Hi, all, I'd like to add another Wolff video to the list of thread topics here, the one at the YouTube link above.
While watching it I made some notes along the way. Anything I don't comment on means that I agree with it in its entirety, which is at least 95% of Wolff's content. Okay, so onto the segments:
48:30 "When you stimulate the economy, when the government comes rushing in with huge amounts of money to spend, at the same time that everyone wants to borrow, borrows money and pumps that into the economy, you have an economy which suddenly there's a wall of money spending, coming at you. Now in a private capitalist economy, where we allow private enterprises to do whatever they want, every business has a moment of truth. How are we, in the shoemaker, the breadbaker, or the car producer, going to react to all of this extra purchasing power that's now in the economy thanks to the stimulus program of the Treasury, and to the money increasing program of the Federal Reserve?"
Wolff should know that quantitative-easing types of injections of liquidity into the capitalist economic system *don't* necessarily impact the real economy -- that of employment, personal incomes, and increased productive business activity.
In other words government deficit spending usually -- in my understanding -- takes the form of attempting to *fix balance sheets*, by providing cheaper capital to the markets, by buying up bad / toxic debts, etc. Just take a look at what's been going on *recently* with governmental economic intervention into the repo market:
Earlier this month, the New York Fed injected another $56.7 billion into the repo market in an effort to keep fed funds interest rates in-line with the Fed’s target range of between 1.5% and 1.75%. The Fed also said its balance sheet grew from $3.8 trillion in September to $4.17 trillion by the end of 2019.
“The big picture answer is that the repo market is broken,” James Bianco, founder of Bianco Research in Chicago, told MarketWatch back in December. “They are essentially medicating the market into submission...But this is not a long-term solution.”
https://finance.yahoo.com/news/repo-mar ... 56690.html
I think Wolff is misrepresenting what the government economic intervention is doing. It's not increasing market capitalizations of firms, for increased purchasing power that 'trickles down' into the real economy, but rather the deficit spending is just trying to prop-up the financials in the balance sheets of banks.
49:47 "But of course a business has a second option. It can choose not to get more stuff. It can choose to raise the price of what it already sells. And, you know, that's a lot more attractive. You don't have to spend a lot of time calling the factory to get more stuff made. You don't have to arrange for the transportation. You don't have to arrange for the storage, or putting it on the shelf. You can make just as much more profit, just by raising the price of everything. And if you do that it's called inflation, prices go up."
In this section Wolff seems to be trying to sell the viewer on a purported economic regime of *inflationary* valuations, while elsewhere he accurately states the GDP for the U.S. as being 2-1/2 percent, which is roughly a *neutral* rate of growth in relation to U.S. population growth.
Yes, capitalists are always more tempted to pursue better payoffs, and so *luxury goods* production is inherently encouraged by capitalism in a slow-growth environment like the current one, but, no, we aren't in an economic paradigm of *stagflation*, or runaway inflation combined with slow growth, as happened to the U.S. in the '70s, after the country incurred the huge expense of Vietnam War military spending, forcing the U.S. off the gold standard and *devaluating* its production on global markets, hence the accompanying undesired *inflation* of prices.
Today's economic paradigm is one of *deflation* -- no matter how much liquidity is pumped into the system it all gets mopped-up and *doesn't* increase prices because of the now-very-well-integrated global capitalist economy and the systematic siphoning-off of cash reserves into tax havens, instead of finding productive avenues for investment, due to the prevailing *slow growth* paradigm.
58:36 "Or people who decide they can do better in the illegal economy than they can [in the legal economy]. I'm sure there's nobody in this room who could imagine such a thing, but there are people like that. Millions of them, and more each day, because the illegal is a better shot for income in many cases than the legal."
I can't help but wonder if this mass-assumption has any basis in reality. Since it's the market mechanism that distributes economic rewards, my own understanding is that the sector *itself* wouldn't really matter in terms of what incomes are distributed to what jobs and work roles.
What's far more definitive, whether for a regular job or one in the black markets, is how much capital one possesses and can actively invest in whatever, within any given sector or industry.
1:07:09 "Napa Valley. Because if there's a tariff of 25% on French wine, that's the price, when you go to the liquor store, for the French wine section of the liquor store. Prices are going to go up. Because that liquor store has to pay part of the cost of this tariff. Now wines from Napa don't go up there, they're not subject to the tariff. So this is a way of shifting the business from the French wine, or the Italian wine, or the Australian wine, or whatever the tariffs are [hitting], to the American alternative. It gets even more complicated 'cause if you do it to the French, but you don't do it to the Italians, well then it hurts France, its exports to America drop, but the Italians don't mind because they're exempted from it. So now we get an immense amount of, ready, of political horse-trading. Everybody is fighting to have a tariff or to not have a tariff. If a tariff is passed, to get an exemption from the tariff."
I think a better description, than 'endless political horse-trading', would be 'nationalist currency devaluations', or 'trade war', since that's always the danger here.
Here are a couple recent news articles on the topic, from a web search:
IMF warns that currency devaluations will not fix a country’s economic problems
https://www.cnbc.com/2019/08/21/imf-war ... blems.html
Trump mustn't fall for devaluing the dollar
https://www.washingtonexaminer.com/opin ... the-dollar
I'll assert and maintain that raising nationalist protectionist tariffs is *equivalent* to Keynesian-type deficit spending, or currency devaluation, since tariffs effectively make one's own domestic production artificially more competitive to the domestic market, compared to the imported goods from one's international competition, as Wolff outlines.
1:15:14 "China is what the United States was. It's the up-and-coming economy, there's no way around that, you can jump up and down all you want, the rate of growth of the Chinese economy is a runaway dominant [economy] over the United States. This is the lowest rate of growth that China has had in many years, it's roughly 6%. Our rate of growth this year, the United States, will be 2-1/2%. Do you understand? They're going at three times the rate and they have been going at three times the rate for thirty years. That's why they caught up. And that's why they will surpass the United States as an economic unit within the next ten years. And there's nothing Mr. Trump can do about it."
I'd like to note that a country's economic growth rate is only meaningful in relation to its *population* growth rate. China's population growth has far outstripped that of the U.S., averging around 7% a year, from recollection, to the U.S.' 2% per year.
The economic growth rates of nations are commonly compared using the ratio of the GDP to population or per-capita income.