From 1950 to 1980 America was the manufacturing superpower with the strongest and largest middleclass in world history. We were the number one exporter of finished goods and importer of raw material to make those goods. We had a twenty five percent unionized private work force, roughly fifty percent of Americans had pensions, and we balanced budgets. Today we have a less than seven percent unionized private work force and around six percent of Americans have a pension.
Since 1980 to 2010 our manufacturing industry has left the country in the auspices of free trade agreements. We were supposed to export our goods to China and India not export our jobs to these countries. The American worker has seen their pay remain stagnant for decades and even drop by $2,000 since 2001 because of these policies. Millions of good paying blue collar jobs have left our country and were replaced with low paying retail (would like to super size your order) jobs causing Americans to work more hours and bring home less money. We are in a race to the bottom as Ross Perot predicted in 1992, Giant Sucking Sound. We need to exit the WTO and renegotiate our trade policies so all nations benefit not just trans-national corporations, international banks, and global trade organizations.
In the 1980 we flipped our economic policies upside down and we have suffered ever since. George HW Bush and opponents of Supply Economics referred to the theory as voodoo economics. They accurately predicted the results from such policies but we don't hear about the failures of Supply Side/ Trickle Down economics in today's news due for one simple fact of; The people or organizations that benefit from our economic system have bought our government through campaign contributions and lobbying efforts. It is the same few that own ninety percent of the US media and seventy- five percent or more of every major industry in the United States. These entities are corporate monopolies, international banking institutions, and global trade organizations.
The result is we no longer make goods in America. The inequality gap has exploded to the most unequal society in the top 40 industrialized nations on the planet, where the top one percent earn fifty percent of income and own nearly ninety percent of the wealth ( property, homes, luxury items,
The answer is simple, but making the shift back to demand side economics and rational trade policies will be difficult. We need to start electing representatives that support public financing of elections, refuse large corporate donations, and want to reduce the influence of lobbyists on our government. Once enough representatives are in office that support these ideas we can then start implementing;
1. Enforcement of Sherman Anti-Trust laws and break up monopolies in every industry
2. Exit the WTO and GATT agreements
3. Selective import tariffs on manufacturing we want to promote in US
4. Restructure our tax policies back to Eisenhower through Carter ranges, to give incentive to reinvest capital back into American productive economy
5. Create a Green Industrial Revolution with existing and advancing technology to spark an economic recovery that includes well paying jobs that will put money in workers pockets, which will create demand for other goods
6. Create a movement to buy American made goods once again, support local economies keeping our money on Main St instead of Wall St.
7. Put incentives in place where it is more cost effective to do business practices in a safe sustainable way.
The major tenants of the Supply Side/Trickle Down Economics:
1. Drop top marginal tax rate on millionaires and billionaires
2. Increase money supply by dropping interests rates making credit easily accessible (a.k.a. debt)
3. Deregulate business allowing them to increase productivity by avoiding the cost of government regulations
1. Tax Cuts for the Wealthy
Theory By allowing the investor class (top 0.5%) to have more money they will invest in more American business creating more jobs. This was the first blow to American wages.
Results It removed the incentive of reinvestment of capital back into the business that created the wealth. This reinvestment came in the form of higher pay, benefits, pensions, and research & development. Instead of investing in American productive economy the investor class kept much of the money and invested in:
1. Wall St.
3. Factories in other countries
Reality The only thing that creates jobs is demand in a sustainable economy. Demand, in traditional economics, is equivalent to wages or workers pay. People having money to spend on goods and services create demand, which in turn creates the need to higher more workers.
2. Drop Interest Rates
Theory This allows business to expand easier and develop new technologies that will increase productivity.
Results As wages didn't increase with cost of living, credit was the only way to maintain lifestyle we have grown accustom to from 1950 -1980. As credit becomes more available boom and bust economic cycles are the result. Savings and Loans Crisis late 1980's, dot com boom of the 1990's, and housing boom and collapse of 2000's.
Reality This has caused more and more Americans get further and further in debt. In 1980 the average homeowner had 2/3 equity in their homes, in 2009 that number was less than 1/3 equity in their homes. Also in 2009, 1/3 of American homeowners were underwater with their mortgages, which means owning more than the house is worth.
3. Deregulate Business's or Let the Market Regulate ItselfTheory This allows business to aggressively move towards the most productive practices and increasing profits.
Results BP oil leak in the Gulf of Mexico, Wall St. reckless behavior that caused the 2007/ 2008 meltdown and the collapse of the American economy, and Massey Coal disaster killing 29 miners to give a few examples.
Reality This gives the wrong incentive to business to cut safety corners and exploit worker rights. For the market to regulate itself people must suffer or die. I don' want myself or my parents, family, or friends to be the one's who suffer or die for the market to correct itself, do you?