Economic Update with Richard D. Wolff
Episode: The System Exposed (August 18, 2016)
Host: Richard D. Wolff
Podcast: Democracy at Work
Episode Overview
In "The System Exposed," Richard D. Wolff applies a critical eye to current economic events and systemic failures in capitalism as revealed by recent news, data, and high-profile examples. The episode covers topics from the financial consequences of the Olympics to mass transit, the decline of unions, falling productivity, and extreme inequality—ending with insights into "the gig economy," golden parachutes for failed CEOs, and corporate tax avoidance. Wolff’s key theme is how capitalist systems prioritize private profit over social need, often at the public's expense.
Key Discussion Points & Insights
1. The Olympics: Private Profit, Public Loss
[00:37 – 05:46]
- Hosting the Olympics generally results in a "financial loss to the public and a boon for private interests."
- "In Rio, as in most Olympics, taxpayers pay for expensive infrastructure, but the direct beneficiaries are airlines, hotels, and businesses."
- The Olympics serve as a "wonderful cover" for public subsidy of rich private interests.
“Private profit utilizes public money to subsidize itself... The loser was the public. And that's how this system works all the time.”
— Richard Wolff [04:16]
2. The Economics of Automobiles vs. Mass Transit
[05:46 – 11:37]
- Shocking statistics: "32,000 Americans killed, 2 million injured in car accidents each year."
- Mass transit is “cheaper, cleaner, safer”—so why don't we have it at large scale?
- The "profit interests of automakers, oil companies, etc." block progress toward mass transit.
- The private car is emblematic of “capitalism prioritizing profit over rational social solutions.”
“The theme, you might say for today, [is that] it puts private profit ahead of rationality, social need and social welfare.”
— Richard Wolff [10:32]
3. Why Are U.S. Labor Unions So Weak?
[11:37 – 18:32]
- Reference to Barry Eidlin’s (McGill University) work comparing the U.S. and Canada.
- Unlike other advanced countries, the U.S. lacks "a political party based in, and committed to, working people."
- After the New Deal era, U.S. unions became "junior partners in the Democratic Party rather than holding independent power."
“Both in the article... and in his forthcoming book, therein lies the cause of the weakness of the labor movement in the United States. It does not have a partner in politics. Instead, it has become the junior partner within the Democratic Party, where the word ‘junior’ gets more obvious and more profound with each passing year.”
— Richard Wolff [16:20]
4. Productivity, Investment, and the Illusory Recovery
[18:32 – 28:53]
- U.S. productivity has not recovered; it is declining for the third straight quarter.
- Business leaders, like Larry Fink (BlackRock) and Howard Schultz (Starbucks), admit businesses are not investing because "they are afraid and pulling back," partly due to uncertainty and consumer weakness.
- Wolff critiques politicians (specifically mentions Hillary Clinton) for touting productivity growth that does not exist.
- Economic “recovery” is mostly for the top 1%, not the majority.
“Our growth of productivity is so slow that we've actually had falling productivity. We are becoming less productive than we were before. That's worse than a slow growth. That's a reverse.”
— Richard Wolff [20:24]
Notable Data Points:
- $55 trillion sitting in bank deposits (U.S., China, Japan) as “dead money.”
- Prime-age employment rates in the U.S. “on par with Europe’s hardest-hit economies.”
5. Wealth Inequality: Race, Wealth, and the Forbes 400
[26:40 – 28:53]
- Shocking disparities: The 100 richest Americans have wealth equal to that of the entire African American population.
- Institute for Policy Studies projects that by 2043 (when people of color become the majority), the racial wealth gap may double if trends continue.
“Over the past 30 years, the wealth of the Forbes 400...has grown by an average of 736%, ten times the rate for the Latino population and 27 times the rate for the black population... The wealthiest hundred members of the Forbes list alone own about as much wealth as the entire African American population.”
— Richard Wolff, citing the Institute for Policy Studies [27:54]
6. Social Security: Facts vs. Myths
[28:53 – 29:41]
- Social Security “is not a ‘handout,’ but a system worked and paid into over a lifetime.”
- U.S. retirees only get 37% of average earnings in benefits, compared to 53% OECD average (90% in Netherlands).
- Without Social Security, 41.5% of U.S. seniors would be in poverty (vs. 10% with it).
7. PG&E and the Limits of Fines for Corporate Crime
[29:41 – 33:01]
- PG&E found guilty of criminal negligence in a pipeline explosion, fined $3 million.
- Compare to $300+ million fine in the Erin Brockovich case—“fixes nothing.”
- Wolff argues that such utilities should become public, cooperative enterprises; fines are insufficient deterrents.
