by Len Hart, The Existentialist CowboyChina owns the United States --or, at least, holds a 'mortgage'. China props up the dollar just enough to ensure that its excess production can be dumped here by way of its US retail outlet --Wal-Mart! The value of the US dollar is almost entirely dependent on China. When it ceases to be advantageous for China to prop up the dollar, the dollar will collapse. The decline and fall of the American empire is a sorry, tragic saga. It is the story of betrayals of this nation by the likes of Richard Nixon, Ronald Reagan , Bush Sr., the Shrub, and many lesser known 'agents' of the increasingly tiny cadre of ruling elites. It is the story of how GOP administrations paid off its elite base with tax cuts which have had, in fact, the effects of impoverishing the poor, enriching the rich, exporting the US manufacturing base, and exporting the jobs that it had supported. There are many versions of the 'supply side' story, but the most famous one involved a napkin and a Pizza Hut. While Ronald Reagan still occupied the White House, an alleged "economist" is said to have drawn a fictitious curve on a napkin. [More about this 'curve' to come.] As a result, millions lost their jobs, tent cities sprang up across the country, the nation plunged into a great recession --the deepest, most severe, the longest since Herbert Hoover's "Great Depression! I saw some of those 'tent cities' in 'boomtown' Houston. I was inspired to publish an essay in a local magazine. My essay was entitled: "What happened?" In a word, the bulls had gone bear if not 'bare'; the captains of capital cashed out at the top and left many another holding real estate that was declining rapidly in values. The least fortunate were those whose interest in Real Estate was simply that of keeping a roof over the heads of family members. Many of these folk lost their homes and moved into the 'tent city'.Under the occupancy of George W. Bush, the folly was repeated and the harmful effects left to Barack Obama whom it is hoped will take the rap. Called "preppies", they consulted Republican political campaigns and were in a position to spread economic dogma like 'supply-side' or 'trickle down theory'. Economists Arthur Laffer and Milton Friedman lent an imprimatur of respectability. Laffer, for example, drew a "curve" on a napkin which some believed proved the preposterous idea that reducing taxes for the elite classes would reduce debt and deficit. In fact, when Reagan put the theory to work with his infamous tax cut of 1982, the opposite occurred. Both debt and deficit increased. Supply side, i.e, 'trickle down' theory was proved wrong. Sadly, the GOP has not gotten the memo. - Wealth might have 'trickled down' IF the wealthy had invested tax cuts domestically! But they don't and probably never have! They squirrel away their windfalls in offshore banks, havens, shady investments or other ways which do not create new jobs, do not raise wages or stimulate capital investments or growth! The opposite has always occurred, i.e, the economy, rather, has always contracted with each GOP tax cut! If the government wishes to stimulate an economy by stimulating spending, it should just cut out the 'middle man' or, as John Maynard Keynes suggested, it should put bucks in mason jars, bury them in a landfill and let 'labor' dig them up! There is no point in letting the very, very, very rich SKIM OFF the top with idiotic schemes like 'trickle down theory'.
- Lower income citizens do not bear smaller tax loads as claimed. In fact, their taxes are always higher as a percentage of income because the working classes do not have access to most forms of depreciation, offshore tax havens, capital gains, tax credits, etc. Because they have dodges which salaried people don't, elites pay much less tax as a percentage of total gross income.
Many historians believe that a combination of growing personal debt and a widening wealth gap destabilized the economy and precipitated the Great Depression, characteristics that define the current collapse. Not so long ago, the media touted rising economic growth and a soaring Dow Jones. Those 'signs' of wealth likewise preceded Herbert Hoover's Great Depression. Certainly, the 20s are remembered for vast inequities of wealth financed by growing consumer debt. Neither 'elephant' has left the room.
Welfare for Wall Street
The lessons of Enron and WorldCom were not learned. The GOP still schemes to PIRATIZE your Social Security and are, perhaps, even more motivated to do so now than during the Bush years. PIRATIZING Social Security i.e, letting Wall Street speculators play with YOUR money is the ultimate 'bailout' of crooks who brought you the current 'financial crisis'. There is simply no rational justification for allowing Wall Street to 'speculate', play the markets with your money.
What are 'private accounts' but a government give away, welfare for Wall Street? You already have the right to open a private account of your own anytime you wish. Giving Wall St speculators carte blanche to play the markets with monies you earned by working is foolhardy, stupid at a time when taxpayers have already underwritten a national debt of several trillion bucks. Privatizing Social Security means that when the next collapse occurs, you will pay for it twice --once with an immediate bailout out of tax revenues and --again --with your hopes for a comfortable retirement, the Social Security which you may never see again! How right wing policies have robbed the US population with "trickle down theory" and other nonsense utterly unsupported with fact or evidence:
- In the late 1970s, the top one percent of the US population held 13 percent of the wealth; in 1995 it held 38 percent. [Source: Source: Levy, Frank. The New Dollars and Dreams ].
