Ask Prof. Wolff

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What do You think about the "Justice Democrats"?

Dear prof. Wolff, what are your thoughts on Justice Democrats? Could You speak about it on your monthly Democracy at Work talk? Leaving some links for your information. - Edwin. https://en.wikipedia.org/wiki/Justice_Democrats https://justicedemocrats.com/ https://www.quora.com/What-are-your-thoughts-on-the-Justice-Democrats/answer/Ed-Winn-4?srid=uGDib

posted an official response

Long overdue, positive reconstruction of a much more genuine (than centrist Democratic Party of Clintons-Obama, etc.) opposition movement to what the Republican Party has become under the pressures of the Tea Party and now of the Trump phenomenon. My only concern is a hesitancy I detect to confront more than the list of ills they identify and for which they offer positive alternatives/solutions. By more I mean simply the capitalist system that underlies, supports, and sustains so many items on their list of social ills. The Cold War being mostly behind us and given the economic crisis of US and global capitalism as a system since 2007, millions are open to and interested in systemic criticisms and system alternatives. Thats why we in DemocracyatWork focus on the transition of enterprises' organization from hierarchical capitalist to democratic worker cooperative...as part of a democratization of the economy needed, in our view, to achieve and sustain precisely the sorts of social changes Justice Democrats favor.

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witholding federal funds

Chump threatens to withhold federal funds from sanctuary cities and states. Is there a precedent or means for those threatened to withhold the very funds collected via various sales taxes?

posted an official response

Not funds collected as sales taxes because those are state taxes and completely within the jurisdiction of the states themselves. But states rely on all sorts of distributions to them of federal funds (based on federal taxes), and presumably these would be what Trump might try to use as leverage. There are precedents for federal funds to be denied to states when they refuse to abide by federal laws governing programs administered by states and receiving federal funds for doing so. Trump could so manage laws with his Republican majorities (plus perhaps a compliant Supreme Court) to make good his threats. He might have to use another excuse - some other trumped (sic) up issues - instead of sanctuary.

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Might average people think that a climbing Dow Jones average actually can be bad news?

I understand that around 50% of the population has no connection to the stock market. I assume that the majority that is involved with stocks has an indirect interest through mutual funds, retirement accounts, etc. I understand that fees over time extract tremendous value from the holder. I believe that Dr. Wolff has stated that 75% of all stocks are owned by 1% of stockholders. If the stock prices are going up, my guess it is usually not because companies are making new products such as a new I-phone, but rather through buy outs, reducing labor costs, lay offs, cheating on environmental laws, not paying taxes, speculation, etc. Then to add insult to injury, dividends and profit on selling stock are generally taxed at lower rates than earning from labor.

posted an official response

Your list is excellent. Stock prices reflect supplies and demands for stocks and those supplies and demands can be and are affected by many, many variables. In recent years, for example, mergers and stock buybacks (when companies buy their own stocks and so retire them from circulation) have sharply reduced shares available for buyers with resulting price increases. Likewise massive injection of new money into the US economy by the FED since 2008 has boosted demands. Foreigners, frightened by deteriorating conditions for global capitalism, move their money into US stock markets so long as that seems safe. Such moves can and do raise stock prices (and thus the Dow industrial average) even though they have little or nothing to do with production, growth, efficiency or anything else about the production of goods and services.

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Thoughts on this article?

https://www.bloomberg.com/view/articles/2017-02-06/why-not-make-economics-a-science While I feel the author is correct in some of his assumptions and his overall points, I can't help but feel like he is mistaking Macroeconomic policy for the return of Classical economics that has dominated economic policy since the 1950's. Lassiez-Faire, Supply Side economics and the return of the "Invisible Hand" have all dominated Macroeconomic policy. I also feel like labeling the 2008 bailout "Keynesian" is inaccurate as I do not believe Keynes would have agreed with trickledown economics. To say Macroeconomic policy has failed in that sense is to continue to fail to acknowledge the criticisms of the branch of populist macroeconomics such as Keynes and Marx as well as many others that have been systematically ignored or in some cases silenced. It seems to me that the article fails to recognize the systemic prejudice inside the field of economics.

