Ask Prof. Wolff

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Can you give us your take on Modern Monetary Theory?

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This article is quite something...

An elaboration on Economic Update could be very interesting: https://nyti.ms/2jDyZku

posted an official response
Thank you for drawing our attention to this story. What a comment on capitalism as a system. This system makes it rational and reasonable for a profit-driven company (like Nike in this story) to intentionally destroy valuable merchandise because it preserves their profits. The story teaches that system change is what is needed because when everyone acts according to the profit logic of capitalism, the end result is behavior that clashes with our sense of human or social rationality. People without good shoes should get them rather than have labor performed first to produce and then to slash and destroy them so that people who need them but cannot afford them dont get them. Capitalism's results are crazy and that craziness argues for system change. It does not argue for "reforms" such as to allow producers to "donate to charity" since such an allowance leaves open the chance for the sort of irrationality documented by the article you sent in. System change not reforms is the conclusion. I will definitely compose a segment for our weekly "Economic Update" based on this story and the important lesson it teaches. 
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What is the effect of derivatives upon the supply of money?

Can large investment banks effectively increase their capital by simply inventing ever more complex bets upon the goods and services created by others? Do CBO and other derivatives operate exactly like bank loans in creating new money?

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The CBO says we'll be 1 trllion in debt by 2023. Is this due to capitalism or social program?

http://www.pgpf.org/analysis/2017/01/CBO-warns-deficits-will-reach-$1-trillion-in-2023

posted an official response

Any number projected for 6 years from time of projection is just a estimate based on how things will evolve over the next 6 years; no one knows. So this CBO projection (one of many it will be making in the months and years ahead) is based on what the staff at the CBO thinks are estimates of federal tax revenues in relation to estimates of federal spending. So, for example, if they estimate that Trump will get his corporate tax cuts (he has promised that but no one knows for sure whether he will or what size if he does) while spending a large sum on an expanded military (he has promised that) and on infrastructure (he has promised that), then 1 trillion has been the size of the resulting deficit (the gap between what Washington raises in taxes and what it spends). It is "due to capitalism" in the sense that politicians, to keep or build their support among business, the rich (which they need for money) and the masses (whom they need for votes), tend to spend to please these groups while not taxing them (rto avoid displeasing them) with the result of deficits.

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Are worker coops the way forward? Why not UBI?

Thank you for the enlightening videos you've been publishing, it's one of the most straightforward and accessible material on marxism I've found. That being said, I have to agree with Prof. Kristin Lawler who was on your show last month. No one's going to be won over to the left if we try to lure them with labour. For centuries technology has promised to replace human labour and we still work longer hours than the average medieval peasant or hunter-gatherer. I am a millenial and I feel trapped, not only because jobs don't exist, but also because I don't want to waste most of my waking life in a job. With hierarchy, impositions, wages and - most important of all - environmental destruction happening around me. We don't work for survival or for well-being anymore but only for economic growth and it's destroying the environment. So my question is whether coops are the way to replace humans with technology, get rid of useless labour, become free and so on. Sure, you may argue that coops would allow for a movement in that direction but it seems to me like gigantic political and economic obstacles would have to be overcome for worker coops to even come to be. How will we organize a significant number of people to accomplish that with the promise of work? And why not use that energy for something like a basic income? All I could find about your opinion on that subject was a short video on youtube where you say it would divide people. I disagree because everyone would receive it and those who choose to work would make money on top of the basic income. Not to mention those who do work wouldn't be able to argue that they're doing all the work while others benefit because they themselves can choose not to work if they don't want to. I could go on but essentially my question is: what are your objections to a basic income?

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Does the modern adaptation of Monetary Policy contribute to income inequality?

Keynes argued that inflation could be beneficial if individuals, businesses and government could spend the surplus money before the inflation effected prices. This theory may have been effective when printing physical money was the methodology that the government used to influence the supply of money; as there was a substantial delay between when the money was distributed and when the market adjusted to the supply. Now the primary tool to increase the monetary supply is to increase the amount of money banks have available to loan, generally by decreasing the amount of money needed to be held in reserve. The fact that the monetary supply can contract or grow at a whim seems like a double-edged sword. On one hand it allows the government to quickly pull money out of circulation to prevent stagflation, on the other it completely negates the delay between the supply increase and the inflation price hikes. Additionally relying on the private sector to redistribute wealth seems counter-productive. At best the only people who would benefit would be those who made enough to take out loans, roughly the top 50%. At worst the banks engage in subprime loans and cause another recession. How would a National or even State banking system be effected by monetary policy and could it combat these issues?

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Robert Samuelson (Wash Post Writers Group) opinion piece contradicts RD Wolff teachings.

