Economic Update with Richard D. Wolff

Episode: Questions about Capitalism
Date: March 9, 2017

Episode Overview

In this episode, Professor Richard D. Wolff tackles critical recent economic events and dives into a foundational debate on capitalism’s fundamental structure. With characteristic clarity and a focus on underdiscussed angles, he connects the dots from corporate tax evasion and health care reform to deeper questions about how societies organize workplaces, emphasizing that the real economic debate goes far beyond “more or less government intervention.” Wolff challenges listeners to scrutinize the employer-employee dynamic at the heart of capitalism and consider genuine alternatives.

Key Topics & Discussions

1. Corporate Tax Evasion: The Case of Caterpillar

• Summary: Government raids on Caterpillar’s headquarters expose a long-term tax avoidance scheme where profits were booked via a minor Swiss subsidiary to dodge higher U.S. taxes.
• Important Details:
  • Caterpillar avoided $3–4 billion in U.S. taxes over 12–15 years ([01:25]).
  • Swiss subsidiary employed about 500 out of 118,000 global staff—managed multi-billion dollar profits with virtually no real operations in Switzerland.
  • Key quote:

    “It’s basically a game in which governments compete for where businesses locate their profits. For Switzerland… you get 4–6% of billions in profits. That’s nice for you.” – Richard D. Wolff ([03:24])

• Implications: Tax games like this shrink government revenue and force three bad alternatives: cut public programs, raise taxes on ordinary people, or increase debt ([05:30]).

2. Healthcare Reform: Who Wins and Who Loses?

• Summary: The Republican proposal to replace Obamacare will shrink health coverage for the poor while rolling back taxes imposed on the wealthy.
• Important Details:
  • Obamacare was funded by taxing individuals earning over $200k, couples over $250k.
  • Republican plan reduces support for poor/uninsured, saves wealthy significant sums.
  • Key quote:

    “Rich people will pay less taxes and poor people will get less medical help to be healthy... to prevent all the rest of us from contracting infectious diseases because our fellow citizens have a decent health insurance.” – Wolff ([11:32])

• Stats:
  • Top 1% save $33,000/year; top 0.1% save $197,000/year due to tax repeal ([10:50]).

3. Forced Labor in Immigration Detention

• Summary: ICE detainees have been forced to work for $1 a day in private prisons like Geo Group, under threat of solitary confinement. Courts are now allowing a class-action lawsuit to proceed.
• Key Moments:

  • “...forced to work for $1 a day while being detained. And you’ll love this, in private enterprise prisons that have contracted with the government to hold these people.” – Wolff ([13:28])

  • Quote from Geo Group lawyer:

    “Even if we are forcing people to work under threat of solitary confinement, that would be allowed by applicable law.”
    Judge: “No, it wouldn’t be slave labor for the detained immigrants.” ([15:40])

4. Harvard University’s Ties to Slavery and Capitalist Wealth

• Summary: Harvard confronts its historic links to slavery, but Wolff urges it to admit deeper dependence on exploitative capitalism and corporate donations.
• Discussion Points:
  • Harvard’s early wealth owed much to slave owners; later, to corporations with controversial or exploitative practices ([17:25]).
  • Quote by Harvard historian Sven Beckert:

    “Some of our most esteemed educational institutions are also the product of some of the most horrific violence that has ever descended upon any group of people.” ([17:50])

  • Wolff’s challenge: Harvard should own its complicity not only in slavery but also in broader capitalist injustices ([21:20]).

5. The Bloomberg Billionaire Index: Gates and Slim

• Bill Gates’ Wealth:
  • $85.6 billion earns him ~$4.3 billion/year in passive income or $82 million/week, without any work ([24:30]).

  • “Now you know why Bill Gates does not need to buy lottery tickets. Because he gets $82 million a week without buying lottery tickets.” – Wolff

• Carlos Slim’s Wealth:
  • $51.5 billion; investment earns ~$2.6 billion/year, or $50 million/week ([30:56]).
  • Raises the question of fairness as millions in their home countries struggle with poverty.

