Economic Update with Richard D. Wolff
Episode: The System’s Unwanted Results
Date: February 8, 2018

Episode Overview

In this episode, economist Richard D. Wolff delivers critical commentary on recent economic developments, focusing on the systemic flaws of capitalism and their wide-ranging effects on wages, health care, housing, and mental health. The second half features a conversation with Dr. Harriet Fraad about the profound intersection between capitalism and the mental health crisis in the United States.

Key Discussion Points and Insights

1. Wage Stagnation and Misleading Statistics

[00:10–10:00]

• Wolff begins with the release of government data showing hourly wages increased by 2.9% between January 2017 and January 2018.
• He critiques the media excitement around this, noting that once inflation is factored (approx. 2–2.1%), the "real" wage increase is only 0.8%.
• Additionally, the average workweek shrank and labor force participation decreased, further eroding real gains.
• Quote (Richard Wolff, 04:15):
  "Wages are stagnant in the United States. They are as stagnant over the last year as they have been for most of the 30 years. The notion that it's different from that is a mistake. I'm being polite."
• Wolff accuses current political leaders and media of deliberately misleading the public by exaggerating wage growth.

2. Health Care: The Capitalist Profit Problem

[10:01–18:22]

• Wolff discusses a new health care initiative by Warren Buffett, Jeff Bezos, and Jamie Dimon, emphasizing their plan for an employee health system "free from profit-making incentives and constraints."
• He interprets this as a sign even capitalist leaders are “sick and tired” of overpaying for employee health, highlighting that U.S. health expenditures are double those of the second-highest spending country.
• Quote (Richard Wolff, 13:14):
  "They don't want to be extorted by other capitalists. They want a medical system...free from profit making incentives and constraints."
• Raises a rhetorical question about why such non-profit options are not available to the general public.

3. The Airbnb Effect: Hidden Costs and Housing Market Distortion

[18:23–25:50]

• Wolff explores the impact of platforms like Airbnb:
  • They effectively shift costs (utilities, maintenance, cleaning) from hotels to individual hosts.
  • This shift is unaccounted for in profitability analyses.
  • Aggregators (those turning multiple units into “mini-hotels”) exacerbate housing shortages, driving up rents and reducing available housing for residents.
• Presents a critique of the so-called “sharing economy,” describing it as merely profit-driven cost-shifting.
• Quote (Richard Wolff, 24:19):
  "There's no technological innovation here. There's no sharing economy. That's not what this is about. It's about making more money... by pushing the cost onto others."
• Suggests that treating housing as a public service (much like parks) could alleviate such issues.

4. Saudi Arabia’s Anti-Corruption Drive: Wealth, Crisis, and Social Priorities

[25:51–30:30]

• Wolff examines Saudi Arabia’s recent detainment of wealthy individuals under the guise of anti-corruption, leading to $106 billion collected for government relief.
• Argues this is evidence that mobilizing wealth to solve social crises is a matter of political will, not economic impossibility.
• Quote (Richard Wolff, 29:13):
  "The problem of getting the resources to solve a country's problems depends entirely on whether you go after it directly or not."

5. Toxic Corporate Culture: The UK’s President’s Club Scandal

[30:31–32:00]

• Details the exposure of sexual misconduct at the President’s Club charity fundraiser, attended by business elites.
• Uses it as an example of how hierarchical, top-down business structures facilitate abuse.
• Advocates for democratizing workplaces to prevent such abuses.
• Quote (Richard Wolff, 31:56):
  "A hierarchical structure of business is an open invitation for this kind of behavior... A democratic business... would at least allow those who don't want to see this kind of behavior to have some power to change it."

6. Housing Crisis: Vacancy Amid Homelessness

[32:01–34:10]

• Notes that in the U.S., for every homeless person there are two vacant investor-owned homes.
• Critiques the capitalist incentive to hold housing off the market for speculation, despite widespread homelessness.
• Highlights possible public solutions inspired by proposals in the UK to seize and repurpose empty investor-held homes.
• Quote (Richard Wolff, 33:28):
  "We have a system that encourages people to become investors in homes, side by side with a system that pays so few wages or gives so few jobs that we have hundreds of thousands... without a home."
• Suggests housing should be treated as a human right and a public good.