He says rewards of govt go mostly to "the people" through massive transfer programs such as Social Security and the costs have been borne mainly by the rich and upper middle class who pay most taxes.

posted an official response

This is an endlessly recyled conservative mantra designed to undermine the overwhelming consensus of the economic profession on how (a) income and wealth inequality have grown in the IUS over the last 40 years, and (b) how transfer payments and other redistributive schemes have only marginally modified the growing inequality. In response to Samuelson again beating the dead horse, think of these issues: (1) is military expenditure a transfer program from the people to the military-industrial complex, and if so, what does that do to the numbers he wants us to look at, (2) "the rich and upper middle classes" (whatever exactly that means" mostly dont pay social security taxes (and even fewer will once ACA is repealed) which account for almost half of what is raised by the federal govt and specifically exempts non-labor income (the super rich get most of their income from property, not labor) and all income above roughly $120,000 per year, and so on. More importantly, consider this: the origin, cause, and rationale for transfer payments follows from the failure of US capitalism - i.e. its leaders, the employers as a class - to provide jobs with adequate incomes to sustain the population. Letting that underemployed and/or underpaid population starve or die is dangerous for the system, so capitalists take a portion of the profits they get from how they treat the working class and give that back to them to pacify them, make them dependent on the govt and hesitant to rebel. To cast this sorry situation as some sort of burden on the rich derived from the poor is to turn an unjust world upside down in order to flatter those who cause the entire problem by their maintenance of a capitalism that has outlived its usefulness or value to the majority of people.

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Transparency; does the public appreciate/recognize an honest organization?

This article mentions how the USA was dropped two points soon after Trump's swearing in. Which leaves the USA (in their estimation) as being the 18th most transparent nation - just ahead of Estonia & France. You can find a link to the study in the middle of this article. http://www.upi.com/Transparency-International-has-US-energy-concerns/2761485442810/ I've been hoping for greater transparency in govt for 30 years now (I'm 51), which I would hope to lead to a shrinking national debt. Perhaps the backlash from Trump's administration will spark those types of changes... www.theatlantic.com/science/archive/2017/01/thanks-to-trump-scientists-are-planning-to-run-for-office/514229/

posted an official response

The British magazine The Economist reached a parallel conclusion this last week: namely that the US was no longer a "full democracy" and had dropped to a "flawed democracy" (their terms). The bottom line in these studies is that US capitalism is in a state of decline that confuses its people (who were in no way prepared for this), worries them, invites demogoues to feast at the scapegoating possibilities, produced Brexit, trump and other right-wing flailings. Sadly, everything but the system itself - the organization of production into adversarial employers (always a small minority) and employees (always the majority) - can be brought up to express people's anxieties about a system in decline. Progress and solution depends, however, on being able to identify, discuss and reach some consensus about system change as necessary to engage as well.

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College Presidents in Ontario, Canada, want salary increases of about 50%.

Just fresh on the news at CBC News, on Jan 26, 2017: http://www.cbc.ca/news/canada/toronto/ontario-colleges-presidents-raises-1.3953066, https://www.thestar.com/opinion/editorials/2017/01/24/ontario-cant-allow-massive-pay-hikes-for-college-presidents-editorial.html, http://www.am980.ca/2017/01/24/massive-pay-hikes-for-ontario-college-presidents/, http://www.am980.ca/2015/04/09/42876/, https://opseu.org/news/local-media-focus-college-plans-hike-executive-pay, Valentin

posted an official response

Thanks for alerting us......similar things happening in US ad colleges and universities replicate businesses with big raises fo top execs and austerity for everyone else.

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NPR says inequality has been decreasing over time?

Just saw this from NPR and was hoping Mr. Wolff would respond to it. It's about inequality and how the Oxfam report that I've heard Mr. Wolff mention is just one way of looking at inequality. The article talks about the Gini Index and how it shows inequality declining over time. Thanks.

posted an official response

Maybe NPR fears what Trump plans to do to its government support and so produces such stuff. Sure, there are multiple ways of looking at poverty (s at anything and everything), but when the prevailing perspectives across countless academic, media, and governmental studies speak to rising inequality, and when even major political candidates refer to disappearing middle classes and other slogans of rising inequality, one has to wonder not about the possibility of some sort of analysis that reaches an alternative conclusion but about the motives of someone who wants to use that analysis to question the prevailing view. By the way, GINI numbers inside countries have mostly shown growing inequality too. Across countries its a bit different because chiefly the stunning economic development of the People's Republic of China (even as inequality inside PRC grows too). Then too there are the myriad problems with the concept and measurement of Gini coefficients which add further wonderment about why an NPR report would use them to undermine the prevailing view of inequality's growth.

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Will Trump help finish off the US economy?

