Ask Prof. Wolff

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How to interest young people in saving Social Security?

Dr. Wolff, I live in Southern California and witnessed unbelievable levels of homelessness and despair among young people during road trips I have taken throughout the West in the past two years. In the age of the "gig economy" where Uber runs radio spots urging people to get their "side hustles" going, young folk have no security in the present and face a bleak future if Trump and the austerity hucksters have tbeir way. How can the young be reached and, most importantly, be mobilized? The mendacious memes of Paul Ryan, who claims he wants to save Social Security, need to be effectively neutralized (Trumped. If you will).

posted an official response

An old man, Bernie Sanders, galvanized millions of young people into a powerful political force. The young can be reached by anyone who has (1) a solid critique of the political economy of a declining US capitalism, and (2) a reasonable plan of what changes to make to give young people (and everyone else) real hope for the future. If we do that, the young will be moved, excited not only to save Social Security but to make the many other changes this country so badly needs. I do a good bit of public speaking and traveling around the US and my audiences include a growing number of young folks, more all the time. The politics represented by Clinton and Trump are making their ugly last gasps. The component of the young in the mass demonstrations across the country against Trump's actions on refugees is yet another sign of what is possible. Organization to mobilize: that is the key next step.

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Is this the crux of the religious rights political thinking?

Would like to know what you think of the Tellus Institutet and a teleconference which is particularly interesting to us "homemakers". Also, I happened upon a frightful muddle of "alternate facts" that begs to be straightened out (by you?).  I remember parents talking like this 40 years ago in Maine.
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Guaranteed minimum income

Are there any studies or statistics you know of that compare the costs of subsidizing (mostly corporations, of course) and workers competing for increasingly scarce and increasingly lower-paid jobs with providing a Guaranteed Minimum Income? 

I take your point about splitting society into workers and non-working consumers. That potential political-philosophical problem could be solved by a revolution in how we think about work and about unemployment. I direct any interested people to Ivan Illich's "The Right To Useful Unemployment." 

I see no absolute virtue in work for the sake of work. Our society mistakenly conflates purpose and work. There are a vast number of soul-sucking jobs that people, given an alternative, would leave to pursue their dreams if they could, which would benefit us all.

 

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Probably are such statistical efforts but they depend on myjriad assumptions and are always contested endlessly. On the point of work/non work dichotomy as socially divisive, that would apply to almost any definition of work unless it was tantamount to equal with non-work. Hegelian complexity but true nevertheless.

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How would you like me to send you my essay when I am finished?

My email: zachcampbell01101@gmail.com

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Is the Calexit a good idea?

It looks like California has different views on Tax, Education, Religion, etc. Could California benefits by separating itself from the Union? or a terrible idea? who would really benefit from it?

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Having not ever really looked into this, I cannot offer you much in the way of an answer. Sorry about that. What I can say is that as global capitalism's relentless instability and inequality worsen, all kinds of rising anxieties push people to rethink their situations, loyalties, etc. They question assumptions they took for granted. One of those is nationality. That can take the form of the rise of extreme nationalist political movements and parties (eg., Trump, Farage, LePen among many others) and/or kinds of nationalism built around units smaller than currently constituted nations such as Scotland, Catalonia, Macedonia, Quebec, and now California as well as Texas. These are signs of socio-economic decline.

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nationalism v. neoliberalism, co-ops v. neoliberalism

Prof. Wolff, The president suggests that he will impose tariffs on companies that ship their jobs overseas as a method to preserve jobs in the US. I presume if this works, the jobs will be saved but the price of product will go up, thus necessitating higher wages (my guess highly unlikely). To my understanding the alternative is, within a capitalist system, to continue on the neoliberal path to globalization maintaining the status quo of outsourcing jobs overseas. Playing devils advocate, let's say these tariffs are indeed implemented, jobs saved and wages increased...could nationalist type economics be a better alternative to neoliberal economics?