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Socialism in different countries

What would you characterize economic systems in the following countries as: poor in S America: Venezuela, Cuba; rich in W Europe: Sweden; Germany; rich in Oceania: Australia? What share (%) of socialism in the economy do they have? Why some of them present themselves as capitalist while being to a sufficient degree socialist in essence? How about some from another end of the spectrum: Bangladesh, Philippines? It seems that all capitalist countries in the poor half of the world are strikingly similar to one another. Why not start implementing some the initiatives there? Are you involved in collaboration with socialist parties internationally?

posted an official response

To answer this requires defining what one means by "socialism." If, as often happens, socialism refers to the extent of governmental intervention in an otherwise private capitalist economy, then almost all countries have "some socialism." In the list of countries you mention, only the degree/extent of such government intervention varies and that variation mostly depends on the specific history, politics and culture of each country.

However, if by socialism is meant a fundamentally different organization - at the micro level - of enterprises/workplaces, the answer to your question would be very different. In none of the countries your email mentions, has there been a large-scale transformation of workplaces from the top-down, hierarchical capitalist model (corporations with shareholders, boards of directors, mass of employees) to the radically other worker-cooperative model where all the basic enterprise decisions are made democratically by all the workers interacting with the democratically determined interests of the residential communities and customers that interact with such enterprises. That kind of socialism is what is emerging in the 21st century and will challenge all the countries you mention and indeed many more.

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No LEFT left, Democrats as cheerleaders for capitalism.

What hope do we have for left economics when we have BOTH political parties fighting us tooth and nail to cheer capitalism as the one and only system we must live in? Nancy Pelosi Repels Young People On CNN Town Hall: http://youtu.be/4xf3W_Jpnls

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What is your view on alternative currencies?

Hi, I saw part of your lecture on capitalism and how the money flows towards the top and gets stuck there. That's an affirmation of my own research I have been doing the last couple of years. In order to solve that problem I came up with an alternative currency system which, I believe, could be a viable contender to run the world economy on. I also believe it should not be the only one and therefore designed it in such a way that it's non monopolistic. I am curious what your opinion on it is. Information on how it works can be found here: circularmoney.org There are some other options I came across too. I think they might all work parallel to each other and be used where they are most applicable. Any ideas on them? http://openmoney.org http://newsystemshub.com/index.php/projects/ http://www.gotchoices.org/mychips/index.html https://en.duniter.org http://www.grantcoin.org Kind regards, Stef Kuypers

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Rebranding "Socialism" With A New Word

The word "socialism" carries so much negative baggage in both left wing and right wing circles that I've been thinking lately that maybe we should simply abandon the word and pursue a different one. Perhaps "cooperativism," or "co-opism" or something like that. What do you think?

posted an official response

This issue keeps returning to discussion. I suspect it reflects a basic and still unresolved tension. On the one hand, socialism carries negative baggage but also the positive heroic history of now centuries of criticism and struggle against capitalism. On the other hand, a new term risks losing the positive and not only the negative dimensions of "socialism." So here is a thought. Bernie Sanders got millions of Americans to accept "socialism" after half a century of endless demonization of the term. He did this by stressing a qualifying adjective "democratic" and placing it always in front of "socialism." Might we then similarly start using "cooperative socialism"?

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What would the effect on the economy be if the US adopted an "open door" immigration policy?

