From Chuck Kelly, a retired management consultant living in Charlotte, in response to “Better off? Yes – see the stock market” (Sept. 12 Viewpoint):
In their column, Betsey Stevenson and Justin Wolfers noted that the stock market gives a resounding yes to the question, “Are you better off now than four years ago?”
They’re correct if you consider the interests of Wall Street, the stock market and the increasing incomes of top corporate executives and their investors. They’re incorrect if you consider the decline of the middle class, stagnant or declining incomes of workers and an increasingly desperate poor.
While it’s true the stock market predicts future economic conditions, it’s also true that it is predicting corporate profits – and those profits are much dependent upon workers’ wages remaining stagnant or even declining. Given the structure of our economy, that seems like a safe bet.
Totally missing in Stevenson’s and Wolfers’ calculations is the fact that the past four years are merely an extension of the previous 18 years. The right question to ask is “Are you better off now than you were in 1980. That’s the year the U.S. and other countries began a structural change in the world economy.
Milton Friedman and his libertarian “Chicago boys” convinced President Reagan, Prime Minister Thatcher, and other world leaders that unions were too strong, wages were too high, taxes on corporations and wealthy investors were too high – and corporate profits weren’t high enough. As a result, Reagan destroyed the air traffic controllers union and Thatcher destroyed the miners’ union. They and other world leaders began to take actions to make it easier for corporations to utilize cheaper labor wherever it was available in any part of the world.
Allowing corporations to utilize the cheapest labor wherever it exists is the whole point of globalization, as it is currently managed by the world’s governments.
Reagan also began an international competition to attract industry to the U.S. by lowering corporate taxes in 1986. Although U.S. corporate taxes were already slightly lower than the average for the developed world, they were further reduced from 46 percent to 34 percent. Naturally, every nation in the developed world immediately followed suit, with some reducing their taxes much lower than U.S. levels.
1980 was also when Republicans seriously began their strategy to “starve the beast” (government). Since entitlements like Social Security are so popular with voters, they decided that they could be eliminated or reduced only by putting the federal government into a deficit condition. Then they could make the case that we could no longer afford entitlements.
If you’re unfamiliar with starve-the-beast economic strategy and its intended consequences, search “starve the beast” and “Grover Norquist + starve the beast” on the Internet. It’ll make how we got into this deficit mess quite clear.