First I agree with your blog on this:
“They have used their political power, which is considerable because of their wealth, to cut taxes for people at the top. They attack and weaken labor laws, they weaken the department of labor, they fight raising the minimum wage, they try to ship jobs overseas, where they can again dictate the wages. They begin dismantling the safety net, by trying to lower Social Security payments, or raising the retirement age. They try to limit Medicare because it “costs too much” (which is doubly evilly ironic because this same class of people keeps the rest of us locked into the most expensive medical system on earth) They cut unemployment benefits. They try to weaken the power of the government in general, by starving it of money and by buying up all of the bribable public servants until there are very few left who understand/care about the government’s important redistributive function. In short, they do everything the Republican party (and about half of the Democratic party) has been doing for the last 30 years.” -
http://professorplum2.blogspot.com/This is an interesting topic and I have been wondering what the heck happened to our economy given that it appears to my lay persons eye, that it is on the verge of collapse.
I don’t have an axe to grind in terms of economic theory, I just want a healthy economy that benefits all of society, and, I do want to understand how we got to this point in our nation’s history in what seems like a blink of an eye.
Therefore, I would like to engage with you and others who are more knowledgeable than me, in some dialogue. I want to learn. I can see that there is an economic problem but I do not have the educational foundation or tools to sort through this to conceptualize or see the solution.
I have some questions and I need to walk through your Op slowly. BTW- I do know who Milton Friedman is and his laissez faire economics, which, as I understand it, was the basis for much of Reagan’s economics in the 1980's and the repug mantra of no regulation, small government, low taxes, trickle down economics, let the market sort itself out, etc.
..........
Hourglass, the money in capitalism flows up, from the people who don’t have much of it to the people who already have a lot of it.
First, people with little money run out of it quickly, and people with no money are a huge problem.
Secondly, the money soon stops flowing and you have economic collapse. - Prof. plum .................
I wonder, do you have a definition for the various categories, such as rich and poor?
Perhaps the question is better asked in terms of categories defined by annual income per single adult:
DefinitionsWhat is the definition of poor?
What is the definition of middle class?
What is the definition of rich?
What is the definition of super rich?
DefinitionsPerhaps there are even more categories?
What is the definition of poor?
What is the definition of working poor?
What is the definition of lower middle class?
What is the definition of middle class?
What is the definition of upper middle class?
What is the definition of rich?
What is the definition of super rich?
Perhaps there are even more categories?
.......
DefinitionsI’ll take a whack at it and see if we agree, I read sometime ago and imagine the definitions to be:
What is the definition of poor? $12,000/year or less.
Frankly, you can’t really live on this.
What is the definition of working poor?
My guess $20,000 to $25,000/year income.
I would say, that it takes around $2,000/month (pre-tax) to pay the bills, so that would mean that anyone below $25,000/year income, would be really struggling, I hate to use the term “poor” because it is emotionally loaded.
What is the definition of lower middle class?
My guess, $25,000/year to $35,000/year
What is the definition of middle class?
My guess, $35,000 to $75,000/year
What is the definition of upper middle class?
My guess, $75,000/year to $150,000/year income, maybe $250,000/year??
What is the definition of rich?
Again, a guess: $250,000/year income or more up to say $500,000/year
What is the definition of super rich?
My guess, $500,000/year or more.
................
Those are arbitrary values, I am not wedded to them, but it helps me to define terms.
Next: HistoryIf I recall, my model for understading American economic history is that through to the beginning of the 20th century, we were a farming nation, agrarian.
Yes, the 19th century had robber baron’s, but, by and large the nation itself farmed.
The industrial revolution created factories, urbanization, an inflow of farming folk to urban industry: steel mills, bridges, factories. Pittsburgh, Cleveland, Gary, In., to name a few.
The financial capitol of the world, through Victorian times was London, as the British Empire collapsed slowly, New York rose to pre-eminence as the financial capitol of the world.
New York by the 1920's, Wall Street in particular and stock brokers and financiers in particular came to exert an influence over the economy. There was poor regulation and the bad practices and speculation on stocks, artificial run on stocks, ended up in the Great Depression of 1929, which actually lasted something like 5 years (+/-), if I have that correct.
I am not totally clear what got us out of the Great Depression. I know FDR created work programs, but, by 1939, still the tail end of the Great Depression, we already knew about the Nazi peril and I am not sure if it took WWII for us to get out of the Great Depression, or if we were out of it before, Pearl Harbor? Does anyone know the answer, as I'm not sure on this?
Following WWII the US entered into an unparalleled period of economic growth and security. This is, BTW, the golden era in the hearts and minds of repug and conservatives. Their halcyon days. A blend of cold war paranoia and economic growth was imprinted in the national psyche. The “red scare” threatened our “way of life.”
The 1960's and 1970's were still economically a growth period, as I understand things.
Then, under Carter, we had our first taste of geopolitical power shift, and it was not the Kremlin that jerked our chain, it was OPEC. Home mortgage rates rose to 17% and we had long lines at the gas pump.
Reagan came in to “save the day,” and he invoked the 1950's as the model for prosperity and culture, with clever use of social-psychology, he called for the nation to return to an era of “law and order” ( a Nixonian phrase) he evoked “the shining city on hill” and “morning in America” (Peggy Noonan’s speech craft) and he touted small government, low taxes (Grover Nordquist and the Club for Growth) and no-to-low government interference with the sacred business of: “business.” Business was King!