President Trump's attempts to curtail immigration to this country seem likely to have a negative impact on the economy because of the elimination of the potential economic activity these immigrants would have had. His motivations aside, it seems like the general idea behind controlling immigration is to cherry pick from the available worldwide pool of workers to fill perceived needs in the economy and limit the socioeconomic burden surplus labor might place on the country. I have heard advocates for immigrant rights argue that immigrants (including refugees) have in fact a net positive impact on the economy. In the face of these renewed attacks on immigrants, there is a need to develop and articulate new visions for how the US should behave towards people who want to contribute to this country. Could your radio show use an episode to address the economic impacts of immigration to the USA, explore what guided the pre-Trump policy consensus on this issue, and discuss the potential economic effects of adopting an "open door" policy towards immigration to America?

posted an official response

Will do, but a word on the current immigration debate. In fact, immigration, like all such major events/processes has both good and bad effects on both the countries left and the countries arrived at. The debate over the pluses and minuses never ends because they are infinite in number and take many years to play out. The debate is by nature chiefly a distraction from the actual problem upsetting so many, namely the dysfunction of our economic system. However, left-over Cold War taboos make that too difficult for usual politicians, journalists and academics to confront, so debating immigration is the displacement.

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A Progressive, Veto-Proof Congress in 2018?

Dr. Wolff, I think we are in terrible trouble unless Trump sees a large, cohesive opposition group rise up soon and help to elect a Veto-Proof Congress. The Democratic Party seems like a clueless, corrupt bunch. A relative of mine lives in affluent Newport Beach, California and last week a large, spontaneous meeting took place in my relative's home, with people expressing outrage and a desire to do something concrete about the threat we face. What about a national umbrella group composed of and representing people who meet like this and who are focused on a small number of gun versus butter issues that affect huge numbers of people, like Social Security, defense spending, and progressive taxation? Such a group could coordinate nationally over the Internet and by phone, and its membership figures could show politicians that large numbers of people are of like mind. Call it "The House Party."

posted an official response

Many such initiatives are being taken by all sorts of people these days. Time will tell which get support. For me what is key, however, is whether a program for basic change will emerge to galvanize people and focus their energies. Without that, people will wonder whether another massive effort is worthwhile when even if it succeeds against Trump will then face how many more Trumps emerging from the same system in which inequality breeds the billionaires who must buy/corrupt the govt to protect their billions and then the whole sad story of the last few years would repeat itself. Only if that problem is addressed will the sustained effort of oppositional people be tapped and the long sought progress be achieved.

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What do you think of this predicted crash in 2018 due to diminishing energy roi ?

https://medium.com/insurge-intelligence/how-global-economic-growth-will-drown-in-the-oil-glut-after-2018-5c96dec3f13b#.vv7walji0

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Why are you of the few who recognize these issues?

I do not understand why it is that you are of the few who recognize these issues and offer socialism as an answer. I have been listening to you for years now, and much more often since I have become a college student. It cannot be that all of the other economists are corporatists or capitalists; why is it that you are the most popular of marxian economists?

posted an official response

After 1945, the US entered into a Cold War that was waged overwhelmingly by an ideological kind of battle. Any criticism of capitalism was portrayed as treason. Students could not find teachers willing to teach Marx's ideas or other critical traditions. Over time, knowledge of critical economic theories simply vanished within the general population and among academics, journalists, and politicians. Until 2008, as capitalism seemed to be healthy and growing, this cultivated ignorance bothered only a very few people. But since 2008, as capitalism's failings and injustices strike more and more people's lives, an interest in critical approaches revives. For particular reasons, I found graduate school in economics to be a time when the arguments for the superiority of capitalism struck me as seriously inadequate. Once launched in that direction, I followed my interests, encountered and read critical theories and theorists, and so arrived at a critical perspective. The 2008 crash brought me then the audience I had unknowingly been preparing to address for most of my life before that.

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Could you make an economic update segment on the anti-corruption protests in Romania?