- The top ten percent of the US population owns 81.8 percent of the real estate, 81.2 percent of the stock, and 88 percent of the bonds. [Source: Federal Reserve Bank data in Left Business Observer, No. 72, Apr. 3, 1996, p. 5].
- One percent of the US population owns sixty percent of the stock and forty percent of the total wealth. [Source: Hawken, Paul, The Ecology of Commerce: A Declaration of Sustainability. New York: Harper Business, 1993].
- The top fifth of households saw their income rise 43 percent between 1977 and 1999, while the bottom fifth saw their income fall 9 percent....
- Since 1973, every group in society except the top 20 percent has seen its share of the national income decline, with the bottom 20 percent losing the most. They have just 3.6 percent of national income, down from 4.4 percent a quarter century ago.
- Indeed, the top fifth now makes more than the rest of the nation combined...
Rebecca Blank, who recently left the President's Council of Economic Advisors, pointed out, ‘We've gone back to levels of income and wealth inequality that this country hasn't seen since the teens and 1920s.’" [Source: Merrill Goozner, Crash of '99?, Salon.com, Oct. 1, 1999; addendum: since 1999, the date the source was published, the situation is much, much worse. Today --just ONE PERCENT own more than 95 percent of the rest of us combined. GOP incompetence and criminality moves so fast these days, it's hard to keep up!]. - The top one percent of Americans receive more income than the bottom 40 percent. [Source: Korten, David. When Corporations Rule the World, p. 108].
- Federal Reserve median family net worth by percentile for 1992, 1995, 1998, 2001 (Federal Reserve Bulletin January 2003, pp. 1-36). Note the small gains for the bottom 75% of the population and larger gains for the upper 25% and that the 1998 to 2001 gains were largest.
--US Wealth Distributions 1989-2001
The Laffer 'curve' was worse than fiction, it was a fraud. But the 16 month long depression which resulted is a disastrous effect that is still with us.
- New job creation under Reagan was 2.1% per year compared with Bill Clinton's 2.4% job creation rate.
- Reagan's showing, however, may be misleading; almost half of those jobs were in the public sector. In other words, Reagan , though he had promised the opposite, added nearly 2 million jobs to the Federal Bureaucracy. Reagan GREW the government --but NOT the economy.(Incidentally, job growth under Bush Sr, was a mere 0.6% --the worst performance since World War II. ) Reagan tripled the national debt and left huge deficits to his successor --Bush Sr whom Reagan blamed for what can only be called the Bush/Reagan recession.
- The disparity between rich and poor grew during the Reagan regime, narrowed somewhat during Clinton but exploded nova-style under Bush Jr.
- Almost one half of all American taxpayers were victimized by Reagan 's so-called tax reform; in other words, over 40 percent of those workers had a bigger chunk taken out of their check at the end of Reagan 's misrule than was taken out at the beginning of his regime.
- And what about "real wages", i.e, income adjusted for inflation? That declined as well.
Job Growth Per Year Under Most Recent Presidents8Stagflation, my ass!Johnson 3.8%
Carter 3.1
Clinton 2.4
Kennedy 2.3
Nixon 2.3
Reagan 2.1
Bush 0.6
-- Bureau of Labor Statistics, Current Employment Statistics Survey
How the GOP Exported Your Job
But, it is objected, the 80s were a period of great prosperity and, surely, Reagan 's tax cut must be credited! The quick response: the 80s, adjusted for inflation, were, in fact, a period of stagnation, increased poverty, and lost job opportunities defined by the export of US jobs, primarily Japan and China.
This was a point about which Milton Friedman reacted very testily, defensively when pressed about it in the grand ballroom of one of the luxury hotels in Houston's famous Galleria. I know. I was there! Friedman said that US jobs are not exported. He was either wrong or excessively pedantic! It was not --after all --a meeting confined to professional economists. For those who must work for a living, Reaganomics represented in a very real and practical sense the export of his/her job! For the real story about the phony 'prosperity' in the 80s, check out: Playing with the Numbers, How So-called Experts Mislead Us about the Economy, Richard A. Stimson Reagan 's legacy lives:
- US manufacturing is all but non-existent as the shelves of Wal-Mart remind every shopper!
- Labor never regained a pre-Reagan living standard
- wages never kept pace with inflation
- 'good paying' and/or skilled jobs never rebounded.
