The Real News Network has the video interview The Tea Party and the Suppression of the Left.
WOLFF: I think the Democratic Party bears a major responsibility for the success of the Tea Party. And when they berate the Tea Party and denounce it, there’s something peculiar, since they’re so complicit in this situation. You’d look long and hard in the history of the Democratic Party over the last 50 years to find a word of criticism of capitalism as a system. The Democratic Party avoids it. The Democratic Party joins in pretending that a political solution is adequate to deal with an economic system that has now collapsed twice in the last 75 years.
You know, I’m part of economics profession. We didn’t as a profession foresee this crisis. We didn’t imagine it would cut so deep. We didn’t imagine it would last so long. And we didn’t understand that it would resist the conventional fiscal and monetary policies that we’d been telling our students are more than adequate to manage capitalism.
Sarcasm Warning – there is some sarcasm in my comments below. If you are unable to detect it, you might be misled by what I am saying.
Well, I still hold onto some of the left wing economics I was gullible enough to believe when I was taught it in college. Apparently President Obama was not indoctrinated enough in his college career. He was educated in the age where the anti-left propaganda began to become dominant.
Sarcasm Warning rescinded.
Because of the strength of the political opposition and the lack of his own commitment, President Obama accepted a fiscal stimulus that was only about one-third the size that was needed. Economists were warning him of the inadequacy at the time. This weak stimulus was wonderful for the Tea Party financial backers exactly because its partial success saved them from a depression like the one that drove them from office in the 1930s, and its inevitable failure to restore full employment could be used to discredit the very idea of stimulus.
I think Wolff’s accepting the blame for the failure of the Economics profession is also playing into the hands of the Tea Party.
It is only the faux solution of the far right wing economics of Milton Friedman that ever thought that monetary policy as exercised by the Fed recently that could ever be a solution to the current economic problem.
All the economists who were onto Friedman’s deception have said that in this world of heightened economic inequality and consequent disappearance of consumer demand, monetary policy is like pushing on a string to get the economy moving. The more you push on the string, the more tangled it gets, but the economy is not moved.
If and when the economy does start to turn around, the frantic effort to pull the slack and tangled monetary string taut again may be impossible to do fast enough. Let’s just hope that Janet Yellen is up to the job.
For those who are into engineering analogies, you might want to think of bang-bang controllers. Maybe good for furnaces and water heaters, not so good for the economy.
The difference between a large tub of water and an economy is in response rate. The water changes its temperature slowly through the range of the bang-bang controller. The economy starts to change slowly, too, with bang-bang controllers. However, once the economy reaches a tipping point, it can start to react faster than anyone imagined. As Taleb would say, one system is linear and the other is non-linear.