being paid between 74 cents and $4 a day, Professor Krugman. That’s an amazing payment for a human being in the United States, by the way. They refer to themselves, many of these prisoners, as slave laborers.” (25:23)

  • Wage Theft and Corporate Practices: Domino’s and Papa John’s caught systematically cheating low-wage workers, suggesting actual conditions are worse than reported statistics (26:02).
  • Federal Reserve Data:

    “Specifically, the typical family in the bottom half of the wealth distribution in the United States was worse off in 2013 than it had been in any of the years covered by the Survey of Consumer Finances going back to 1989.” — Narayana Kocherlakota, cited by Wolff (27:01)

  • Young Adults at Home: Record-high 32.1% of 18-34 year olds living at home in 2014, up sharply since 1960 (27:42).
  • School Segregation: Increase in schools segregated by race and class (from 9% in 2001 to 16% in 2014), with associated educational inequities (28:09).

[AD BREAK & MUSIC] (28:17-29:36 skipped per instructions)

4. Markets, Worker Co-Ops, and Economic Systems (29:36-43:30)

• Common Critique: Skeptics claim worker co-ops can’t survive under market conditions.
• Wolff’s Response: Throughout history, societies have distributed goods via various mechanisms, not only markets; markets themselves are shaped by prevailing systems (slave, feudal, capitalist, etc.).
• Comparative Examples:
  • In slavery, markets in slave labor (selling people), but not labor power.
  • In capitalism, markets in labor power (selling capacity to work).
  • Worker co-op economy: Would likely eliminate markets in labor power, structuring markets to reinforce cooperative values, much like families distribute labor and resources based on need and mutual support.

    “There is no abstraction called ‘the market’ which would dictate to a production system whether or not it can exist and how it will work. Production systems are just as capable of shaping the market to serve themselves as the reverse.” (41:52)

5. Greek Debt Crisis — A Cautionary Tale (43:31-end)

• Background: Greece has received massive bailouts under the guise of helping Greeks, but most funds were channeled straight back to major European banks to cover bad loans.
• Systemic Critique:
  • Politicians worldwide avoid taxing the rich or public, instead borrowing to meet demands, creating unsustainable debts.
  • In crisis, the public is told bailouts help the people, but they actually rescue banks.
  • Result:

    “All that money that went to Greece, that was explained to the European people as helping our Greek brothers and sisters was nothing of the sort. It was money designed to help the very bankers that bankrolled the politicians that arranged this hustle.” (48:32)

• Current Situation: Greece is left with crushing debt, Europe refuses relief, leading to deepening social divides and fueling reactionary politics.
• Broader Implication:

  “Greece, in a way, is that famous canary in the mine telling people there are very bad, dangerous social explosions building.” (54:50)

Notable Quotes

• On Corporate Adaptation to Economic Slowdown:
  “The car companies see the writing on the wall. There’s already more capacity, more ability to produce cars than there’s a demand for it. And that demand is shrinking, at least in the parts of the world where capitalism grew up over the last 250 years. And the prediction is that this is never coming back.” (05:27)

• On Labor Exploitation:
  “Those who do that are true bloodsuckers, said the Pope.” (13:47)

• On U.S. Income Inequality Rhetoric:
  “No, the president could have, should’ve, might’ve done much, much more. The opposition in Congress needn’t have been the end of the story and does not justify his not having done all of the other things he could have and should have.” (21:01)

• On American Youth Economics:
  “People can’t afford to live on their own. Not only that, but more and more couples are not the way people are living. They’re living singly. America is changing and the economics of it are very painful and difficult, Professor Krugman.” (27:51)

• On the Flexibility and Power of Market Systems:
  “Markets are a system of distribution that has to be coordinated with the system of production…there is no such thing as an abstract market.” (35:25)

• On the Greek Crisis and Bank Bailouts:
  “Those bailouts didn’t work. But that’s not because we Greeks don’t work hard. They do. Or that we Greeks aren’t productive. They are. But the money was simply shoveled back into the banks who had lent it, banks who had made those weird loans.” (52:08)

Timestamps for Important Segments

• Car Companies & Ride-Sharing: 02:55–10:32
• Pope Francis on Labor Exploitation: 10:33–14:21
• Krugman and Obama’s Record: 14:22–36:53
• Worker Co-Ops and Markets: 29:36–43:30
• Greek Debt Crisis: 43:31–end

Conclusion

Richard D. Wolff leverages current events and incisive commentary to challenge mainstream economic representations, particularly Paul Krugman's view of recent U.S. economic history. He presents a persuasive case that inequality has worsened, not improved, and connects these trends to deeper systemic issues—from corporate adaptation in a shrinking economy to the devastating impacts of global financial systems on nations like Greece. Wolff also educates on alternative economic models, notably worker cooperatives, illustrating the malleability of markets and the enduring relevance of organizing the economy around human needs rather than profits.

For more from Richard Wolff, visit: rdwolff.com or democracyatwork.info