The US boasts the world's largest NEGATIVE current account balance while China boast the world's largest POSITIVE current account balance. [CIA, World Fact Book, Current Account Balance] China owns us! China props up the buck because it is still in their interests to do so. China will pull the plug on the buck when it is in their interests to do so! As a result of the GOP policies of Ronald Reagan , Bush Sr and Bush Jr, the US has become a vassal state even as it indulges the delusion of empire! Pathetic!Supply side --though discredited --reared its stupid head again some twelve years after Bush Sr. failed to grasp the simple maxim: It's the Economy, Stupid!
For measuring the economic welfare of individuals rather than the strength of the nation, it is necessary to convert the national measure to the amount per individual, family or household. Otherwise, a nation could double its GDP and its population without anyone benefiting. Such an individual measure is real per capita GDP, obtained by dividing real GDP by the population, and this can be very useful for comparisons over time, although it contains the same weaknesses as GDP itself. Another such measure is per capita personal income, which is the share each individual receives, on average, of total personal income. The latter parallels GNP and GDP, differing only moderately because of adjustments explained in first-year college economics courses (for example, corporate retained earnings and some taxes are deducted, while Social Security benefits, private pensions, and welfare are added). A paradox almost always arises during recessions. Wages are stagnant, unemployment grows, and yet the media broadcast and print government reports of increasing per capita personal income.Die hard, embittered supply-siders tried to effect a coup by impeaching a popular President who presided over the creation of some 35 times the number of jobs than were created under Bush Sr! The coup didn't work, of course, but the die-hards failed to get the message. It's the Stupid Economy!Following the closest election in the history of the nation, an election in which the winner was defined [by Scalia's 'majority opinion'] as the one getting the fewer number of votes, a mediocre, self-described 'retail politician' of few achievements and fewer ideas presumes to lead a nation while declaring:
This misleading result can be explained by considering the average income of a population of two: namely, billionaire Bill Gates and almost anyone of the rest of us. Take the total, divide by two, and you have an enormous amount. If Gates adds another billion it raises the average but does nothing for the other individual.
Rising per capita personal income during recessions reflects the gains being made by a small fraction of the population, which are enough to offset the losses of all the rest and thus bring up the average. A per capita figure has the characteristics of a simple average (the arithmetic mean), but people’s economic well-being depends on how evenly or unevenly the fruits of production are shared in the population. For this reason, the median (that is, the value at the middle of the range, with as many lower instances below as there are higher instances above) is a better measure. It is available statistically in the form of median family income and median weekly wages and salaries. Another complication is that when a household has more wage-earners and/or people work longer hours, often taking more than one job at a time to make ends meet (as has been happening to an increasing degree), a given amount of real income is not as beneficial as when it came from fewer hours. --Playing with the Numbers, How So-called Experts Mislead Us about the Economy, Richard A. Stimson
"This would be a lot easier if this were a dictatorship...and I was the dictator!"Those are the words of a someone who places loyalty to his ideological party and his corporate constituents above his loyalty to his nation. This is the kind of man who subscribes to "supply side" economics because it justifies his largesse to his corporate sponsors --the Enrons who bought him a public office.But --it is hard to comprehend the near mass hysteria that accompanies debate on this issue --exploited as it was by Bush Jr's hero, Reagan, who somehow managed to make people feel good about themselves, when, perhaps, they should not have. Reagan, Bush Sr and Bush Jr, indeed, the GOP, must take the responsibility for the US debt which was, last time I checked, some 7.4 trillion dollars, the highest in US history, perhaps World History. Since Ronald Reagan bankrupted the nation, the US has been a net debtor nation which survives, literally, at China's whim. You can pay off your old credit cards with new ones for as long as you can find another card willing to extend you credit! Eventually, however, someone will refuse, and you will have to cough up the cash --and, if you can't cover what's due by selling off your assets, you must declare bankruptcy. The US is bankrupt! Why was the US able to sustain the fraud for so long? Europe was willing to buy our T-Bills because the world's fuel --oil --was traded in dollars. Nations wanting to buy oil, had first to exchange their currency for dollars as oil producer nations demanded payment in US dollars. A crack in the dike was the creation of the Iranian 'oil bourse' where oil would be traded in currencies other than the dollar. That and other less publicized moves explains US antipathy toward Iran and US determination to seize the oil fields of Iraq, specifically, the Bush/Cheney/Carlyle/Halliburton attempted "oil grab" in the Middle East --the raison d'etre for war, the plan behind the convenient pretext called '911'. The history of the US since 1980 is the history of US attempts to seize and/or dominate the world's oil resources and markets.
This was all predictable! It was shortly after the US attack and invasion of Iraq that I posted the following comment on one of NPR's long defunct 'How's Bush Doing Board'.
The most absurd invention in the history of technology --the SUV --will go out of fashion overnight --and so will jobs! It will make the Great Depression of Herbert Hoover --another GOP charlatan --look like a casual walk in the park.
Nixon Ends US Agreement with Bretton Woods
