Whoever Got a Job from
Conservative spin artists like to ask the question: whoever got a job from a poor person? Since the wealthy will always be with us, the more realistic question is: whoever invested money when consumers didn't have enough money to buy the products they needed?
The day after the Fed lowered the prime interest rate by a quarter of a point in December, 1995, Rush Limbaugh noted that they were forced to because our economy was slowing down. And, of course, he used the event to cast blame on liberals for the inevitable economic downturn. His reasoning: the Deficit Reduction Act of 1993 increased taxes on America's wealthy (the top 1.2%).
Of course, the economy boomed and the deficit actually went down for the six years after Limbaugh's prediction. But, according to Limbaugh, the later "delayed reaction" caused the recession after Bush became president. Because, you see, when the wealthy have less money, they invest less, unemployment goes up, and, voila, you have an economic downturn (six to sixteen years later).
What nonsense. Limbaugh and his right wing cohorts are conveniently leaving out the fact that our present economic difficulties have nothing to do with the lack of investment funds. Plenty of manufacturers are producing products. There are no shortages in the warehouses or on the store shelves.
Everyone should understand that the reason more retailers will go out of business eventually, and the economy will slow down—is that the bottom half of Americans are running out of money to buy the products that are already available.
By historical standards, unemployment is low, but wages should be high, and they aren't. In fact, wages for the bottom half of Americans are progressively getting lower, relative to inflation. And taxes on our wealthiest citizens have nothing to do with it. Even the amount of investment has nothing to do with it. It's the quality of investment that has everything to do with it.
The major causes of our present problems are the conservative political actions that been accumulating for the past fifty years, and that have destroyed the quality of investment in America.
Conservative political actions that:
It's deja vu (1929) All Over Again
Add all these things up, and you have the identical conditions we had in the late 1920s, when our country converted this same kind of conservative political nonsense into actual law.
Despite the economic boom of the roaring twenties, by 1929 over 60% of Americans made less than $2,000 per year, the amount required to take care of a family of four. While the number of millionaires tripled (the same as in the 80s), the per capita income was just $750 a year.
It was not a lack of investment funds in the hands of the wealthy that brought us the depression. It was a lack of money in the hands of consumers. People all over the world simply didn't make enough money to buy the products they were making in their own factories.
Labor unions were almost powerless. Companies were relocating manufacturing operations overseas. Twelve hundred mergers swallowed more than 6,000 companies, and just 200 corporations controlled half of American industry. The so-called "free market" was a market that was ruthlessly controlled by the world's wealthiest citizens.
Just like today.
And when the bottom two-thirds of Americans ran out of their purchasing power, did the wealthy invest and provide jobs? Not on your life. Who would invest money in manufacturing plants or stores when people haven't enough money to buy anything but bare necessities?
Instead, during the depression, and with the huge tax breaks they had been receiving since 1925, the wealthy bought mansions in Florida, islands in the Caribbean, bankrupt farms at ten cents on the dollar, and, in general, anything safe and that they could enjoy.
The "Wealthy Investor" Fallacy
Fact is, if we managed our economy so that, say, one million workers got $100,000,000 more in wages ($100 each), we would create far more investment than if we gave each of 1,000 millionaires a $100,000 tax break.
The millionaire might simply buy treasury bills with his $100,000 tax refund (on which taxpayers would pay the interest.) Or, he may buy the house you're living in and raise the rent. Both of these are socially desirable options in the view of conservatives. On the other hand, he may just go to Las Vegas and gamble it away. Easy come, easy go. Unfortunately, this is exactly what too many rich people are doing today.
To rich people, $100,000 is discretionary. That is, they can spend the money any way they damn well please. They can invest it, they can sock it away, or they can hoard wealth (especially land and buildings), and drive up the prices on everything from private homes to automobiles. However, if a million workers each make an extra $100, you know for sure that investors will climb over each other trying to figure out how to get it. Investors know that, in workers' hands, the money has to be spent, and usually for necessities.
Not only will the money be spent, it will create investment in producing products that are needed by large numbers of people.
By the way, if you've been reading the newspapers lately, you know that "upper-end stores," the ones that cater to high income people, are doing very well today. The stores that cater to middle and low income workers are the ones that are in trouble, and that likely will go into bankruptcy. That's an omen for the future if there ever was one.
Arm Yourself with Facts and Educate Others
No doubt about it, a severe economic downturn is coming. It's hard to tell when it will happen, and, with conservatives in total control of our economy—it probably won't come to a screeching halt until the bottom half of Americans lose their credit and most of their purchasing power.
But when it comes, watch out. Conservative demagogues are already figuring out new ways to transfer blame:
America's wealthiest citizens bankroll our right wing think tanks, and their highly paid propagandists will massively bombard the public with the same kind of economic nonsense that Limbaugh spouts on his daily harangue.
Our only defense will be poorly financed, but well educated citizens who talk to each other.