Interview: Dr. Harriet Fraad on Capitalism and Mental Health

[34:11–55:41]

The Mental Health Crisis and Its Economic Roots

• Dr. Fraad asserts that 1 in 6 Americans is taking a mental health drug, mostly ineffective but lucrative for the pharmaceutical industry.
• Emphasizes the role of capitalism in isolating individuals, eroding the key to mental health: connection.
• Quote (Harriet Fraad, 33:01):
  "The key to mental health is connection...capitalism disconnects people from everything they need."

Capitalism’s Disconnection: Work, Consumption, and Loneliness

• Wolff and Fraad discuss how capitalist labor arrangements (Uber, Amazon) isolate workers, suppress unionization, and erode social bonds.
• Overwork, unpredictable schedules, and lack of time off diminish family and community life.
• Quote (Richard Wolff, 39:06):
  "You live in your own little house, you drive your own little car, and you get this loneliness built in. Once you open the space to see it, it's kind of everywhere."

Pharmaceutical Profits over Real Care

• The U.S. alone allows direct-to-consumer advertising by drug companies, boosting the normalization of medication as the solution for unhappiness rather than addressing underlying societal causes.
• Fraad shares a striking patient story about the failure of psychopharmaceuticals compared to holistic therapeutic approaches.

The Role of Technology in Deepening Disconnection

• Discusses the illusory connectedness of social media and digital devices.
• Fraad draws a comparison between genuine relationships and online interaction:
  "It's like making love versus watching porn. That's not the same." (Harriet Fraad, 50:23)
• Notes that such devices fill the gap left by capitalism's destruction of community, but do not solve the real need for connection.

Cooperative Workplaces as a Remedy

• Suggests worker co-ops as a model for reconnecting people, democratizing workplaces, and improving mental health.

• Praises the Mondragon co-op’s practices (job rotation, shared meals, weekly meetings) as fostering dignity, connection, and well-being.

• Quote (Richard Wolff, 54:48):
  "The co op builds the connectedness into the job because work life balance is on their agenda. Whereas if it's run by a small number of people for profit, it's a wholly different set of goals that govern how you organize work."

Notable Quotes (with Timestamps)

• "Wages are stagnant in the United States. They are as stagnant over the last year as they have been for most of the 30 years."
  — Richard D. Wolff [04:15]

• "They want a medical system...free from profit making incentives and constraints."
  — Richard D. Wolff [13:14]

• "There's no technological innovation here. There's no sharing economy. That's not what this is about. It's about making more money... by pushing the cost onto others."
  — Richard D. Wolff [24:19]

• "The problem of getting the resources to solve a country's problems depends entirely on whether you go after it directly or not."
  — Richard D. Wolff [29:13]

• "A hierarchical structure of business is an open invitation for this kind of behavior... A democratic business... would at least allow those who don't want to see this kind of behavior to have some power to change it."
  — Richard D. Wolff [31:56]

• "The key to mental health is connection...capitalism disconnects people from everything they need."
  — Dr. Harriet Fraad [33:01]

• "You live in your own little house, you drive your own little car, and you get this loneliness built in. Once you open the space to see it, it's kind of everywhere."
  — Richard D. Wolff [39:06]

• "It's like the difference between making love and watching porn. That's not the same."
  — Dr. Harriet Fraad [50:23]

• "The co op builds the connectedness into the job because work life balance is on their agenda. Whereas if it's run by a small number of people for profit, it's a wholly different set of goals that govern how you organize work."
  — Richard D. Wolff [54:48]

Important Timestamps

• Wage Stagnation Reality Check: [00:10–10:00]
• Health Care Capitalist Critique: [10:01–18:22]
• Airbnb and Housing Market Problems: [18:23–25:50]
• Saudi Wealth and Resource Redistribution: [25:51–30:30]
• President’s Club and Workplace Abuse: [30:31–32:00]
• American Housing Crisis: [32:01–34:10]
• Dr. Harriet Fraad Interview Start: [34:11]
• Connection & Mental Health: [33:01–52:33]
• Worker Co-ops as Solutions: [52:55–55:41]

Conclusion

This episode provides a sweeping and critical examination of how capitalist systems produce 'unwanted results' — stagnating wages, unaffordable healthcare, housing crises, and a mental health epidemic. Through both data and compelling examples, Wolff and Fraad argue for systemic alternatives, such as public services and democratic workplaces, that could foster greater well-being and economic justice.