It's Still the Economy Stupid

The more things change, the more they stay the same. Coming off of an extended period of Republican rule, which saw first an economic boom that was enjoyed much more by the wealthy but which eventually turned sour and hurt those at all levels of the socioeconomic ladder, we are approaching a presidential election that offers a continuation of the policies of the recent past versus a new, albeit as yet truly defined approach to fiscal policy. This is an apt description of the 2008 presidential campaign, but could just as easily be a description of the 1992 campaign with the unproven and mostly undefined ideas of upstart Bill Clinton running against George Bush who represented the continuation of the Reagan-Bush Republican economic policy. For that matter it could also be a description of the 1932 campaign between Republican Herbert Hoover and the inexperienced Democratic challenger, one-term New York governor Franklin D. Roosevelt.

Then as now, the choice is stark, and historically the results of differing policies speak volumes. The twelve years of Reagan-Bush, when added to the eight years of Bush II have given us a twenty year record with which to judge the Republican policies of laissez-faire, free-market, trickle-down economics. The theory is quite simple, and quite appealing to our sense of independence as a people, and to our sense of belief in ourselves and our ability to rise up the ladder without assistance or hinderance on the part of the federal government. It also appeals to our desire to pay less taxes, which seems to be engrained in our DNA. Finally, it appeals to our belief that we will be better off economically in the future than we are now, we are constantly chasing the carrot of that next promotion, the sleeker car and the bigger house in the better neighborhood, and buy into the idea that if we just put a few extra hours a week in at the office and sacrifice spending our time and energy on more productive things, like our families and friends, and stuff we actually take pleasure in doing, that it will all pay off down the road. The problem is that the road always seems to have just one more bend to navigate before we get to the pot of gold, and the target keeps moving. The newest model is replaced by one even newer, the houses and neighborhoods keep getting bigger and farther out, and the few extra hours gradually increase to the point where a 40 hour work week seems like an antiquated notion, in the same vein as the two week family vacation, the $1000 mortgage payment, or $2 a gallon gas.

Republican economic policy promises less taxes for the middle class, which is appealing. Who among us wants to give up any more of our hard earned income than we need to, especially when we are giving it to a federal government that is notorious for waste and often corruption and fraud? What we fail to appreciate however is that historically when Republicans lower taxes for the middle class, our benefit is a drop in the bucket when compared to the break that the upper and elite classes get. So why should this concern us, if the upper and elite classes are better off, their wealth will somehow trickle down to the rest of us in the form of increased jobs and so forth. The problem with this trickle down approach is two fold. First off, taxes pay for social services and infrastructure, which generally benefit the middle and working classes the most. The public schools we send our children to, the roads we travel to and from work, the police protection we receive, all of these benefits play a larger role in our lives than they do in the lives of the two upper classes for a variety of reasons. However, when revenues are decreased, spending almost always drops as well, and that spending is on programs that the two lower classes, which make up roughly 95% of the population, use and benefit from the most. So while the upper classes receive the lion’s share of the benefits, the lower classes (that’s right my fellow middle-class citizens, we are one of the lower classes and have much more in common with the working class than we do with the upper and elite classes) are left with a net loss due to decreased government services. It’s not just welfare queens that get less, as the elites would like us to think, consider funding for public education. How many schools have had their budgets for arts programs and sports cut or eliminated over the last two decades? Do you really think that stagnant teacher salaries don’t play a major role in the overall quality of the education your kids receive, from Kindergarten all the way to public universities? Do you think that the increased traffic on over congested freeways isn’t a result of less government spending on needed services and infrastructure?

The second problem with the trickle-down theory is that the wealth generally doesn’t trickle down. Wealthy elites didn’t get that way by accident, they spend much less proportionally of their income than do the working and middle class. They keep much more for themselves, and while some do create businesses and invest in the economy, most simply keep accumulating wealth and keep score against other elites in a big game of Monopoly where our houses and jobs are often the game pieces. When is the last time a bigwig at the company you work for offered to pass on their fat bonus check so that the rank and file worker could share in the wealth? What does effect us however, is the general price inflation in everything from a restaurant meal to a dress shirt that is caused not by a real increase in the cost of the raw materials or transportation costs of these goods and services, but by the fact the ultra wealthy can afford to pay exorbitant prices for such things, which does trickle down to the prices that the rest of us pay. Just take a look at the ads on pages 2 and 3 of the New York Times next time you’re in Starbucks and you can pick up a copy of the paper. You will find watches and handbags in the thousands, dress shirts in the hundreds, and real estate that is too ridiculous to even comprehend. The upper and especially the elite classes keep most of their money for themselves, that’s how they, or their predecessors got wealthy in the first place for the most part.

So if tax breaks and trickle down are losers, what about the free market laissez-faire philosophy practiced by pro-business Republicans? Surely this is as American as it gets, we don’t want to be tied down by our government, our ingenuity and creativity stifled by Big Brother. In theory it sounds good and it appeals to our sense of personal liberty and responsibility. If we work hard enough and play by the rules, we’ll get our fair share, and those that advocate for more socialism are just apologists for the poor, who are mostly shiftless and lazy ignorant fools undeserving of living in dignity according to this way of thinking. Pick yourself up by your bootstraps if you don’t like your station in life and work your way up the ladder the old-fashioned way, by earning it, not by handouts and government welfare programs. Socialism is equated with nations that many perceive to be weak and effeminate, like the French or other European countries that don’t boast of a giant economy and military (not to mention the enormous budget deficit) that we have in the U.S. Worse, it is associated with Communist regimes in the former Soviet Union and China, as if the two are inseparable and all socialist systems will inevitably lead to a communist government, which is simply not the case even though it obviously can and has ended up that way in certain nations, the two mentioned above being the most noteworthy. Mention socialism to the average American and you might as well say that you don’t support the flag and apple pie, or even worse, that you don’t want to follow the terrorists to the gates of hell. You might as well wear a sign that reads namby-pamby liberal apologist who wants to lose the war and who doesn’t put America first. I suppose that would need to be a pretty big sign, but I think the point has been made. While I am not arguing in favor of a Marxist economic system, I do believe that we need less laissez-faire, and more of a hands on approach that would redistribute wealth and level out the playing field. I do believe that we need less unfettered free-market capitalism and more sensible regulation in order to prevent situations that we currently find ourselves in. And would it be the worst thing ever if we weren’t such a giant economic and military power? Does France really have it that bad?

To be honest, I’m not really sure what the new guy’s economic policy would be, he either hasn’t articulated it well enough, or the media hasn’t given it the coverage it needs, probably some of both. But I would be willing to bet that it will be more sensible and humane than what twenty of the last twenty-eight years have given us. I believe that it would lead to a more just and equitable society as opposed to one with a wealth gap as great as at any time since the 1920’s, a period known as the Gilded Age, which of course preceded the Great Depression of the 1930’s. We are already teetering on the verge of a serious economic recession, and have been for the last year or so. The current crises, which will be the topic of my next political column, is taking us dangerously close to crossing the economic Rubicon, and it seems to me that another four years of Republican economic policy will almost assuredly take us over the edge. There are many issues on which this election will hinge, the wars in Iraq and Afghanistan, foreign policy in general, the increasing national debt, the environment, energy policy, and health care to name some of the most pressing issues. Yet the economy arguably affects the greatest number of people in the most direct way, and that remains the same, be it 1932, 1992, or the current election cycle. Let’s hope that the American people and the American media can stop their obsession with an obscure and mostly irrelevant remote governor and all the other distraction issues that get tons of coverage, and start focusing on the issues that matter the most, mainly the economy and how government policy is likely to impact it. If not, we really will be the stupid ones.