Episode Overview

Podcast: Economic Update with Richard D. Wolff
Episode: Moving Beyond Capitalism
Date: November 23, 2016
Host: Richard D. Wolff (Democracy at Work)

Richard D. Wolff takes a critical look at pressing economic issues, dissecting corporate tax realities, infrastructure funding schemes, the impact of anti-immigrant rhetoric on education, and the economics of real estate. The episode culminates with a thought experiment about building an economic and political space for worker co-ops as an alternative to capitalism, drawing parallels with the British Labour Party’s platform.

Key Discussion Points & Insights

1. Corporate Taxes: Myths vs. Reality (00:00–09:15)

• Nominal vs Effective Rates: Wolff debunks the narrative that U.S. corporations face some of the highest taxes in the world, explaining the difference between the nominal rate (35%) and what companies actually pay (the effective rate, closer to 22–23%).
• How It's Calculated: Using a Standard & Poor and New York Times study of the 50 largest U.S. corporations, Wolff reveals most pay far less than the advertised rate, even after combining federal, state, local, and foreign taxes.
• Examples:
  • Boeing: 7.8%
  • Verizon: 12.5%
  • Amazon: 12.5%
  • Alphabet (Google): 16%
  • IBM: 17%
  • Bristol Myers Squibb: 18%
  • AT&T: 19%
  • Berkshire Hathaway: 20%
  • Bank of America: 23%
  • PepsiCo: 24%
  • Merck: 28%
  • Walt Disney: 31%
• Key Insight: Major corporations systematically reduce tax bills through exemptions and deductions.
• Quote:

  “The major corporations in the United States … don’t pay anything remotely like what you hear about in the newspapers.” (07:50, Richard Wolff)

2. Infrastructure Funding and Privatization (09:15–15:40)

• Canada’s ‘Dangerous’ Move: The Trudeau government plans to rely on public-private partnerships (PPP) to rebuild infrastructure, a path the U.S. is likely to follow.
• Taxing vs. Borrowing: Politicians avoid directly taxing the wealthy for infrastructure, preferring borrowing—which ends up enriching those who weren't taxed as they become government lenders earning interest.
• The Perverse Incentive: Instead of taxing the rich (which would directly fund infrastructure), governments borrow from them, making infrastructure doubly expensive due to interest payments.
• The New Wave – PPP: Now, governments invite the wealthy to invest in public infrastructure, funneling future profits to private hands rather than maintaining infrastructure as a public good. Profits come from user fees, like toll roads, further burdening the public.
• Quote:

  “This is privatization in a whole new form—transformation of public facilities into privately-owned and privately-profitable.” (13:50, Richard Wolff)

3. Impact of Anti-Immigration Rhetoric on Universities (15:40–20:40)

• Foreign Students’ Exodus: Anti-immigration sentiment post-2016 election, according to Wolff’s direct conversations, is pushing foreign students to reconsider staying in the U.S.
• Consequences: The departure of foreign students risks collapsing many U.S. graduate programs, which rely on international enrollment to sustain faculty and research.
• Broader Costs: The U.S. invests in educating talented people, but anti-immigration climate drives them—and their contributions—elsewhere.
• Quote:

  “They are leaving. That’s the blunt, bottom line. They are leaving.” (18:36, Richard Wolff)

  “Has anyone calculated the costs to the United States of the research that won’t be done … of these trained young people now leaving the United States …?” (20:09, Richard Wolff)

4. Understanding Real Estate Economics & Donald Trump (20:40–26:20)

• What is Real Estate?: Ownership of land (which no one creates) and buildings (seldom built by the owner).
• Trump’s Example: Donald Trump, as a real estate magnate, profits not from production but from ownership—charging others to use land and property he didn’t create.
• Economic Parasitism: Owners’ fortunes are determined by society’s movement and development, not their own productive efforts.
• Quote:

  “A real estate dealer like Mr. Trump produced neither the land nor the buildings that he owns … to be blunt, nothing. He’s an owner.” (23:12, Richard Wolff)

