Law and Disorder Radio – Rick Wolff on From Economic to Social Crisis: Deficits, Debt and a Little Class History – Hosts: Heidi Boghosian, Michael Steven Smith & Michael Ratner – Produced by Geoff Brady

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 From Economic to Social Crisis: Deficits, Debt and a Little Class History

We welcome returning guest Rick Wolff, Professor of Economics. We talk with him about his latest article, “From Economic to Social Crisis: Deficits, Debt and a Little Class History.” Earlier this year Rick pointed out how the Democrats and Republicans debate over spending cuts at around $40 to 60 billion. Rick says the debate is inconsequential when the federal budget’s projected deficit of $1.5 trillion will carry an annual interest cost of $40-60 billion. Now, as both parties are committed to a broken, corrupt system, Rick points out that transitioning to another economic system is not in the public discussion. He says the tools used to recover from the 1930s economic collapse can’t be used today mainly because of the last 75 years of rising national debt and budget deficit.


Professor Rick Wolff:

  • This is mostly theater, the people I talked to in the business of finance and government are quite clear that the United States will work this out.
  • It is a sign of the political dysfunction that they can’t do it in a reasonable way.
  • It is a normal procedure to periodically ask for the debt ceiling to be raised, so that they can borrow the amount of money stipulated by the budgets they have passed. The sitting president asks for the debt ceiling to be raised, Bush did it eight times. It’s normal.
  • The only thing the Democrats have left, to not look defeated, is to make a big deal out of the cuts they’re willing to accept that are smaller than the “draconian” version that the Republicans want.
  • The Republicans don’t know, the Democrats don’t know what will happen. They fundamentally don’t care, because they have long ago decided that their political needs and strategies are unhooked from the underlying economic situation.
  • We’re spending $3.5 trillion this year as a federal government. We’re raising $2 trillion. That means $1.5 trillion has to be borrowed, otherwise its not going to happen.
  • That’s money that will be used to help old people’s needs, help fight wars in Iraq, Afghanistan, Libya, Pakistan, to help cities and states that need support, etc.
  • The actual creditors in the immediate situation have nothing to fear.
  • For the rest of the world you have a double whammy, which is what we should be thinking about.
  • We have the driver of the world’s economy collapse in 2007/2008 and having been unable to recover since.
  • The bottom line is this economy isn’t working well and isn’t solving its crisis. This is now a deeper, longer crisis than any since the Great Depression.
  • That means every other player in the world, from a Chinese official, to a Spanish bank to an investor in Brazil has to rethink what he or she thought.
  • A thousand small decisions are going to be made a little differently from now on.
  • There is no proposal working its way through Congress to provide employment to the tens of millions of people who have no work.
  • The president’s statement is a bipartisan commitment to ignore the problem of unemployment.
  • The most extreme proposal is to cut $4 trillion in the next ten years. This year alone the US deficit will run one thousand five hundred billion. $1.5 trillion.
  • The debtors know that at a certain point there’s going to be trouble.
  • You can’t continue to cut the masses’ standard of living to make money for big bankers, that’s not a politically sustainable program. Not here, not in Greece, not anywhere else.
  • The silence of the press here is stunning. There have been multiple general strikes across Europe.
  • The greed of the corporations, they’ve had their way for 30 years. Republicans and Democrats alike, have basically gone in the direction they want. Corporate taxes have been cut, regulations relieved, money is everything, wealth is everything, consumption is who you are.
  • The smaller businesses are late to party. They still want to get theirs. Those who already got theirs don’t want them to mess up the game. I believe you will see big splits emerging among the right in America because these are different attitudes.
  • They want a stable United States so that they can grow in the rest of the world, because that’s where they think growth is coming.
  • They don’t need to maintain the roads like they did, they don’t need to maintain the education in this country.
  • You can appeal to them: you need these workers, you need these consumers. No, we don’t. We don’t need them as workers, and we don’t expect them to be much in the way of consumers, because they would have to borrow and we’re not going to lend to them.
  • They would have to have higher wages, and we’re not going to give that to them. We have no reason to, we have cheaper, better workers elsewhere.
  • You are subjecting your working class to a major sustained attack on its standard of living. To believe this is all going to happen and they’re quietly going to sink some resignation with no consequence is nutty.
  • The attempt to isolate, to freeze, to inoculate the population so they don’t fear what’s coming. It’s falling apart in Europe, but it will fall apart here too.

Guest –  Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a visiting professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan.