Economic Update with Richard D. Wolff
Episode: What Inequality Does
Date: May 10, 2016
Host: Richard D. Wolff (Democracy at Work)
Overview
In this episode, Richard D. Wolff delivers a powerful critique of economic inequality in the United States. He examines how extreme wealth disparities impact fiscal policy, public programs, politics, housing, and the overall health of democracy. Wolff further challenges common misconceptions about capitalism, discusses the structural roots of crises in local and state governments, and explores how worker cooperatives could offer a real alternative to the current system. The episode is rich with statistics, case studies, and sharp commentary, intended to inform and empower listeners seeking systemic solutions.
Key Discussion Points & Insights
1. Billionaire Tax Flight & State-Level Inequality
[06:30]
- Case of David Tepper: Wealthy hedge fund manager moves from New Jersey (high state income tax) to Florida (no state income tax), causing a "major tax loss for New Jersey."
- New Jersey officials held emergency meetings, indicating how reliant state budgets are on a handful of wealthy individuals.
- Quote:
"States are being held hostage, aren't they, by rich people who can get all kinds of extra benefits...by threatening to leave. This is also called a race to the bottom..." — Richard D. Wolff [09:30]
- States compete by offering tax breaks and incentives to retain wealthy residents—benefitting the rich, and doing so at the cost of public goods for everyone else.
2. Corporate Malfeasance and Public Safety
[11:00]
- Takata Airbags Scandal: 63 million cars recalled for defective airbags, representing 1 in 4 cars in the US.
- Issue first reported by engineers over 20 years ago, showing long-standing corporate negligence with fatal consequences.
- Quote:
"We are riding around today in cars that have a dangerous, possibly fatal flaw that was known about over 20 years ago. But the Takata company either didn't deal with it or didn't tell anything about it..." — Richard D. Wolff [12:50]
- Wolff underlines how profit motives can override public safety in capitalist corporations.
3. Wealth Redistribution Thought Experiment
[15:30]
- Listener question: What if all private wealth in the US was divided equally?
- Using 2013 data:
- Per capita: $216,567
- Per adult: $301,539
- Quote:
"The next time someone tells you that if we divided the wealth among all of us, we'd all be poor, you now know just how wrong ... such persons are." — Richard D. Wolff [16:55]
- Source: World Inequality Database (WID.world), maintained by economists Thomas Piketty and Emmanuel Saez.
4. Government Response to Youth Justice Issues
[18:15]
- US Justice & Housing Departments promote aid for "justice-involved youth" (young people with criminal records).
- Program budget: $1.75 million for 240,000 people — $7.29 per person.
- Quote:
"$7.29. That's what Obama's cabinet is going to deliver to solve the problem of a quarter of a million people having trouble finding a job and finding a home." — Richard D. Wolff [19:45]
- Wolff highlights the mismatch between rhetoric and the real allocation of resources for marginalized youth.
5. Political Campaign Funding & Inequality
[20:30]
- Chicago mayoral race: Rahm Emanuel’s donors were disproportionately wealthy (80% earned over $100,000; only 15% of Chicagoans do).
- Most of challenger Garcia's donors were also wealthier than the average Chicagoan, but less so than Emanuel’s.
- Quote:
"Rich people supported Mr. Emanuel overwhelmingly, and he won. And they're happy. And the rest of Chicago can live with ... a political system that allows the inequality of the economic system to come in there and do what it wants in the political sphere." — Richard D. Wolff [22:55]
6. Housing Policy, Gentrification, and Structural Limits
[24:10]
- Response to question on curbing gentrification and preserving affordable, diverse communities:
- Progressive taxation on high-value properties.
- Mandating mixed-income developments.
- Implementing rent control and diversity requirements.
- But:
"Whenever you have that, the rich go to certain places, make them as nice as they want them to be because they have the money... and so you get the inequality in housing, the inequality in neighborhoods, all of it." — Richard D. Wolff [26:10]
- Wolff argues attempts to mitigate inequality through policy are ultimately undercut by the structural reproduction of inequality in capitalism.
Second Half: Deeper Structural Analysis and Alternatives
7. Food Industry, Competition, and Capitalism
[30:45]
- Referencing Eric Schlosser’s "A Safer Food Future" (Consumer Reports): Schlosser blames not capitalism, but lack of “free markets and real competition” for food system failures.
- Wolff’s rebuttal:
- Historically, capitalists have always tried to subvert competition (toward monopoly/oligopoly).
- “Free markets” are a fantasy; government intervention is inherent to capitalism.