5. The Looming Interest Rate Hike (31:00–38:50)

• Context: The Federal Reserve is poised to raise interest rates for the first time in years.
• Why Now?: Years of low rates and huge increases in money supply since the 2008 crash have not led to the expected inflation—yet.
• Inflationary Tipping Point: If holders of large cash reserves shift towards spending, especially on assets, it could trigger inflation, which the Fed wants to prevent by raising rates.
• Self-Fulfilling Fear: Fear of inflation can itself spark inflation, as those with money rush to buy goods and assets, bidding up prices.
• Side Effects: Higher interest rates raise borrowing costs for mortgages, cars, student loans, potentially slowing the broader economy and hurting workers.
• Quote:

  “The very thing they’re going to try to do to deal with inflation could very badly hurt the jobs, the incomes, and the economic situations of masses of people. And yet they don’t know how to do otherwise.” (38:05, Richard Wolff)

6. Imagining Two Sectors: Capitalism vs Worker Co-ops (38:50–49:50)

• The Political Monoculture: The U.S. has two dominant political parties, but both are fundamentally aligned with capitalism; they only differ on regulatory detail.
• Thought Experiment: What if Americans could freely choose between a capitalist sector (corporate, top-down) and a worker co-op sector (democratically managed, worker-owned)?
  • Workers decide collectively.
  • Consumers decide where their purchasing “votes” go.
  • Real freedom: choice of workplace, products, and organizational form.
• Call for Political Representation: An actual “second” party—one that advocates and organizes for an expanded worker co-op sector—is needed to balance a political system that currently only voices support for capitalism.
• Quote:

  “We have … two political parties that have throughout their history supported … the capitalist system. … What we don’t have, not yet, is a political party that says, okay, we are different, we want there to be a bigger, more successful co-op sector.” (43:15, Richard Wolff)

  “If we believe in competition, let these two compete.” (45:55, Richard Wolff)

7. UK Labour Party Example (49:50–52:00)

• Reality in Britain: The British Labour Party, under Jeremy Corbyn and John McDonnell, has pledged to enact laws giving workers the right of first refusal to buy a company being sold, closed, or offshored—legally and financially supporting the creation of a vibrant worker co-op sector.
• Implication: The “imaginary” experiment of a co-op sector is already a real political project abroad.

Notable Quotes & Memorable Moments

• Corporate Tax Evasion:

  “You’re listening to people that are counting on your not knowing what the reality is. And the least I can do is try to do something about that.” (09:05, Richard Wolff)

• Danger of Infrastructure PPPs:

  “We’re coming to the end of what capitalism can figure out as to how to maintain itself without taxing the rich.” (14:35, Richard Wolff)

• Worker Co-op Competition:

  “Let’s quickly empower a political party that can make sure that the government is as fair to the worker co-op sector as … to the capitalist sector. Let the struggle begin.” (47:12, Richard Wolff)

Timestamps for Important Segments

| Timestamp | Segment/Topic | |------------|---------------------------------------------------------------------------| | 00:00–09:15| Corporate Taxes – Real Numbers, Effective Rates, S&P/NYT Study | | 09:15–15:40| Infrastructure Funding, Public-Private Partnerships, Dangers | | 15:40–20:40| Anti-Immigrant Rhetoric and Its Impact on Higher Education | | 20:40–26:20| Economics of Real Estate, Donald Trump’s Business Model | | 31:00–38:50| The Looming Interest Rate Hike & Inflation Risks | | 38:50–49:50| Imagining Capitalism vs Worker Co-op Sectors, Political Parties | | 49:50–52:00| UK Labour Party & Worker Co-op Policies |

Conclusion

With clarity and critical candor, Richard D. Wolff exposes distortions in economic discourse, from corporate taxes to infrastructure, educational policies, and the hidden mechanics of real estate profits. He challenges listeners to interrogate the status quo and imagine a genuine alternative: a society where worker co-ops operate and compete alongside capitalist enterprises, underpinned by political advocacy—a prospect no longer fantastical but already surfacing in British politics.

Ending Thought (paraphrased):
If we treasure competition, democracy, and freedom of choice, it’s time to give worker co-ops and their political voice a genuine place in our economic—and political—landscape.