Economic Update with Richard D. Wolff

Episode: The Pension Crisis
Date: October 13, 2016

Overview

In this episode, Richard D. Wolff explores the emerging crisis around pensions in the United States, set against the broader economic backdrops of recession warnings, economic inequality, and the fragility of workers’ rights. The second half features a detailed and passionate interview with economist Teresa Ghilarducci, a specialist in retirement security, who explains the mechanics, history, and challenges of the American pension system—and lays out the risks for retirees if present trends continue.

Key Discussion Points and Insights

1. Economic News Round-up (00:00–29:53)

a. Looming Recession Warnings (01:00)

• Theme: Major global banks (HSBC, Bank of America, Goldman Sachs) have recently issued "red alerts" concerning an imminent recession.
  • “Looming down the road has a bit more meaning than it normally might have.” — Richard Wolff (01:17)

b. Labor and Inequality: Harvard Strike and Farmworkers Win (02:00)

• Harvard’s 750 cafeteria workers, among the lowest paid in an exceedingly wealthy institution, strike for modest pay and health benefits.
• The strike highlights grotesque inequality; Harvard’s endowment ($30 billion+) dwarfs the cost of these workers' demands.
  • “The amount of money involved for Harvard would be the equivalent of you or I taking a nickel or a dime out of our pockets in order to do something that would... transform the lives of 750 people and their families.” — Richard Wolff (05:13)
• Contrast: Good news for farmworkers at Sakuma Brothers Berry Farms (WA), who secured improved conditions following a successful boycott (08:07).

c. The Food Industrial Complex (08:45)

• Richard discusses Michael Pollan’s critical article on the failure of the Obama administration to challenge "Big Food" and its links to public health crises (obesity, diabetes).
• Organic/"little food" estimated at $50 billion, dwarfed by "big food’s" $1.5 trillion (10:11).

d. Berlin’s Anti-Gentrification Policies Compared to London (11:29)

• Berlin’s left-wing government is taking concrete steps (taxes on foreign buyers, Airbnb restrictions, reinforced rent controls) to prevent gentrification and protect residents in contrast to the luxury-driven transformation of London and New York.
  • “Markets... to distribute scarce items to those most able to pay ... makes the city uniform, a playground for wealthy people.” — Richard Wolff (13:24)

e. The "Mauling" of America: Retail Crisis (14:00)

• The U.S. has more malls per capita than any other country, but major retail anchors (Sears, Macy’s, JC Penney) are closing, causing widespread mall failures.
  • “Across America today, there are hundreds of dead malls... looking a lot like Detroit or Cleveland or Camden, New Jersey.” — Richard Wolff (16:56)
• Underlying cause: income inequality and shift to e-commerce, exposing market failures and inefficient capital allocation (17:15).

f. Labor Market Exclusion and Palliative Policy (21:30)

• Richard critiques a paper by Alan Krueger (Princeton), which finds many non-participating working-age men rely on pain medication.
  • “These people don’t need pain medication. These people need a good job at a good salary in a community where they can live out lives that mean something to them.” — Richard Wolff (25:59)

g. Electoral Disconnection from Real Economic Issues (27:28)

• The two leading presidential candidates aren’t seriously addressing urgent economic threats or historic inequality.
  • “These are severe failings of this election campaign and have nothing to do with which of these folks ends up in the, the hot and to becoming hotter seat in the years to come.” — Richard Wolff (28:52)

2. The Pension Crisis – Interview with Teresa Ghilarducci (29:53–57:43)

a. What Are Pensions? (31:08)

• Pensions are “deferred income,” a way for workers to secure income after their labor ends; also compared to a “depreciation allowance” for human labor.
  • “When they sell their time to employers, the employers owe them a depreciation payment. So for your listeners... I think that view of what pensions are makes some sense.” — Teresa Ghilarducci (32:25)

b. Origins and Role of Pensions in the U.S. (33:13)

• The modern pension concept started with Civil War veterans and was then incorporated into labor agreements and Social Security.
• Pensions act as stabilizers for households and local economies (e.g., Detroit’s reliance on Social Security/pensions).

c. Defining Retirement and Its Social Importance (35:45)

• Ghilarducci expands on retirement as earned time to control life’s pace/content, not mere idleness.
  • “Everybody deserves a time in their life when they can control the pace and content of their life. We fought hard for the weekend… the retirement time I’m talking about is a long weekend before we die.” — Teresa Ghilarducci (36:20)

d. How Universal Retirement Time Was Achieved—and Now Being Lost (39:08)