Pappy B*sh, got the top job once and then lost to Clinton. He seems forgettable, other than Gulf War I.
Under President Clinton, we experienced the rapid growth of wealth, enormous wealth, wealth unlike much I recall from previous times, due to the technological developments centered around computers, computer technology, and information technology.
The old business models, like IBM were out and Microsoft and Apple and Intel and Sun Microsystems, etc. etc. were creating young, millionaires by the bushel, or so it seemed, reading about the stock option instant rich.
In the wake of so much money a new culture arose, not hippies, of the 60's, but, rather, yuppies. Hence, Starbucks, Gap, Eddie Bauer, and so on. Old blue chip companies and old Dow companies were gone and the new brand names appeared not on the NYSE, but rather, on NASDAQ.
In the late 1990's the over inflated tech stock bubble burst and there was an economic down turn.
All the while the nation was still being fed the line: globalization, the new economy and less regulation, low taxes, unions are bad, small government and we all can work our way to the top. During that time, something like 40% of the US were invested in the stock market through pension plans: 410K’s, IRA’s, then Roth IRA’s and mutual funds were shilled like hot chestnuts on a frigid London morning in a Dickens novel.
Then, as the repigs will tell you, “they” forced Bill Clinton to balance the budget. Regardless of who or why, he did!
Now we come to the chimperator. He, as the late Molly Ivens predicted based on his past performance in Texas, ran this nation into the ground.
He bloated the government, yet managed to cut services. Took us into a costly and needless war in Iraq that we could not pay for nor afford, we started to buy loans from foreign nations to feed our war costs and cost of government, at the same time, the workers power of collective bargaining had been undercut and ridiculed by the conservatives, manufacturing went over seas where benefits were nil and labor costs low, corporations moved their HQ’s off shore, for ex.: Hell-Is-Burton, to avoid corporate taxes, the national debt grew, the surplus Clinton left us was gone, the Social Security “lock box” that Gore talked of and was ridiculed for saying that it was locked, was raided and slowly and quietly, while the corporate shills and whores snuck in the message that corporate globalization was inevitable, we lost manufacturing jobs steadily, until State by State, textile work, steel mills, hell, any manufacturing, even down to toys and pet food, was sent over seas.
In the meantime, as we made less things, as living wages declined so that it was common to hear pundits and their half hearted moaning and faux concern that Americans do not save and that something like 60% of us live from pay check to paycheck or worse yet, by using credit cards, no one asked why? Was it for jollies or was it that people were shifted out of $35/hr manufacturing jobs with benefits, to low wage service industry jobs?
At the same time that jobs were being shipped overseas, unions were under attack and losing members, the US auto industry leadership became non-competitive with their product, so that one of the mainstays of the economy was failing from within.
And all during this time @ss wipe chimperator was floggin the notion of “entrepreneurship,” and an ownership society: Hey folks! You live pay check to paycheck, so, this is a great time to buy a home, as the prices are bloated, so, we’ll give you an exotic loan!
Then, the financiers took that money from home loans and sold the Ponzi scheme as bundled assets dressed as stocks, i.e., equities, and called them “mortgage backed securities” and then, voila, before the chimperator could leave town with pickles, his robe fell off and lo and behold, not only was he naked underneath, but he had nothing there!
So here we are, this is the legacy: the likes of Maddoff, an obscene national debt, rising unemployment and a very few, my guess, 0.5% of the top of this nation are super rich and they sit with their losses in net worth down to 2 billion from 4 billion, ( waaa....) while the rest of sit with our thumbs up our bums watching it all collapse. Jobs, wages and life savings. And there is nothing to fall back on, because the staple of this nation, the things that we would look to and to pull us up by our boot straps, are gone. We are no longer talking at all about shoring up any industry–except the last one–autos, because there are none to go back to.
No steel mills, no U.S. bridge, no textiles, hell, even tech jobs have been off shored.
No matter who I call for tech assist, or related "phone help" service work, I am talking to India, not Indiana.
Now, I note that my respected friend readmoreoften did allude to the failure of communism to destroy capitalism globally and I hear the refrains of globalism again, but, this time, in terms of globalization of workers and not corporations. Well, that comes under the category of solutions and I am still in the first stages: trying to identify the problem. So, I wanted to acknowledge that thought, but leave it for later consideration, when I have some sense of what really went wrong, then, I can begin to ponder what to do next.
As it stands, we got into this mess because we stopped making things, when we stopped making things we lost good paying jobs, the workers felt the squeeze first, hence, we saved little and lived on credit cards - because we had no choice. Now, we have nothing to fall back on for jobs for folks who have say a high school education and we have also outsourced white collar jobs so that folks with speciality skills like tech work have no jobs available and now the trickled down economic pain has hit college grads, who also find jobs hard to come by.
OK, I invested 1.5 hours of my labor into this reply. :)
I hope that what is lacking in depth of knowledge, will be made up for in sincere effort and will be taken seriously and with a at least the honor of a reply or two.
So, my question then is:
Is my analysis even close?
If not, why?
If it is correct, what do we, as a nation, do now to restore the economy and what should it be “restored” to?
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