8. The “Gig Economy” and the Rise of the Precariat
[33:01 – 36:24]
- “Sharing economy” is PR hype; the real substance is a shift to insecure, low-benefit contract work.
- In Europe, the term “precariat” (from precarious + proletariat) is used honestly.
- "Companies want cheaper, more easily disposable labor—hence the proliferation of gig work, outsourcing, and automation."
“Calling it fancy names doesn’t put dinner on the table, doesn’t pay your bills, and doesn’t change anything.”
— Richard Wolff [35:50]
9. Golden Parachutes for Failed CEOs
[36:24 – 40:32]
- Egregious example: Marissa Mayer (Yahoo) to receive $54.89 million after selling off a failing business.
- Top four CEO golden parachutes: Steve Wynn ($358 million), David Simon ($302 million), John Hammergren ($198 million), David Zaslav ($161 million).
- Stark contrast to struggles of average Americans.
“You may be having financial problems, but they're not. And none of those problems that you worry about in your future bother them at all.”
— Richard Wolff [39:46]
10. Elections: Political Influence of the Wealthiest
[40:32 – 42:53]
- Citing Robert Reich, Wolff notes that in 2012, the richest 0.01% gave four times as much to Democratic campaigns as all unions combined.
- Implication: Political parties serve their biggest donors, not workers.
“In the 2012 presidential election…the richest 0.01% of households... gave to Democratic candidates more than four times what unions contributed...”
— Richard Wolff, quoting Robert Reich [41:18]
11. IMF Self-Critique: Neoliberalism Oversold
[42:53 – 45:33]
- IMF’s own economists admit “neoliberal” policies (open to foreign capital, cut government spending) failed to deliver growth.
- These policies “increased inequality, which undermines growth itself.”
- Echoes previous show themes: "Inequality generated by capitalism ultimately sabotages capitalism."
“The IMF program has not delivered increased economic growth. Neoliberal reforms have increased inequality and the increased inequality caused by the neoliberal reforms have undermined the level and sustainability of economic growth.”
— Richard Wolff [44:51]
12. Apple, Tax Avoidance, and Transfer Pricing
[45:33 – End]
- Apple and others park profits in low-tax countries like Ireland to avoid higher U.S. taxes; Tim Cook (CEO) denies “unpatriotic” motives.
- Introduces “transfer pricing” as a mechanism corporations use to shift profits abroad.
- Wolff: Politicians should have made this systemic tax dodge a serious campaign issue.
“A serious American presidential campaign would have said this is outrageous. We will stop it. Neither Mr Trump nor Mrs Clinton has done anything of the sort.”
— Richard Wolff [48:08]
Notable Quotes & Memorable Moments
- “Capitalism... puts private profit ahead of rationality, social need and social welfare.” [10:32]
- “Our growth of productivity is so slow... we've actually had falling productivity.” [20:24]
- “The winner is the 1%; the rest of us are told fairy tales about recovery.” [26:19]
- “Calling it fancy names doesn’t put dinner on the table, doesn’t pay your bills, and doesn’t change anything.” [35:50]
- “You may be having financial problems, but they're not.” [39:46]
- “We have nowhere to go but up. Otherwise people like me will be reminding us of the histories like with Erin Brockovich.” [33:01]
Major Timestamps for Reference
| Time | Segment & Topic | |----------|------------------------------------------------------------------------------------------------| | 00:37 | Olympics and public vs. private benefit | | 05:46 | Automobile deaths & the case for mass transit | | 11:37 | U.S. unions vs. Canadian unions | | 18:32 | Productivity myths and who really benefits from “recovery” | | 26:40 | Wealth inequality: Forbes 400, racial wealth data | | 28:53 | Social Security: facts and international comparison | | 29:41 | PG&E criminal conviction/fines | | 33:01 | Gig/sharing economy and the precariat | | 36:24 | Golden parachutes for failed CEOs | | 40:32 | Political donations: Robert Reich on party funding | | 42:53 | IMF’s neoliberal policy self-critique | | 45:33 | Apple, tax avoidance, and transfer pricing |
Episode Tone and Style
Richard D. Wolff maintains a critical, analytical, and impassioned tone throughout, blending economic data, historical knowledge, and accessible analogies. The episode draws clear systemic connections between news items and broad economic processes, often incorporating wry commentary and moments of incredulity about the functioning of the economic and political system.
Summary Takeaway
"The System Exposed" makes the case that many current economic problems—costly Olympic spending, unsafe car-centric transit, weak unions, stagnant productivity, gaping inequality, the rise of insecure gig work, corporate impunity, and tax avoidance—all stem from a system in which private profit overwhelmingly trumps public welfare. Without systemic change, Wolff suggests, these injustices will continue, masked by the veneer of progress and recovery.