I am in favor for a democratized workplace and fully support co-ops. I am conflicted however in understanding how a co-operative system would deal with capitalist foreign enterprises making cheaper products. Would the co-operative economy be forced to impose tariffs and other protections or are there alternative methods that can make co-operatives successful in dealing with cheaper goods and services abroad?

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The historical record is clear, if perhaps not what you might have expected. Sometimes neoliberal policies happen together wit rising wages and sometimes with falling wages; sometimes protectionist policies occur together with lower unemployment and sometimes with higher unemployment. In other words, it is simply wrong to debate neoliberalism vs economic nationalism as if one or the other is better for wages, jobs or anything else. No one to one correlation like that exists now (or ever has). Bill Clinton said NAFTA would be a boon for US workers; it wasn't. Trump says ending NAFTA and levying tariffs will be a boon to workers: no reason to believe that either. Free- trade vs protection is a struggle between groups of capitalists who think one or the other will be better for their profits. Workers/employees have no skin in that struggle; they will be fleeced by employers in either case because that is how capitalism works. If tariffs make US producers produce in the US, not Mexico, their labor costs will rise and so will the incentive to replace higher cost workers with machines and robots, thereby worsening workers' positions. The problem for working people is capitalism not this or that kind of capitalism (neoliberal or protectionist).

A worker-coop based economy would evaluate international trade differently because its "bottom line" (i.e. top priority) would not be profits. If imports are cheaper than producing it yourself, then workers would gain more free time and thus welcome cheaper imports etc. Its a different system and thus has altogether different attitudes toward and responses to international trade conditions.

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What are scholarly/statistical institutes or resources that focus on worker coops?

I am writing a persuasive essay on the superiority of worker cooperatives instead of the traditional employer-employee relationships. I would like arguments in addition to the democracy, equality, etc points.

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Look into the work of Virginie Perotin (teaches at Univ of Leeds in UK) and Prof Peter Ranis of CUNY. They will provide all sorts of leads for you to follow. I would be interested to read your essay when completed.

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Market System "structural incentives" as the real problem?

Dear Dr. Wolff, I agree with your criticisms of Capitalism, and I find your suggestion to democratise the workplace very interesting. I own a very small distribution company in a very small part of the world, and may put those ideas into practice there. However, the solution does not do away with the incentive to out-compete competitors - which I see as an equally problematic issue. This same economic incentive to outcompete competitors can be spun to sound like a good thing, but it is the very same incentive that leads countries to war with each other over resources. I feel strongly that the problem is not Capitalism per se, but the Market System construct. The Market System has it’s own “structural incentives”, and often, a gaming strategy is required by the individual/state/company to “get ahead” in the game of Market. This usually means to acquire wealth for yourself, and taking it from the other guy. Are my criticisms naive? Am I missing something? I did not study economics, but I feel that we need to transition into an “Access system based on automated labour” from a “Market system based on human labour” to really detach ourselves from the same self-perpetuating problems of the Market. I have more to say on this topic, but will end it here for now. Best, Andrew

posted an official response

The social organization of production (that has historically taken such forms as master-slave, lord-serf, and now employer-employee) is one thing within an economy and the mode of distributing resources and products among enterprises and people is something else. Today we have an economic system comprising a capitalist organization of production and a market system of distribution. The combination of these two elements produces that competition to which your email refers. I focus my criticisms on the capitalist organization of production chiefly because its negativities are insufficiently understood, appreciated and targeted for change. However, I know that for a long time now, thoughtful analysts have offered very powerful criticisms also of the market as a mechanism of distribution. Indeed, when I teach my courses I ask students to read the powerful critiques of markets offered in ancient Athens by Plato and Aristotle. So let me suggest that we collaborate: you with your focus and emphasis on the problems of markets and me with min on the problem of how we organize production/the workplace. Both elements call for change and transition to far better social arrangements, especially now.

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Isn't the quest for profits a defiining characteristic of capitalism?

In your last show you said the defining characteristic of capitalism is the employer-employee relationship. Isn't capitalism also defined by the quest for profits? It seems to me that the employer-employee relationship and the quest for profits originated around the same time, in the late middle ages or perhaps during the Renaissance, around the time of the onset of colonialism. I don't think Roman slaveholders or medieval lords were interested in profits, though they certainly sought to increase their wealth, mostly by acquiring more land. I'd be interested in your thoughts.

