Let’s talk economics. First of all, I am not an economist, I’m just an average American. But maybe that’s a good thing when it comes to this discussion. We need to talk about this in a way the average American can grasp it (or maybe this will be so off-base and convoluted that no one will get it at all).
This is a work in progress, and I know this is kind of rambling, and there are some gaps in this, but I just wanted to put these ideas out there and see what people think. What I want to try to do is compare our tax policies and economic model to the GOP policies and model. We are called “tax and spend” liberals, while they are “trickle down” conservatives. My hypothesis is that our model (tax and spend) is not only more moral, but also boosts the economy while their model does not.
To see how, follow me across the break.
Though not the main thrust of this diary, I’d like to begin by knocking down one of the frames that has been erected recently. Economic policy and values are not separate — they are interrelated. This has become my mantra lately. Economic policies are an implementation and reflection of values. There are a slew of questions we should be aiming at the GOP that will reveal this to the American citizens. How do you claim to be the party of family values when you are screwing families with your program cuts and protecting corporate rights over people’s rights? How do you claim to be pro-life, when you are giving economic windfalls to companies that pollute the air and water and banning stem cell research? How do you claim to be the party that supports the military, when you are cutting veterans benefits? How do you claim to be the party of morals when you allow immoral corporate behavior like the raiding of pension funds? How do you claim to be the party of small government when you are running up record deficits?
And there is our opening to the larger discussion: Those deficits are because the GOP is just as much a tax and spend party as the Democrats. Repeat: The GOP is a tax and spend party. The difference is in who we tax and what we spend on. The GOP taxes the masses and our children (via deficits the taxpayers of the future will inherit) and gives to the military-industrial-corporate complex. The Democrats tax the overclass and spend on programs that benefit the lower classes. Note how I phrased that: they “GIVE” we “spend on programs that benefit” – a small distinction, maybe, but I think an important one.
Now here are a couple of questions: which way seems more moral: leaving large debts for our children to pay off so that corporate fat cats can get richer, or taxing the obscenely rich so the poor can have a decent standard of living? More importantly, which way works to boost the economy?
Well, even as a non-economist, I understand a few things about the way people spend their money and can see how that impacts the economy. I’ve been a starving student, so I know the lower classes spend every penny they earn. The wealthy do not. If you can understand this simple, basic, undeniable fact, you will see why our way helps the economy and their way does not.
The GOP wants us to believe that the economy is driven from the top down, by companies and the wealthy people who own them. Based on that assumption (which is wrong), they have come up with this model: Companies create jobs, so give more money to (or take less money from) the wealthy business owners, and it should mean more jobs and a stronger economy. The wealthy buy big ticket items and invest their money in businesses, so if you give tax cuts to the rich, it should mean more money for corporations through big purchases and investments, which should mean more jobs.
But it just aint so. Tax cuts for the rich do not trickle down. I think we have tried this experiment for long enough that we can see that it is, in the words of George H.W. Bush, “VooDoo economics.” More money for the overclass only helps the overclass. (Top down is a GOP theme — it’s how they think morality should be as well, but that is another discussion).
So why doesn’t trickle-down work? Because businesses only create jobs when they are making money. To make money, you need customers, not investors. Outside of the IPO, investors are mostly just shuffling shares between each other, with little money actually reaching the company. And those investors expect a return, which means profits paid out to investors rather than used to hire more employees. The personal greed promoted by the GOP has also led to skyrocketing CEO salaries instead of pay raises or new jobs created. Remember, the rich don’t spend a lot of that money you let them keep, they save it or invest it (hiding it from taxation). These people have already bought most everything they could ever want to buy, so they aren’t going to make a lot of extra big purchases with that tax cut you’ve given them. So where are the new customers who are going to spend their money and drive the economy? This system doesn’t produce any.
Our economic policy is one that realizes that the economy is driven from the bottom up, not the top down. Increase the spending power of the masses, and the economy will boom. A booming economy means higher tax revenues, lower deficits, and possibly the ability to pay down debt.
