Podcast Summary: "Inflation and Labor Shortage"
Economic Update with Richard D. Wolff
Date: July 8, 2021
Episode Overview
In this episode, Richard D. Wolff critically examines two pressing economic issues in the United States: inflation and the so-called labor shortage. He draws parallels between the power dynamics of feudal monarchies—specifically the reign of King George III, whom the American revolutionaries overthrew—and the modern capitalist system, where a small minority (employers/capitalists) exercise disproportionate power over the majority. Wolff explores how inflation and labor market dynamics serve capitalists’ profit motives, often at the expense of working people, and questions why society tolerates such undemocratic economic arrangements.
Key Discussion Points & Insights
1. Historical Analogy: King George III and Modern Capitalism
- [00:10–04:15]
- Wolff sets the stage by invoking the American Revolution. The colonists rebelled against a king who wielded unchecked power for personal and imperial gain.
- He contends that today's employers/capitalists have similar unchecked power in economic matters, specifically in setting prices and wages, for their own benefit—drawing a parallel to the authority Americans once overthrew.
"We did not establish another king to replace George III... We did something very different—no king. We didn’t want anyone in political authority to have power over the rest of us without some reverse power."
— Richard D. Wolff ([01:50])
2. Price Setting & Inflation: Who Decides and Who Suffers
- [04:15–17:40]
- In a capitalist system, Wolff explains, a small group (owners or boards of corporations) freely determines prices to maximize their profits.
- The public narrative often blames wage demands, taxes, or higher input costs for price hikes, but Wolff emphatically points out that profit is the true driver.
- Inflation disproportionately hurts the poor, who are least able to absorb rising prices; their budgets “are busted” first.
- Consumers may turn to lower-priced goods (e.g., shifting from American brands to Walmart/Chinese goods), which has geopolitical ramifications, such as supporting the growth of China.
- The social consequences of rising prices are deeply felt, but those setting prices bear no responsibility for wider hardship.
"The capitalist is setting the price based on one thing. He or she is focused on profits... It is not in our capitalist system the obligation or the responsibility of the employer to worry about the consequences of whatever prices he sets or she sets."
— Richard D. Wolff ([07:55])
- Rising prices have the same impact as wage cuts, but there are few mechanisms to protest price hikes.
"A rising price for the things you buy is just as devastating as getting less in wages... But how do you protest a price increase?"
— Richard D. Wolff ([12:45])
- Wolff likens free price-setting by employers to the chaos of unmanaged traffic intersections, arguing that some constraints exist in society for the common good, and price-setting power should be similarly shared.
3. Alternatives to the Current System
- [17:40–18:50]
- Wolff proposes democratic shared responsibility over economic decision-making (including prices and wages), rather than leaving these crucial choices to a minority.
"We all have to live with the consequences of price setting. We shouldn't have a minority free to do it in its own self-interest."
— Richard D. Wolff ([18:45])
4. Labor Shortage Narrative: Myth or Reality?
- [20:00–29:00]
- Shifting to labor issues, Wolff explains that after the economic disruption of COVID-19, employers want to quickly recover lost profits.
- As businesses reopen, some additional hiring is necessary. Employers must decide what wages to offer.
- Workers suffered greatly during the pandemic—82 million Americans filed for unemployment at some point—but employers are reluctant to raise wages, seeking instead to maximize profit by limiting labor costs while raising prices.
"Employers want to be able to raise prices? You betcha. But they don't want to raise wages? You betcha. And for the exact same reasons. The bigger the profit for them..."
— Richard D. Wolff ([26:15])
- The "labor shortage" is largely manufactured; at prevailing wage offers, there may not be enough takers, but if wages were raised, workers would return.
"'Labor shortage.' What an interesting idea and what total nonsense… Listen, Jack, you raise the wages, the shortage will vanish."
— Richard D. Wolff ([28:20])
5. Political Response: Cutting Benefits to Force Labor Supply
- [29:00–32:30]
- Several states, responding to business pressures over the so-called labor shortage, have withdrawn from federal unemployment programs ($300/week bonus).
- The strategy is to strip away support and force workers to accept lower wages, heightening hardship and inequality.
- At the same time, there were extensive bailouts for businesses, while support for workers is now being cut back.
"What kind of a society gets through a cataclysmic crisis... and responds by squeezing the mass of the working class to force them back to work?"
— Richard D. Wolff ([31:35])
6. Systemic Critique & Call for Economic Democracy
- [32:30–35:20]
- Wolff reasserts that the structure of capitalism is the fundamental issue: a small group exercises power over prices and wages for their own enrichment.
- Political energy is spent on superficial changes, while relentless pressure on working people continues “below the surface.”
- He ties the critique back to the founding spirit of the United States: Americans once rejected autocratic rule for democracy and should question why economic autocracy is tolerated today.
"That's why capitalism as a system is a problem. Because right below the surface of the rhetoric, there's this relentless reality in which a tiny group of people have the power... to set the prices, to use the profits they gather in their hands, to... persuade the politicians so that they can force the workers to come back to work without the wage increases..."
— Richard D. Wolff ([34:50])
Notable Quotes & Memorable Moments
-
Parallels to Revolution:
"Our independence was won from a system, a feudal system with a king on top that we didn't want to live under. There's a lot of message there, and it applies to our situation in capitalism in the United States right now."
— Richard D. Wolff ([35:10]) -
On the True Source of Price Hikes:
"The capitalist who raises prices is never going to tell you I'm doing that because I want and can get more profits that way. No, no, no, no, no. We're always taught that the poor capitalist is only doing this unpleasant thing because he or she is forced to by still others. Don't be fooled."
— Richard D. Wolff ([15:20])
Timestamps of Important Segments
- 00:10–04:15: Setting up the analogy between King George III and capitalist employers
- 04:15–17:40: How inflation works, who sets prices, and who suffers
- 17:40–18:50: Why price-setting power should be shared democratically
- 20:00–29:00: Labor market recovery, wage dynamics, and the labor shortage narrative
- 29:00–32:30: Political actions to cut unemployment benefits, forcing workers into lower-wage jobs
- 32:30–35:20: Systemic critique of capitalism and the call for economic democracy
Summary in the Spirit of the Episode
Richard D. Wolff uses the July 4th holiday and lessons from the American Revolution to draw a sharp critique of the current economic system. He argues that, just as Americans once rejected being ruled without power or recourse under the monarchy, we should question why so few have so much power over our economic lives today. Inflation and labor shortages, he says, are not mysterious phenomena but predictable outcomes when profit-maximizing elites control prices and wages. The suffering of working people is not a natural outcome but a result of the system’s design.
Wolff’s analysis is urgent and unapologetic: he calls for a more democratic approach to economic decision-making, echoing the same spirit that animated the country’s founding. His message is clear—profound change is possible and necessary if we wish to escape repeating the oppressive patterns of the past.