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The best way to respond to your question is to explain the point of a "defining characteristic." The attempt is made to dig down deep to find the key thing that sets the stage for, provides the basis for, generates the major aspects that comprise whatever you are trying to explain. If that is capitalism, then you try to reason your way back to that quality or characteristic that is such a "key thing." In my view that is the employer-employee relationship in production such that the employee produces what he/she consumes plus a surplus beyond that which is taken/appropriated by the employer. If such a capitalist production relation co-exists with a market as the mechanism of distribution (of resources and products) the result is a drive for profits as both the best offensive and defensive strategy vis-a-vis market competitors. In this way of defining capitalism, the key thing that sets the stage for, provides the basis for, generates the profit drive is the production relationship interacting with market exchange as the distribution mechanism.

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Trump "Border Tax" casualties (the first 600 jobs) in auto industry in Canada

Since the American automakers have been threatened by Trump to bring the Mexico jobs back to the US, or else, GM is taking Canadian Jobs to Mexico, see news from Friday, below http://www.cbc.ca/news/business/gm-unifor-ingersoll-1.3955128

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The immediate narrow issue is that GM, to escape Trump tweets, is moving canadian jobs to Mexico while GM waits for better circumstances to do the same to US jobs. More profoundly, this is all about the radical change in the global capital-labor balance since the 1980s. The collapse of the Soviet bloc and changes in China coupled with new technology (jet air travel and the internet) made it possible to bring billions of new workers into capital's orbit, available for hire and at far lower wages than had been built up in the west and Japan. So businesses have been moving to take advantage of lower wages and higher profits. In an historical irony, the development of capitalism drove up wages in the old centers of capitalism (western Europe, north America and Japan) while driving them down in the old colonial and post-colonial territories. Now the low wages in the latter plus technical changes etc enable capitalists to move from higher to lower wage locations for production. US and canada just told to suffer and absorb all the social costs as the rich get richer off of the lower-wage workers.

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Ellen Brown: How to Cut Infrastructure Costs in Half