Trump claims he is going to put a tariff upon multiple countries.That of course will create a trade war,inevitably costing the USA trillions of dollars.Trump says he will cut taxes.That will ultimately end up ballooning the US deficit and debt.He says he is going to cut regulations including Dodd-Frank,which will untie the hands of Wall Street to do their multi billion dollar schemes.Trump wants to increase defense spending even though the USA spends more on defense than the whole world.I will value your response,Sir.

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Corporate culture and values - Bosch as example and case studies

It was very refreshing to see your interview and comments on Big Picture, especially the solution regarding sharing the company decision, direction and results between employees for long-term sustainability and not just left to CEO/Shareholders for short term profits often hurting or not benefiting employees. I have seen this working with success in Germany at BOSCH GmbH (which I'm sure you're familiar with. No public stock options, decisions are made by a committee mad of workers, and revenue is used to reinvest in company’s future and shared between employees, health care for and job security for all until retirement. If it works for a big successful company like Siemens, it shows it can be done and replicated by others!). Thanks again for your voice. https://www.youtube.com/watch?v=QIADOe7a-V8

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Can Democracy at Work partner with labor unions or the IWW to promote economic democracy?

As you have pointed out, a union could be used to promote worker ownership. Thank you.

posted an official response

The simple answer is yes. We seek alliances with all sorts of social forces to advance the campaign for social change grounded in a democratic transformation of the workplace. A social transition from an economy dominated by the capitalist economic system (the employer-employee division at work) to one in which worker cooperatives prevail (where employer and employee have merged into the same persons functioning democratically on all major enterprise decisions) is our goal. Once labor unions and worker coop organizations were allies in US history. I see no reason why that cannot happen again; it should.

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Solution to "Trumponomics 101", but nobody knows about it.

There exists a revolutionary solution to Trumponomics 101, yet getting average and even awakened people to take the time to learn about it and adopt this simple solution is like pulling teeth. Me and my fiancé have tried to get this movement started in our area which is very socioeconomically distressed (the Appalachian Mountain coal mining region). I was a famous Olympic figure skater turned doctor who got fed up with the medical system, and it appears that efforts are being taken to attack my credibility and stifle our message. I won't go into that here, but want to share a link to an informative video we made of an interview we did for a local radio show. I added invaluable visuals to get the point across better. I went to high school and college with Peter Thiel (billionaire founder of PayPal), and he was smart enough to drop out of pre-med and has warned of the college debt bubble. The system we speak of in the interview is an international gold money and payment system that is head and shoulders above PayPal. It is the only real existing solution to wealth inequality and the continuous shift of wealth to the elite and failing systems. It makes acquiring this physical gold money affordable to the masses. The problem is that the masses do not understand global economics nor the need or urgency to adopt this system. I know you are very busy, but please find 30 minutes to watch our video and help us get this info to the masses: https://youtu.be/nmn0SydzIlI. Also, you may like these two videos: Karatbars International CEO explaining CASHGOLD, KaratPay, and KaratBank: https://youtu.be/DZ4qeXfGMiU. Security features on new CASHGOLD design: https://youtu.be/EbYPn_4m7tQ. We hope to get this information to more people and hope more people will participate and contribute to the solution instead of the problem by waiting for the government to fix it. It needs to be a revolution!

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What are the economic aspects of the attack on women's reproductive rights?

Why is it so important for the right, apart from their hypocritical moralist arguments, to curtail women's right to choose abortion? Is there an economic side to it, or is it only a matter of "principles"? Although, of course, the same principles do not apply once the child is born and is in need.

posted an official response

While there are multiple reasons for the right's focus on abortion, since you ask about an economic side or reason, let me offer a comment. Middle and upper income Americans who want abortions have been able to obtain them through much of history by using their money to go to where they are illegal or to purchase them illegally. Banning legal abortions is mostly a problem for poorer people who cannot then access abortions. They will thus have more children which (1) adds to the available labor pool (pushing down wages as more people compete for jobs), and (2) adds to the costs and responsibilities of parents correspondingly less likely to engage in risky political or labor union action to improve their jobs and incomes. Allowing legal abortion gives millions of families a way of taking control over so important a decision as having a child and as such might well encourage families to want to take parallel controls of other important life decisions like economic decisions  (about jobs, income distribution, govt programs, etc.); the system instinctively works against this. Another way to get at this is to see the right as a complex political alliance. That alliance includes capitalist employers who worry that they are too small a percentage of the population and thus need a mass base to ally with. If they can find a religious institution having difficulty holding onto its flock, a deal can be struck that advantages both sides. Business gets a mass base of people organized into, say, churches, who will endorse and support pro-capitalist govt policies, while the churches get business support for institutional imperatives like opposition to abortion. In the US, the Republican party has long depended on such an alliance to exist.

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