These are the biggest protests in Romania since the anti-communist revolution which it mirrors in many ways. The people spontaneously rose up against a government which tried to weaken anti-corruption despite the fact that the government adopted a series of populist measures. Protests happened across the country and were entirely peaceful, with the exception of a single group of hooligans attacking police forces in Bucharest in the first evening of protests, hooligans which many people consider to be instigators, a method used by the same party years ago to break other protests https://www.nytimes.com/2017/02/04/world/europe/romania-protests-corruption.html

posted an official response

That masses of people demand and act on their democratic rights to protest and change their government is an enormous positive not only for Romania but for all the world to see (since it is badly needed in many other countries). While the effort to stop corruption - so obviously exposed in this Romania situation - is important and valuable, for it to succeed it needs to answer a key question: why is governmental corruption so widespread and endemic a problem in modern societies? If that question is not raised and answered, we will endlessly repeat our suffering from corruption and simply explode into mass actions such as those now in Romania again and again. Here, then, is my answer to that question: the capitalist economic system generates such ongoing inequality that it drives the minority of the rich to seek to buy and thereby control the political system to protect their wealth. There lies the core of why corruption is so endemic.

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What do you think about this?

https://www.oxfam.org/en/pressroom/pressreleases/2017-01-16/just-8-men-own-same-wealth-half-world

posted an official response

While there are some technical problems with this specific number, most of the other numbers about global inequality point clearly to the huge and growing inequality that, with a few, very temporary exceptions, has been capitalism's product now for centuries. In 2014 Thomas Piketty published a volume that explained why as well as reviewed the key statistics which he (and his colleague Emanuel Saez at UC-Berkeley) have been developing for decades. For me all this points to and supports one basic line of criticism of capitalism. I would present it this way. The French revolution that ushered capitalism into modern European history had three slogans: liberte, egalite and fraternite. That is, the transition from feudalism to capitalism was to bring the world those three basic values. One reason Marxbecame a critic of capitalism was because he saw that while capitalism had indeed replaced feudalism as the dominant economic sysatem in mid-nineteenth century Europe, it had NOT brought with it equality. Inequality, fostered and worsened by capitalism as a long-term structural tendency, is a profound critique of capitalism; It was and it is today, perhaps more than ever now. And Oxfam keeps producing the data and analysis to prove it.

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Why didn't the top 20 companies make any profit in 2016?

In your monthly update released in november (https://youtu.be/sPDd9cibY9A?t=59m18s), it was excellent how you brought up the fact that the top 20 trading companies were not bringing in any profit due to a lack of trade. But I was hoping you could elaborate a little more on this. What factors do you think are causing this enormous lack of trade and leading to a massive decline of profits in the top 20 trading companies? I know it may not be possible to produce an insight on this matter due to secretive factors that only the trading companies know about. This is like what happened during the 2008 mortgage crisis. Economist knew that banks were lending out huge amounts to corporations to create leverage, but nobody knew that they were relying on mortgages to lend out huge amounts of money - it was a secret. And in that case, it may only be possible to create a post-crisis analysis on why the trading crisis will occur, when it finally blows up. But if there are known factors that you know about, i take a keen interest in learning more about this.

posted an official response

My point there was to highlight that international trade (what carries/profits those companies) had taken a tremendous hit since 2008....as further evidence that the so-called "recovery" was an ideologically and politically promoted misreading of an economic crisis that has cut far more deeply into contemporary global capitalism and lasted far longer (thereby worsening the damage) than anyone foresaw. The decline of mass purchasing power in the advanced countries of western Europe, north America and Japan has badly affected not just those areas but also the newly emerging capitalist industrial powers of China, India, Brazil and so on. The way to see it is in the shipping/trading companies who bear a big part of these "bad effects." There is nothing secret about all this. The problem is the denial or desire of mass media and political leaders to distract the public from what this means by focusing instead on whatever "good economic news" there is. In almost all circumstances, the economy displays both good and bad economic data. the uneven development of economies guarantees that. So the question is how to interpret an always complex or mixed bag of news. But the advertising mentality fixes instead on what sells and so media and political leaders fix our attention on what makes them look best.

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