great article, in case you had not seen it. Thanks for all you are doing! http://www.counterpunch.org/2017/01/27/how-to-cut-infrastructure-costs-in-half/ January 27, 2017 How to Cut Infrastructure Costs in Half by Ellen Brown Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com. Email Photo by zeevveez | CC BY 2.0 Photo by zeevveez | CC BY 2.0 President-elect Donald Trump has promised to rebuild America’s airports, bridges, tunnels, roads and other infrastructure, something both Democrats and Republicans agree should be done. The country needs a full $3 trillion in infrastructure over the next decade. The $1 trillion plan revealed by Trump’s economic advisers relies heavily on public-private partnerships, and private equity firms are lining up for these plumbing investments. In the typical private equity water deal, for example, higher user rates help the firms earn annual returns of anywhere from 8 to 18 percent – more even than a regular for-profit water company might expect. But the price tag can come as a rude surprise for local ratepayers. Private equity investment now generates an average return of about 11.8% annually on a 10-year basis. For infrastructure investment, those profits are made on tolls and fees paid by the public. Even at simple interest, that puts the cost to the public of financing $1 trillion in infrastructure projects at $1.18 trillion, more than doubling the cost. Cities often make these desperate deals because they are heavily in debt and the arrangement can give them cash up front. But as a 2008 Government Accountability Office report warned, “there is no ‘free’ money in public-private partnerships.” Local residents wind up picking up the tab. There is a more cost-effective alternative. The conservative state of North Dakota is funding infrastructure through the state-owned Bank of North Dakota (BND) at 2% annually. In 2015, the North Dakota legislature established a BND Infrastructure Loan Fund program that made $50 million in funds available to communities with a population of less than 2,000, and $100 million available to communities with a population greater than 2,000. These loans have a 2% fixed interest rate and a term of up to 30 years. The proceeds can be used for the new construction of water and treatment plants, sewer and water lines, transportation infrastructure and other infrastructure needs to support new growth in a community. If the Trump $1 trillion infrastructure plan were funded at 2% over 10 years, the interest tab would come to only $200 billion, nearly $1 trillion less than the $1.18 trillion expected by private equity investors. Not only could residents save $1 trillion over 10 years on tolls and fees, but they could save on taxes, since the interest would return to the government, which owned the bank. In effect, the loans would be nearly interest-free to the government. New Money for Local Economies Legislators in cash-strapped communities are likely to object, “We can’t afford to lend our revenues. We need them for our budget.” But banks do not lend their deposits. They actually create new money in the form of bank credit when they make loans. That means borrowing from its own bank is not just interest-free to the local government but actually creates new money for the local economy. As economists at the Bank of England acknowledged in a March 2014 report titled “Money Creation in the Modern Economy”, the vast majority of the money supply is now created by banks when they make loans. The authors wrote: The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. . . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money. [Emphasis added.] Money is not fixed and scarce. It is “elastic”: it is created when loans are made and extinguished when they are paid off. The BOE report said that private banks now create nearly 97 percent of the money supply in this way. Richard Werner, Chair of International Banking at the University of Southampton in the UK, argues that to get much-needed new money into local economies, rather than borrowing from private investors who cannot create the money they lend, governments should borrow from banks, which create money in the form of deposits when they make loans. And to get that money interest-free, a government should borrow from its own bank, which returns the interest to the government. Besides North Dakota, many other states and cities are now exploring the public bank option. Feasibility studies done at both state and local levels show that small businesses, employment, low-cost student loans, affordable housing and greater economic stability will result from keeping local public dollars out of the global banking casinos and in the local community. Legislation for public banks is actively being pursued in Washington State, Michigan, Arizona, Philadelphia, Santa Fe, and elsewhere. Phil Murphy, the front-running Democratic candidate for New Jersey governor, is basing his platform on a state-owned bank, which he says could fund much-needed infrastructure and other projects. New Money for a Federal Infrastructure Program What about funding a federal infrastructure program with interest-free money? Tim Canova, Professor of Law and Public Finance at Nova Southeastern University, argues that the Federal Reserve could capitalize a national infrastructure bank with money generated on its books as “quantitative easing.” (Canova calls it “qualitative easing” – central bank-generated money that actually gets into the real economy.) The Federal Reserve could purchase shares, whether as common stock, preferred stock or debt, either in a national infrastructure bank or in a system of state-owned banks that funded infrastructure in their states. This could be done, says Canova, without increasing taxes, adding to the federal debt or hyperinflating prices. Another alternative was proposed in 2013 by US Sen. Bernie Sanders and US Rep. Peter DeFazio. They called for a national infrastructure bank funded by the US Postal Service (which did provide basic banking services from 1911 to 1967). With post offices in nearly every community, the USPS has the physical infrastructure for a system of national public banks. In the Sanders/DeFazio plan, deposits would be invested in government securities used to finance infrastructure projects. Besides financing infrastructure without raising taxes, the plan could save the embattled USPS itself, while providing banking services for the one in four households that are unbanked or under-banked. Reliance on costly private capital for financing public needs has limited municipal growth and reduced public services, while strapping future generations with unsustainable debt. By eliminating the unnecessary expense of turning public dollars into profits for private equity interests, publicly-owned banks can allow the public to retain ownership of its infrastructure while cutting costs nearly in half. Join the debate on Facebook Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com. More articles by:Ellen Brown

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Ellen Brown has a long, distinguished record of research and advocacy on behalf of public banking that was often a lonely battle. Now that the 2008 crash and the gross complicity of major private banks in its creation and in the unjust and weak "recovery" since have been exposed along with their illegal and/or unethical actions in setting interest rates (LIBOR), money laundering, excess fees, mortgage mismanagement, manipulating foreign exchange rates, and so on....defending any "necessity" for private as opposed to public banking is on the weakest political ground since the last capitalist crash in 1929. So now Ellen Brown's work begins to get the hearing and attention it has long deserved. I applaud her for all she has done. Public banking is a major part of what ought to be done to make something so basic to our economy a publicly accountable process and institution not something subordinated to private profit-seeking enterprises. I would only add that public banking should be carefully organized democratically so that bank workers and the public served by banks together control and manage banks to avoid any state apparatus becoming as authoritarian as private bank boards of directors have been. 