6. Austerity in Puerto Rico and Greece

• Summary: Puerto Rico and Greece suffer from unsustainable debts fueled by collusion between local politicians and global bankers. Now, ordinary people bear the costs via extreme austerity.
• Details:
  • Greece: Poverty up 40% (2008-2015), youth unemployment >50% ([34:08]).
  • Puerto Rico: Control board (appointed by U.S. Congress) dictates $7.6B in cuts—turning recession into a “depression of a magnitude seldom seen around the world.” – Joseph Stiglitz ([36:07])
  • Key quote:

    “We are subordinating the needs of millions for the interest and profits of a handful of banks and institutions. This is not acceptable behavior in a decent society, is it?” – Wolff ([38:18])

7. Foundational Economic Debate: More or Less Government Is Not Enough

• Core Argument: The standard left-right debate—government intervention vs. laissez-faire—misses the crucial question: Should economic production be organized through a capitalist employer-employee relationship or a new democratic model?

• Explanations:

  • Every major economic system (slavery, feudalism, capitalism) included a government role; the real issue is not government size but the underlying structure of workplaces ([42:18]).
  • In capitalism, a small group (owners/directors) make decisions; the vast majority (employees) simply carry them out ([46:05]).

  • "That’s why capitalism is not a democratic system at the workplace, whatever it does in the community. At the workplace, a tiny group of people give orders and a large number of people take them." – Wolff ([48:48])

• Real Alternative:

  • Organize production as a democratized, collective process—workers themselves run enterprises and share in decision-making, replacing the employer-employee divide ([50:04]).

  • “The employers and the employees are the same people. It becomes a community affair, not the affair of a tiny number making the decisions that a large number have to live with, but they have no control.” – Wolff ([50:20])

• Conclusion:

  • Wolff calls for critical reflection on whether it’s time, as with slavery and feudalism before, to question and move beyond the core hierarchy of capitalism.

  • “I don’t want that question, which I think is fundamental, to be lost in an endless and very repetitive debate about more or less government.” ([51:00])

Notable Quotes & Moments

• On corporate tax evasion:

  “It is good to see one of them getting into trouble. But it’s a tip of the tax evasion iceberg, and many more companies should be caught...” – Wolff ([06:36])

• On Harvard and history:

  “Face up to the fact that you have benefited from and grown rich on the fruits not only of slavery in the American south, but capitalism everywhere else in the United States and indeed globally. And that that has shaped what you teach, how you think of yourselves…” – Wolff ([21:20])

• On health care debate:

  “It wasn’t really about the care it provided. It was about the taxes needed to pay for it. And since the taxes affected the richest Americans, it will benefit them the most to have those taxes reduced or repealed.” – Wolff ([09:11])

• On the real central debate:

  “The big issue for our economic system, I would argue, isn’t about more or less government… The really big issue… is whether we have a capitalist system or some other system, since the capitalist system is… in a great deal of difficulty.” – Wolff ([41:00])

Timestamps for Key Segments

• Caterpillar Tax Evasion: 01:00 – 07:00
• GOP Obamacare Repeal & Taxes: 07:14 – 12:20
• Forced Labor in ICE Prisons: 12:25 – 16:30
• Harvard and Wealth from Slavery/Capitalism: 16:35 – 22:00
• Bill Gates & Carlos Slim (Billionaire Index): 24:30 – 32:10
• Greece & Puerto Rico Austerity: 32:30 – 38:30
• Capitalist Structure vs. Government Debate: 41:00 – 53:45

Conclusion

Richard Wolff frames this episode as a powerful indictment of “business as usual” in both economic discourse and daily practice. While news headlines focus on taxes, billionaires, and healthcare rollbacks, Wolff pushes listeners to confront the structure of capitalism itself—who wields power at work, who reaps the rewards, and whether democracy should be extended into the economic realm. By spotlighting the concrete stakes for workers, students, immigrants, and struggling nations, he argues for a new kind of debate: not just more or less government, but what kind of economy—and society—we want to build.