So, here is our model: Increase taxes on the wealthy and the mega-corporations and reinvest it in programs that benefit the lower classes. Things like subsidized housing and utilities, subsidized daycare, universal healthcare, education and after school programs, food stamps and free school lunches, adult education and trade schools, public transportation, etc. This will enable the lower classes to spend their income in other areas — and spend it they will. Essentially, the lower classes will have more disposable income to buy all those things they couldn’t afford before. Voila: Here are your new customers! More customers means more need and more ability to hire extra employees. The wealthy benefit as well, since they own or invest in those businesses that now have more customers (this should diffuse complaints of class warfare). It raises the standard of living of the poor, while not hurting the standard of living of the overclass (I like using the standard of living as a measure, because it show who can afford to pay more taxes and who can’t).
My GOP older brother argues that giving so many benefits to the poor makes them lazy because it takes away incentives to work hard. It is an argument that is 300+ years old, formulated by economists writing in England in an economic system far different from our own (little to no middle class or upward mobility, for instance). Yet their theory is still regurgitated by modern conservatives. From the Literary Encyclopedia:
In his “Dissertation on the Poor Laws” (1786) Joseph Townsend echoed the title of a 1704 pamphlet by Daniel Defoe – Giving Alms no Charity – and called for the abolition of the relief system on the grounds that nature alone should arbitrate the balance between population and food supply. Apart from saving on the huge costs sustaining the Poor Law, such a move would transform labour into a commodity, the value of which the market alone would determine.
Thomas Malthus, influenced by Townsend’s naturalism, deplored the lack of a mechanism to compel paupers to earn their own crust – the assistance system, as he saw it, sapped the nation’s moral fibre by encouraging immorality and over-population.
I have to call bullshit on this. The American people are naturally industrious. We have a national mythology called the American Dream that encourages hard work. People take pride in working and making their own way. What makes people give up on working is a sense of despair and hopelessness. What kills motivation is when a person feels they have no chance of achieving the American Dream.
So, not only does the GOP model not create new customers, but by cutting programs for the lower classes it does exactly the opposite — it reduces the purchasing power of the lower classes. As it reduces the purchasing power of the poor, it increases their sense of hopelessness.
What do you think? Does this make any sense? Just remember these key points:
- Economics and Values are interrelated: GOP economic policies reveal that they value corporations over people, while we value people over corporations.
- Their model — top down — gets it wrong because it doesn’t create new consumers.
- Our model — bottom up — gets it right because it increases the purchasing power of the lower classes.
- Our model is not anti-free market, it boosts the market and everyone benefits.
This last point about the free market leads me to one more area I would like to cover. Unlike the GOP, we also feel the government should protect the market. No, I’m not talking about tariffs. I’m talking about regulations — labor laws, fair marketing laws, environmental protections, consumer protections, etc. I know it seems counter-intuitive and I wouldn’t blame you for asking, “How do regulations protect the market?” Well, let’s look at the GOP model and see what the market is like without regulations:
The GOP thinks the government should not intervene in the market at all (unless it is helping corporations). But this GOP laisez faire model is actually anti-free market. Let me say that again: the GOP laisez faire model is anti-free market. I know that seems contradictory – how can the least regulated market not be the most free? Well, let me answer a question with a question: What happens when you have a totally free market? We can look at our history books for the answer: You get monopolies and trusts. You get corporations abusing consumers, labor, and the environment. You get anti-competitive business practices — big guys crushing little guys or squeezing them out of the market. And you get market disrupting and democracy threatening concentrations of wealth and influence — Robber Barons — the overclass — Bush’s Base.
Heck, you don’t even need to look at history books. Look at what happened here in California when the energy industry was deregulated: consumers got screwed. The energy companies got together to manipulate the market and steal money from hard working Americans. Look at what happens when an American company sets up shop in Indonesia or Saipan: laborers are paid pennies on the hour and made to work ridiculously long hours in uncomfortable or dangerous conditions, while the factories pollute the air, water and ground in and around the villages where the laborers live. Not to mention that jobs that used to go to Americans are outsourced. If the government isn’t involved in monitoring and regulating the market, the corporations manipulate and abuse the market. The “invisible hand” of supply and demand is easily replaced by a corporate fist.
So, the final points are these:
- An unregulated market is an anti-free market.
- The GOP thinks people exist to benefit corporations.
- We think corporations exist to benefit the people, and must be regulated to ensure they do.
I hope this makes some sense.
(CP everywhere)
