Tag: stagnation

Trickle-Down Returns to Enrich the Rich

As the rest of us are recovering from the outrageous Senate healthcare bill released this week, Trump and the Republican Party are having closed door meetings to shape their “reforms” to the Federal tax system. Get ready for a resurgence of rhetoric about how enriching the rich will generate a surge in economic activity that will raise all boats. There will be lots of talk about “pro-growth tax reforms”. This is the return of 1980s trickle-down economics. The basic notion is that if you put more money in the pockets of the rich and corporations they will invest in creating new businesses and jobs. Thus the money trickles down to the bottom. Trump and his Republican Party allies have already claimed that this will increase the growth rate of the economy from its recent typical of 1.5% to 2% annual growth to over 3%. The difference of this one percent has enormous implications. At 2% growth the economy doubles in 36 years. At 3% growth it doubles in only 24 years.1

Trickle-Down – The Reality 

BUT, no economist, banker, or corporate chieftain not on the payroll of Trump and the Republicans believes this will happen. Leaving aside all sorts of analysis about demographics (aging population), technology, and global competition, history and current events provides a fairly comprehensive rebuke to these trickle down cover stories for the Republican give backs to the rich and corporations. Trickle-down economics was invented in the early 1980’s to explain the wisdom of Ronald Reagan’s tax “reforms”. Much space was taken up with displays of Prof. Arthur Laffer’s demand curves that were passed off as proof from the academy that enriching the rich and corporations would unleash a new wave of economic activity. Nothing like that happened in the 1980s. Nothing like that happened in the first decade of this century after Bush II’s big tax cuts.2 And most recently in Kansas, the Republican dominated State legislature had to override the governor’s veto of tax increases after a 5 year experiment there with trickle-down drove the state nearly to bankruptcy.3

Nevertheless, get ready for another round of bull shit Republican propaganda about “pro-growth tax policies”, unleashing the over-regulated, over-taxed job creators, and a great surge in economic growth. The forces of free-market capitalism just need to be freed from the shackles of government. You will here all of this and more. The media will continue to do its job of repeating all of this. You need to be clear that the vicious Republican Party is at work for their masters among the rich and corporations. There job is making sure that the 40 year stagnation in incomes for the 80% will not change course and the flood of wealth will continue to those at the top. 

 

  1. This is the rule of thumb exercise. To calculate how many years a given percent of growth or interest will take to double the initial amount you divide 72 by the growth rate – e.g. 72/2=36. []
  2. See “Trump’s Big Tax Cut Is Unadulterated Trickle-Down Fundamentalism” by Justin Miller 4/25/2017 at The American Prospect []
  3. Read “Epic fail of Kansas’ tax-cut plan offers a lesson for us all” by Eric Zorn in the Chicago Tribune 6/20/2017 []

1 Our Situation

Our Situation button

For some time I have been thinking, writing, and gathering information, not necessarily in any good order, about our situation here in the US. For more than a decade I have thought that we are in a protracted crisis.

This crisis can be felt at the personal, family, local and national level in all areas of life. Some of the sources are systemic to technological change and the global dynamics of capitalism. Some find their roots in fundamental failures in humans – racism, sexism, religion, etc. Some flow from our political system, some from our economy.

The focus of this work has been to try to identify what this crisis is about within the US context, to describe it, without any real notion of even suggesting solutions.

Where Did This List Come From and Is There an Order?

I first started this list two or three years ago while we were still in the deepest part of the Great Recession. Most of the early entries related to the political system and economic inequality. As I have returned to it I have broadened the coverage of social and political topics. Most recently I have added ones that relate to the mythology underlying our approaches to life in the US.

Here is my current list of topics:

  • Underperforming, expensive healthcare system
  • Political system controlled by big money, private and corporate
  • Distorted role of corporations
  • Quasi-religious faith in “free market” capitalism
  • Race, sex, ethnicity, klans….
  • Myth of social mobility
  • National and State Political Systems Designed to Be Anti-democratic and Dysfunctional
  • 30+ year stagnation of income
  • Disappearance of living wage jobs
  • The rich are at their feeding troughs
  • Expensive, underperforming K-12 educational system
  • Expensive, underperforming higher ed system
  • Web access and infrastructure
  • Homelessness and poverty
  • Bloated, dysfunctional global military and empire
  • Our longest war – the war on drugs
  • Criminal justice system – aka the judicial-incarceration gulag
  • Persistent income disparities
  • Super rich vs. everyone else
  • Intrusion by organized religion into government and politics
  • Energy policy focused on consumption instead of efficiency