It's time for a radical new approach!
We've tried trickle-down and it hasn't worked! All that's trickled down is crap.
So as we near, bounce along, or bounce off the bottom in our financial recovery, let's start thinking outside the pox.
Yes, supply side economics has been a pox on this country, on the world -- a pox on capitalism with a predatory financial system and unfiltered greed becoming a malignant cancer.
What caused this insidious and unrelenting disease? How do we reverse it?
Milton Friedman was wrong and those that still follow his philosophy are either blind or ignorant of three decades of decline.
Alan Greenspan, a staunch supporter of Friedman economics, admitted, in testimony before Congress, to being wrong about capitalism. Wrong about deregulation. Incredibly wrong about market self-regulation.
As a result of their miscalculation -- of their failure to include greed in their equation -- the world is experiencing a meltdown of major proportions.
Now, the powers responsible for fixing this global tragedy are making strategic mistakes that will lower the bottom to intractable levels causing even greater suffering for a wide swath of the global population.
The clarion call in global economic circles is 'austerity.' It's amazing that the wealthy people controlling the world's governments think an austere world will be a better solution.
For whom?
A growing portion of the globe has already been laid bare with more and more people living in poverty every forbidding day -- losing their jobs, losing their pensions, losing their homes, losing their dignity.
Austerity will accelerate this negative spiral and slow growth; growth which is necessary to reverse this merciless decline.
So, how do we stimulate growth?
Passing the American Jobs Act would be a good start, but, absent that, let's try something really radical. Something that might actually work.
Let's stimulate the bottom!
It's way past time to make the wealthy pay their fair share for the health and welfare of this country. They've been given a pass far to long and it's time they ante up.
Let's tax the rich and give to the poor; increase demand and stimulate growth. Let's return some of the money they've stolen to those they stole from.
Some call that reparations, some redistribution. What it really is, is wealth fairness.
The wealthy in this country must be made to pay for the wars they encouraged -- for the lives their advocacy ruined, the deaths and permanent disabilities -- the result of their callous apathy.
Past generations have paid for the wars with higher taxes; top marginal rates as high as 94% after World War II. But this generation of wealthy Americans feels no such patriotic obligation.
So, to start, let's create a progressive tax structure that will force the rich to pay for their tacit acceptance of a crumbling society -- an eroding democracy.
Start by increasing individual tax rates to Reagan levels -- around 50%. Then raise estate and capital gains to Reagan levels.
Restructure the corporate tax rate and get rid of all the corporate loopholes (corporate welfare). According to the Congressional Budget Office, corporations in fiscal 2011, paid the lowest effective tax rate, 12.1%, in 40 years. The bigger the corporation the greater the civil obligation. Tax all foreign profit at a flat 10% for retaining it overseas each fiscal year and 28% when they bring it back to the United States.
Putting these funds back into the economy will immediately stimulate demand.
How do we do that?
Social Security recipients, disabled veterans, and retired veterans receive an immediate and quarterly dividend.
Unemployed will be given a split dividend for reemployment based on retention. Low income working families will receive an employment stipend.
Returning veterans will be given a deployment subsidy upon their return from theater.
Renters and homeowners will be provided a value dividend for continued habitation.
Low income college students will receive semester completion benefits for remaining in school and completing their course of education.
Putting money into the hands of responsible people that will immediately put it back into the economy is a smart plan given the history of trickle-down.
The American people are growing weary of the up hill struggle and the crap that has filtered down to them. They're tired of stagnant wages. Tired of having their pockets picked.
There are other ways to rebalance an unfair system and the spring is drawing near. Will it be 'The American Spring?'
A bloody resolution may not be the most desirable way to "level the playing field" but given the current state of affairs may end up being the only solution.
America has a choice. A chance to save itself from the ravishes of poverty. A chance to save our asses from the persistent degradation of the past three decades.
Time is running out so we, collectively, must demand a change in direction -- a radical change that will reestablish the middle-class and strengthen the nation's economy.
We've tried trickle down and it's been miserable for most of the globe.
Don't you think it's time we tried something that works?
Follow Jim Worth on Twitter: www.twitter.com/authorofmystery
Private industry in this country is holding back, awaiting demand to increase (good luck!) Since private companies are reluctant to spend, that leaves the government to pick up the slack. Yes, we need to be concerned about long term debt, but not now. First, increase demand, and if the private sector won't do it follow Germany's lead (who is doing OK, thank you very much) and let government get involved. They choose to have government and the private sector partner with each other, as opposed to the adversarial relationship that's fostered here.
As for the very wealthy, in 1980 the top marginal tax rate was 70%. Last year it was 35%. What has happened to jobs and entire U.S. industries during that same period? They have followed the same downward spiral as the tax rates. As for trickle down economics, the only thing that rolls downhill is shit.
http://www.henrygeorge.org/isms.htm
https://libertyrevival.wordpress.com/2011/01/09/ending-poverty-and-political-turmoil/
It is completely illogical to think we could ever raise taxes to even 2000 rates much less those which prevailed during Reagan's administration. Good grief, Congress can't even come to a reasonable agreement to pay the nation's debts for which we are already obligated.
Better we emulate China and most other countries and establish new rules for trading with the US. If you want to sell it here, you must make it here. If you service it here, the call center and other service employees must be on American soil.
It is amazing how the incomes of the wealthy stop being a bone of contention when everyone who wants a job has a job.
Here is a clue:
1) Supply side economics unremarkedly observes that the more you use the tax code to punish wealth creation, the less wealth and thus less tax revenues taken from that wealth you get. Every single time over the past century, when the government lowers marginal tax rates, the economy and tax revenues have grown.
2) Milton Friedman is a monetarist, not a supply sider. Monetarism unremarkedly observes that the more money the Fed prints, the lower the value of that money.
3) Trickle-down is a pejorative and not a school of economic theory.
First of all there's his fallacy of composition, not all people who are wealthy "stole" their wealth, and that's even if you use the left wing definition that treats inheritance and all forms of banking income as theft.
Then there's the second one saying that all the wealthy supported the wars. I think it's safe to say that those who profited from them by investing in or owning defense contractors and other companies that profited supported the wars but even that's tenuous because then you'd have to assume that every low and mid level employee that got a paycheck thanks to the wars supported them as well.
There's a couple more but those are the first two and the most glaring ones.
"Wealth fairness" is absolutely redistribution. It is also blatantly un-American. You are in effect saying that you have the right to earn wealth, and buy property, and enjoy it (life, liberty, happiness) but only in prescribed limits. You cannot tax people for having too much without destroying society,
Taxing the wealthy based on the wealth they have, and not just the wealth that they are earning may be progressive but it's also repressive and defacto seizing of wealth for the sake of equalization. How would you feel if the government said that you would be taxed at 90% because you were "too wealthy" according to their arbitrary standard of how much is too much?
Just like every other industrialized nation has.
If we do not change this existing too heavily efficiency-oriented market process soon to a more effectiveness-oriented market process, I strongly believe that this economic tailspin cannot be stopped. At the very least, as long as the current conditions remain, we cannot achieve sustainable economic growth.
Our economic experts should consider this seriously in their ruminations about the economy.
Please see: “The Real Cause of the Current Economic Crisis and a Suggested Solution” http://goo.gl/9y8Uf.