• Achievement: Decades of struggle produced rough equity in the years spent in retirement for rich, middle-class, and poor.
• Current Crisis: Only the rich and well-educated now retire with sufficient resources; the middle-class and poor face downward mobility, insecure retirements, and poverty.
  • “Only the rich and well educated are going to be able to have a healthy retirement.... The middle class and the poor... have to work into their late 60s, 70s, and on into their 80s just to maintain... above the poverty or near poverty level.” — Teresa Ghilarducci (40:51)

e. The Shift from Defined Benefit to Defined Contribution (401k, IRA) (42:49)

• Past: Employer-based, defined benefit plans plus Social Security created predictable, dignified retirements.
• Present: The rise of voluntary 401k/IRA plans means fewer protections and more individual “do-it-yourself” risk. Only 50% of workers have any employer pension or 401k.
  • “Companies do not have to provide a 401k plan. It's completely voluntary… Only half of workers have a 401k or a pension at work. Half have nothing.” — Teresa Ghilarducci (44:59)
• 401k/IRA plans are plagued by high fees, poor investment options, and predatory financial vendors.

f. Financialization and Middle-Class Squeeze (49:04)

• The finance industry, rather than employers, is extracting value through fees and complexity. Even employers are dissatisfied, opening the door for broad coalitions for reform.
  • “The squeeze on the mass of people is accruing to... the financing... the middlemen, not so much employers, not to the employers so much, not to the real economy. You should have an alliance with the employers to squeeze the middle.” — Richard Wolff (52:09)

g. Collective Institutional Investment vs. Do-It-Yourself Models (52:22)

• Institutional pension plans (like CalPERS or UAW plans) pool risk and achieve better returns/management.
• The individualized 401k/IRA model forces workers to act as financial professionals and exposes them to predatory practices.

h. International Comparisons and Solutions (55:25)

• Most developed countries have a mixed system: a public, pay-as-you-go base and a regulated, advance-funded public/private pension layer.
• The U.S. stands apart for its heavy reliance on individualized, profit-seeking models.

i. Policy Momentum and Hope (57:04)

• States like California are adopting “Secure Choice” automatic pension plans for all workers, a sign of grassroots solution-building.
  • “The retirement crisis is real and people know it. So, 29 states have moved before the federal government has moved and we're passing Secure Choice.” — Teresa Ghilarducci (57:10)

Notable Quotes and Memorable Moments

• On Corporate Greed and Inequality:
  “Administrators, faculty, alumni [at Harvard] indulge themselves in these gracious charitable speeches. But when it comes down to where they are and what they do and the institutional life they partake of, suddenly they are out to lunch, most of them.” — Richard Wolff (03:57)

• On the Purpose of Retirement:
  “Everybody deserves a time in their life when they can control the pace and content of their life. We fought hard for the weekend… the retirement time I’m talking about is a long weekend before we die.” — Teresa Ghilarducci (36:20)

• On the Roots of the Pension Crisis:
  “Only the rich and well educated are going to be able to have a healthy retirement.... The middle class and the poor... have to work into their late 60s, 70s, and on into their 80s just to maintain... above the poverty or near poverty level.” — Teresa Ghilarducci (40:51)

• Critique of Individual Responsibility Narrative:
  “People are saving for the long term earnestly. And I resist everybody blaming the victim for not saving enough.” — Teresa Ghilarducci (50:19)

Timestamps for Important Segments

• [01:00]–[07:30] – Harvard strike and inequality
• [08:45]–[11:19] – The food industry and diet-related health costs
• [11:29]–[14:00] – Berlin’s anti-gentrification approach
• [14:00]–[21:20] – U.S. retail crisis & the “mauling” of America
• [21:30]–[25:59] – Alan Krueger’s paper and “pain management policy”
• [27:28]–[29:09] – Disconnect in the electoral discourse on economic threats
• [29:53]–[31:08] – Introduction to Teresa Ghilarducci and pension focus
• [31:08]–[35:27] – What pensions are, history, and function
• [35:45]–[41:10] – Retirement as entitlement, crisis emerging
• [42:03]–[49:28] – Trends in pension coverage and individual risk
• [49:28]–[54:11] – Financial industry’s profit from individual retirement savings
• [55:25]–[57:43] – International models and policy reform efforts

Tone and Language

Richard Wolff’s tone is critical, direct, and analytical, blending professional expertise with urgency about real-world consequences. Teresa Ghilarducci is passionate, detailed, and empathetic, focusing both on hard policy facts and the lived experience of retirees facing insecurity.

Summary

This episode chronicles the economic, social, and political factors underlying America’s pension crisis. It highlights how the dismantling of collective, stable retirement systems has left the majority of workers exposed to insecurity, predatory financial interests, and the perils of growing old in a system designed for profit over wellbeing. The discussion is both a warning and a call to action for alternative, collective solutions rooted in real economic democracy.