Tricked-Down Economics

Madame M:

Rear guard actions and coping mechanisms.  How long will they hold up?  Worker burnout is on the rise, as those who remain after cuts feel the stress of more work.

The middle class’s share of total income shrank 17% from 1970 to 2010.  Their share of total assets (including houses) did even worse.  Banks, financial institutions (Wall Street), large corporations—and of course, the executives and boards that profit by them—made sure their lackeys in  Congress wrote the rules and made the changes, including ever lowered tax rates and generous tax rules, to favor them. 

Many well-paying jobs were deliberately killed and sent overseas, not because the manufacturing plants weren’t profitable, but because the kings of greed mentioned in the previous paragraph wanted even more profits.  When a community is hit by the loss of well-paying jobs, it has a negative multiplier effect: teachers, firemen, policemen, and others, not to mention many small businesses, get cut back.  Wages fall far behind the cost of living for the average person, as people spin out of the middle class and into the lower class.  The effects cascade.  Multiply that by thousands of communities, and you have America today.

Ironic that those who fret about “foreign control” are all too willing to vote in “free trade” candidates so multinational corporations can sell America off—and sell them out—and transfer economic control.

Did the executives take the pain and the cuts as well?  On the contrary, they increased to sickening opulence while the Lazaruses waited for scraps.   CEO pay for many European corporations averages no more than 7-10 times the average worker.  Even as recently as 1978 here in America, CEO compensation was “only” 26 times that of the average worker’s wages.  By 2010 (not a very good year, if one will recall), it was 205 times. 

It is one thing to truly globally compete, and comparative advantage certainly has its place.  But this idea that giving more money to people at the top who already have tremendous amounts, who have benefited ultra-tremendously the last 40 years while the middle class has declined, is ludicrous.  They don’t “create jobs,” as 5 minutes worth of serious consideration would tell you; otherwise, we’d be swimming in jobs the last 12 years, and that certainly isn’t the case (as the Congressional Research Service found out, tax cuts for the wealthy DON’T help the economy or create jobs; you don’t hear about the study because Republican congressmen suppressed it).  As Tina Dupuy of Cage Syndicate wrote in an article September 5^th of this year, “Trickle-down economics is a pyramid scheme.  The idea of those at the bottom sacrificing their retirements benefits (pensions, Social Security, Medicare, etc.) so that the top tier can pay even less in taxes” is sold to people that somehow they too will become rich if taxes for the rich just get lower.

Too many of us seem magically ensorcelled by the above mantra.  Even though  signs of decay are all around us: 1) Worst wealth inequality in the industrialized world, 2) poverty rate that has skyrocketed to nearly 16%, 3) top 1% of Americans own almost half of the nation’s wealth and yet only 5% of the nation’s debt.  As Dupuy says, “we’re fatter, sicker, further in debt, and using the most illegal drugs in the world.”

“Don’t punish success”, the men who do the spin for the wealthy say.  “Don’t regulate, that is punishing those who would create jobs in a free market and makes them withhold jobs out of uncertainty.” 

It’s a lie.  While there is at times maddening and excessive regulation (George Will is notorious for fishing up the instances), what the above spin is for is merely to deflect you the people from having your creature—government—do anything to those who are bleeding you slowly to death.

The simple mathematics is that those at the top don’t exist in enough numbers to create demand and stimulate the economy by their spending, even if they wanted to do so.  That can only come from many millions of middle class consumers with spendable money who by that spending create demand for products and services, and with that demand, even more jobs.

That has a proven track record, and it’s also socially stable and long-term sustainable.