Voodoo Economics

Hola Everybody,
I’m just going to point out something I think is obvious, but seems to escape a large majority of the people I talk to these days. It should be self-evident that you cannot disagree with, or have an opinion on something you’ve failed to understand.

You cannot dislike a movie or a book, if you haven’t finished viewing or reading it, for example. How can you dislike or disagree with something you have not taken the time and effort to understand?! You can say that you didn’t like the parts that you absorbed, but you cannot say you don’t like something if you haven’t seen or read it all. Am I the only one who sees the logic in this, or am I missing something? It makes no sense to say otherwise. If you saw only half a photograph or painting, how can you say that you don’t like the work? The only sane thing you can say is that you don’t like the part that you have experienced. Anything else is insanity.

SMDH

No wonder people still think there are WMDs in Iraq and that we receive a better quality of health care in comparison to other developed nations!! People aren’t using their critical faculties!

With all the recent talk of an “economic stimulus” plan, I thought I would weigh in…

* * *

True Believers and the “Free” Market, pt. I
(Or: The Free Market Ain’t Free, Ma’fuccas!)

“Mass movements are usually accused of doping their followers with hope of the future while cheating them of the enjoyment of the present. Yet to the frustrated the present is irremediably spoiled. Comforts and pleasures cannot make it whole. No real content or comfort can ever arise in their minds but from hope.”

— Eric Hoffer, The True Believer

People allow themselves to be swept up in larger causes in order to be freed of the responsibility for their lives, and to escape the meaninglessness or misery of the present.

Con men and politicians know this very well and use it to rob you of your hard-earned money. Let me introduce you to the greatest con game ever. It’s so good you have probably voted for this con – and happily. The con, like all great cons, is simple. These con men, all true believers, want to make you true believers in laissez faire capitalism. They would have you believe that if only government would go away, everything would be just fine. Employers would suddenly sprout streaks of benevolence, employees would be enthusiastic, and bureaucracy and its inherent inefficiency would vanish like magic.

Poof! Gone!

Of course, these true believers aren’t troubled by the growing consolidation of multinational corporations or the loss competition that happens when markets aren’t regulated. These modern-day snake oil salesmen would have you believe that society will run best when run by a very small group of elites that always comes out on top. What they sell is what some people call a corporatocracy – the view that an economic elite benefits the working class because wealth will “trickle down” from above to below. I call it fascism, straight and simple.

Ronald Reagan was a true believer. He didn’t understand economics. Actually, some say he didn’t understand much, especially when his Alzheimer’s began affecting him mid way into his second term. Because he had no understanding of economics, the simplistic notions of self-sufficiency and a pioneering spirit appealed to his simple mind. In essence, he asked, “Why should someone want to regulate a business? Wouldn’t it eventually always do what was best without regulation?”

What Reagan and his band of true believers failed to understand was that business will not always do what’s best for society. In fact, the fundamental goal of business – to maximize profits while externalizing costs and liabilities – is often destructive to the public good. This becomes crucially evident when business owners do not live in the same society and culture as their customers. For example, a small business owner can’t run sewage out his door or pay his workers starvation wages because he has to face his next-door neighbor, who’s kid may want to work in his shop.

The same is not true for multinational corporations. Executives of large corporations don’t live in the same society as the people who work for them. As a result, the consequence of unregulated big business and the concentration of wealth in the hands of the few is pollution, worker exploitation, cuts to worker (and consumer) safety, and the giving away of profits to the company’s elite while cutting the wages and benefits to the company’s rank and file.

But these con men would be merely wrong and not dangerous if they didn’t hide their profits-before-people agenda. No one seriously agrees that a government ruled by a small and privileged group is the most stable form of government or that stability and predictability is more important than democracy. So they sell their snake oil in the guise of “smaller government. the snake oil charmers suggest that when workers pool their risk with a private, for-profit corporation to protect personal property, it is a good thing; but when citizens pool their risk with the government to guarantee health care, retirement, and a social safety net, that is (ooooh) “socialism” and should be “privatized.” Simply translated, this con game means one thing and one thing only: you and I get screwed.

I submit that it’s impossible to govern with a government that hates itself. What is at stake today is what kind of society will we choose. Will we choose a society of and by the people, or a society ruled by the fascism of the corporate elite? Will we support a middle class that is the heart of any democracy, or will we let the middle class continue to get screwed?

For more than two-hundred years – until Ronnie, that is – economics wasn’t that hard to understand. Everyone could figure out that when working people have money, they spend it. When extremely wealthy people have money, they save most of it. It’s the spending of money by working people that creates consumer demand. Consumer demand in turn creates business opportunities, and that creates jobs.

In 1981, Ronnie introduced America to the snake oil of trickle-down economics. Also called Voodoo economics by none other than Bush the Elder (until later when he had to please his snake oil con base). In a nutshell, Ronnie’s concept was a reorganization of society so that the wealth of the rich grew suddenly and quickly. The rich, in turn, would use that money to build factories and hire more people, thereby allowing their wealth to “trickle down” to the workers.

This idea of Ronnie’s was new for a democratic society. It had never happened in the history of the world. Of course, history is full of examples of a chosen few hoarding wealth at the expense of the many, but no one had ever said they were doing it because economics justified it. Throughout history, the powerful simply claimed their right and it was off with your head if you disagreed with them. Simple.

Even though voodoo economics had never been tried, Ronnie was able to convince average Americans that it would work, and got it pushed through Congress. In order to implement his voodoo economics, Ronnie slashed top marginal income tax rates on the wealthy (billionaires and millionaires) from 70% to 50% in 1981 and all the way down to 28% by 1988.

The result was disastrous. Rather than create income, the Reagan tax cuts dropped the United States into the greatest debt in the history of the world. Reagan then turned to his friend, Alan Greenspan, who suggested that Ronnie could hide part of the debt by borrowing a few hundred billion dollars a year from the Social Security trust Fund. Reagan followed Greenspan’s advice, which resulted in an increase in the income tax which hit regular guys and gals like you and me harder than the fat cats.

Of course, the rich got richer during the Reagan years. From 1980 to 1990, the income of the wealthiest 5% rose by 25%, while the income of the bottom 40% stayed absolutely flat. This is partly why the wealthy didn’t build factories – there was no significant increase in demand, so why manufacture things that people can’t afford? What happened instead was that the nation’s rich loaned some of their money to the U.S. government (us) so it could pay the bills Ronnie was running up, getting it back over the ensuing twenty years with a healthy dose of interest, paid for by me and you.

I will say, however, that voodoo economics did produce millions of jobs. The problem was that almost all were outside the United States, while at the same time, good U.S. manufacturing jobs vanished. The only accomplishment of trickle-down economics was that it produced a nation of economic losers.

So when you’re listening to all the talk about “economic stimulus” pay attention with the above details in mind. See who’s selling the snake oil and whether you’re really willing to buy the Kool-Aid.

Love,

Eddie

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