- Quote:
"The capitalism we have is the capitalism we've always had... We have the results of a horrible food industry that abuses the mass of people ..." — Richard D. Wolff [36:00]
- Problems are endemic to capitalism itself—not just its supposedly corrupted version.
8. Fiscal Crises of Cities and States — Origins and Dynamics
[37:40]
- Widening inequality means rich resist taxation; political leaders avoid raising taxes; result is deep cuts or borrowing.
- Public programs squeezed; governments take on unsustainable debt, enriching lenders (often the wealthy) with interest.
- Fiscal crises ensue especially in poorer cities or territories (Detroit, Puerto Rico, Illinois, etc.).
- Quote:
"For the rich and the corporations, it's a double benefit. They don't have to pay taxes and they get a nice borrower to lend the money they save from taxes to the same government..." — Richard D. Wolff [41:23]
- Blaming public workers or pensions is scapegoating; core issue is structurally produced inequality and captured government.
9. Worker Cooperatives as an Alternative
[47:50]
- Clarifies: Small business isn't the target; the critique is of undemocratic, hierarchical corporate structures.
- Advocates creating a cooperative (worker self-directed enterprise) sector alongside capitalist businesses, allowing true freedom of economic choice for workers and consumers.
- Models policy on innovative proposals by the UK Labour Party:
- "Right of first refusal" for workers to buy their company before sale or IPO.
- Government support for financing and technical assistance.
- Quote:
"There ought to be a political movement advocating that. There ought to be a political party advocating that. And you know what? In my remaining two minutes today, I'm going to tell you that there is one. It's really interesting. It isn't in the United States, it's in Great Britain..." — Richard D. Wolff [52:10]
- This, Wolff claims, would truly challenge capitalism and offer meaningful economic democracy.
Notable Quotes & Memorable Moments
-
On the 'Race to the Bottom':
"...every state will compete with every other state for these rich people offering lower taxes, subsidies, breaks, supports. And of course, those all come at the expense of all the rest of us."
— Richard D. Wolff [09:30] -
On the Takata scandal:
"When will we discover enough evidence that when it comes to the bottom line of capitalist corporations, that will take precedence even over human life...?"
— Richard D. Wolff [13:55] -
On real per capita wealth:
"The next time someone tells you that if we divided the wealth among all of us, we'd all be poor, you now know just how wrong... such persons are."
— Richard D. Wolff [16:55] -
On campaign finance and democracy:
"Rich people supported Mr. Emanuel overwhelmingly, and he won. And they're happy. And the rest of Chicago can live with... a political system that allows the inequality of the economic system to come in there and do what it wants in the political sphere."
— Richard D. Wolff [22:55] -
On the futility of piecemeal reforms:
"The solution to inequality is not some law after the inequality happens to try to limit, to control how it infects the society. The best solution is not to allow the inequality in the first place."
— Richard D. Wolff [27:00] -
On capitalism and monopoly:
"Every capitalist who could tried to become a monopolist, tried to get around competition... competition is a high-pressure game that drives every capitalist to a behavior that eliminates competition."
— Richard D. Wolff [34:10] -
On fiscal crises and blame:
"This is not about incompetent public employees or lazy employees or excessive pensions...What went crazy was an economic system. Capitalism went crazy in the inequality it produced..."
— Richard D. Wolff [42:50] -
On worker co-ops and real freedom of choice:
"If you believe in freedom of choice, then you ought to be doing the same for the alternative to a capitalist top down enterprise... a cooperative worker democratic enterprise."
— Richard D. Wolff [49:10]
Timestamps for Key Segments
- 06:30 — Billionaire tax flight, David Tepper moves state residency
- 11:00 — Takata airbags recall: corporate negligence
- 15:30 — What if US wealth were evenly divided?
- 18:15 — Federal aid to “justice-involved youth”: $7.29 per person
- 20:30 — Chicago mayoral race, campaign finance & political inequality
- 24:10 — Housing policy, gentrification, limits of regulation
- 30:45 — Critique of “real capitalism” vs. actually existing capitalism
- 37:40 — Structural causes of fiscal crises in cities and states
- 47:50 — Worker cooperatives: concept, misconceptions, and international policy examples
- 52:10 — UK Labour Party’s plan for a co-op sector and “right of first refusal”
Conclusion
Richard D. Wolff’s episode "What Inequality Does" weaves together concrete examples of how inequality distorts tax policy, endangers public safety, shapes politics, and constrains reforms. He insists that the roots of these crises aren’t fixable by tinkering at the edges but require reimagining how the economy is structured—especially by building up worker cooperatives. Throughout, his tone is incisive, urgent, and informed, offering listeners both a diagnosis and a glimpse at real alternatives.