Economic Update: Professor Rick Wolff
We welcome back returning guest Professor Rick Wolff to get an economic update. Recent news of Janet Yellen emerging as a frontrunner to succeed Ben Bernanke as Federal Reserve chairman garnered the support of many Democrats in the House and Senate, yet she urged to lower payments for senior citizens on Social Security and voted to repeal the Glass-Steagal Act. Meanwhile, President Obama with the support of the Republican Party has targeted Social Security and medicare for cut backs. We talk about these topics and more with Professor Rick Wolff who hosts Economic Update on WBAI Saturdays at Noon.
Professor Rick Wolff:
The Federal Reserve is an enormously important institution all of the time.
It has nothing less than the mandate in this economy to control and manage and manipulate the monetary system.
It is a wonderful reality to throw at anyone who thinks we live in a free market economy where the government plays a marginal role.
When the government controls the quantity of money and the cost of borrowing it, its not a marginal role, its most central role a government can play.
We have a dysfunctional Congress and President who can’t figure out what to do, unwilling to take serious steps to deal with this crisis, leaving it to the Federal Reserve.
We are now in the worst economic crisis since the Great Depression.
Clearly, now that we’re entering the 6th year of this calamity, and we have huge unemployment, huge foreclosures, the Federal Reserve also failed to make it short and shallow it is in fact long and deep.
Ms. Yellen’s nomination would go through quickly and more smoothly than Summers would have. Obama and his folks don’t want a big review of how they manage the economic system since its an unmitigated disaster.
Enough extreme right Republicans exist now in the House of Representatives to make serious the threat of denying the Federal Government the right to raise the debt ceiling.
The President has already signaled his willingness to compromise with Republicans around Social Security, Medicare and Medicaid.
There’s a long standing debate about measurements on the cost of living. That’s a very difficult thing to do and perfectly reasonable economists disagree.
All they’ve done is picked the one that looks the smallest (cost of living for Social Security) to use as a benchmark to therefore give the smallest increase.
The first thing you should understand, which is an outrageous injustice, is that the money for Social Security is only withheld from a wage or a salary.
It’s not withheld if you earn interest income, if you earn dividend income or if you earn capital gain income.
That’s why the tax for Social Security is called a payroll tax.
Currently, its a payroll tax but its only on the first 113 thousand dollars a year that you earn.
For every dollar above 113 thousand, you don’t pay anything.
Saez and Piketty
The inequality of wealth in the United States has gotten much worse in the last 30 years and more interesting has gotten worse across this crisis.
That’s interesting because in the Great Depression, the crisis collapsed the gap between the rich and the poor.
The top ten percent of American income earners this last year 2012, took home more than half the total income.
Ten percent have half the income and the other 90 percent share the other half.
The 400 richest people in America have more total net worth than half the population.
There’s been movement of sheer outrage of what it means when you read about this extraordinary wealth that some people are earning 7.25.
There are signs of upset within the United States beginning to build around this. (inequality of wealth)
We have a minimum wage at the federal level, 7.25. We also have state minimum wages that vary all over the place.
We have now a situation where wealth is so concentrated at the top that the folks who have that wealth understand perfectly the situation. They love the way the economy is going. They’re gathering the wealth into their own hands, but they’re not stupid.
They understand that when you concentrate wealth that much you’re creating an impossible tension between an ostensibly democratic political system where universal sufferage means the mass of people vote on the one hand, and their concentrated wealth.
“We have to worry that the political system will be used by the masses to undo politically the benefits we get economically.”
A billionaire from California buys the Washington Post and a billionaire from Boston, buys the Boston Globe.
It was a hostile environment, lots of rich white boys who thought they were all that.
The GI Bill actually even things out class-wise which was a delight.
I worked at Legal Aid, while I went through law school it kept me sane. My first job was at Law School Clinic.
We provided civil legal services to state prisoners.
Through the process of doing abortion rights work, anti death penalty work and prisoner’s rights work through the Guild, and then I met the folks at the People’s Law Office.
Even to today, there’s only a handful of people who do that work and we tend to know each other.
Michael Deutsch whose been my law partner for the last 3 decades called me up and said we have a couple of Puerto Rican radicals who have been sent to the state prison near where you’re doing your work and you need to go see them. They’re quite at risk the state considers them to be enemies.
I knew nothing about Puerto Rico being a US colony, having been invaded, them resisting colonialism. I learned about international law making it a crime against humanity.
They really opened my world, what gift its been for me.
The National Lawyers Guild created a Puerto Rican project to work with Puerto Rican lawyers and activists in the Independence Movement and people who were trying to get the Navy out of the small Puerto Rican island of Vieques.
It’s culminating in this wonderful convention we’re going to have in the middle of October in San Juan.
There’s going to be a panel and workshop on the death penalty in Puerto Rico which the US imposes on its colony.
There will be workshops about labor, and political prisoners.
I think people in this country understand who Nelson Mandela is and what he stood for and sacrificed and what he meant for his country. These men and women are the same for the people of Puerto Rico.
They were artists and working in universities. Most had college degrees, but really understood that colonialism is a crime against humanity.
They organized clandestinely into an organization called the Armed Forces for National Liberation. They were arrested in the early 1980s and accused of seditious conspiracy.
My job was to advocate for their human rights and educate about their situation. They refused to accept the jurisdiction of a US court.
For the National Lawyers Guild, I’ve gone to the United Nations Decolonization Committee to present.