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Can socialism or capitalism work without the use of force?

Both capitalist and socialist societies seem to struggle with forced compliance, with dictators, coercion and corruption following suit (see Cuba, Russia, U.S. for a few examples). Is there a role for liberty in either system?

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I think so: namely that a society can be constructed with liberty in the sense you mean it. I think society needs to strive and seek ways to achieve that. I dont think this is a speculative matter; no one can know whether it is possible or not, but that does not matter much. The point is to live in a society that seeks such a result, works at it, because that makes a society bearable and good as opposed to the deadend of a society - or its members - who have given up.

 

So the issue is to think through what basic changes in economic, politics, and culture are needed to support a libertuy-based system and then to pursue their realization.

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Could a private university be run as a worker co-op?

If my university were run as a co-op, would workers be able to redirect donations toward the university's greater good? Today Jan 28 2017 Cornell's interim President Hunter Rawlings has announced a "historic, transformative $150 million gift from Trustee Emeritus Fisk Johnson and SC Johnson to endow and name the SC Johnson College of Business." I'll spare you the rest of the drumbeat rhetoric of this press release about how this "landmark gift" will "continue the Johnson family's multigenerational legacy of leadership and support for Cornell." For one lopsidedly well-endowed segment of Cornell, that is, as we in the strapped College of Arts and Sciences and beyond are all too aware. I'm sure the same story unfolds in the academic sector widely, but this version seems especially egregious as a capstone to this week's news. Could a university run as a worker co-op change any or all of this? Thanks.

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There are multiple ways to respond. Most simply, the answer is yes. Universities began centuries ago as precisely collections of teachers who collectively administered as well as taught: in effect a kind of cooperative with greater or lesser hierarchies of power within them varying from place to place and time to time. Today, colleges and universities could be run as worker coops working out divisions of labor within them as to all the functions they would undertake, etc. And then, of course, they would likely decide collectively and, hopefully, democratically whether to accept and how to make use of any outside funds flowing in. Of course, how colleges and universities would be funded would itself be decided socially according to how the larger society was organized. If, for example, higher education were deemed to be a public right and entitlement for all citizens, if could be funded by taxes on all and thus not subject to the vagaries and private agendas of rich individuals and businesses, etc. In any case, there are radically different ways to organize colleges and universities from the current system that panders to the corporations and the rich.

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Cleveland iron workers Union cuts pensions, up to 60%

http://www.cleveland.com/nation/index.ssf/2017/01/iron_workers_pension_cuts_are.html Workers/pensioners who didn't vote were counted as for by default.

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Thank you for sending me this. It is an important, if tragic, milestone in the sustained assault on the working class in this country. I have just sent out a tweet to our many tens of thousands of twitter followers alerting them to the reality and to the story you sent. I will discuss it also on the radio in my show for next week. In case it might be of interest, here is the tweet just sent out:

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What does Socialism have to contribute to new concepts for trade deals?

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There are quite different notions of what the term "socialism" means, so what follows is based just on the one I work with. What socialism means is that the goals of trade are defined radically differently than what obtains today. In today's capitalism, trade is first and foremost about private profit opportunities. You trade if you are a business and see profits from doing so. The goal is private profit and collateral costs (externalities) are not the concern of the trader, no matter how huge or negative they might be. In socialism, the framework of calculating costs and benefits of trade are different. The social externalities are estimated and counted into determining whether a social profit is or is not entailed in any proposed trade. Moreover a socialist perspective would add goals not relevant in capitalism. For example, to correct capitalism's uneven development (the last 300 years of dividing countries into rich and poor) a socialist trade policy would stress offsetting key imbalances in the interests of equality, world peace and so on. 

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