The bailout of big banks and 'financial houses' is a deliberate fraud! So too, 'trickle down/supply side' economics. Even if 'tax windfalls', like those found in 'supply-side' economics, persuade manufacturers to produce more, where is the market for the overproduction? Lately, however, Fat Cats have figured out how to game the system: transfer the booty offshore! As a result, declines in GDP have become a defining characteristic of every GOP regime since those of Calvin Coolidge, Herbert Hoover, Ronald Reagan and the two Bushes.The current economic crisis has much in common with the US economy in the 1920s. The economy had been booming but by 1927 the nation had overproduced goods for which there was no market. No one should have been surprised that the overproduction led to a slowdown in both manufacturing and agriculture.
Overproduction results when there is no market for increased production. Among several reasons for 'declining markets' the most obvious is this: more and more have less and less to spend on new products or increased production. Failed economic ideology inevitably favors what is called 'economic stimuli', a more 'intellectualized' version of 'voodoo economics', otherwise called 'supply side economics' or, just as precisely 'trickle down' theory! It's all more accurately called 'bunkum', 'claptrap' or 'bullshit'! GOP/right wing economics fails to recognize the basic fact: increased production means absolutely nothing to those who have grown poorer. The fancy car in the showroom means nothing if I don't have a job or if my dollar has declined vis a vis the 'yuan' or the 'yen'.
Some recent history may illustrate the point: the Wall Street crash of 1929 was followed by a severe world wide depression acutely felt in the US, Germany, France, and to a lesser degree --Great Britain and Sweden. Nevertheless, unemployment was high in Sweden when that nation returned a Labor government committed to a program of public investment to address the high unemployment problem. It worked. By 1935 real output in Sweden was 7 percent above its 1929 level. Unemployment was reduced and the finance minister was said to have been happy to suffer another budget deficit to stimulate the economy. Ronald Reagan's budget deficit did not have as happy a result. So --why did Keynesian economics work for Sweden in 1929-30 but not for Ronald Reagan more recently? The answer is simple: Sweden was then --as it is now --among the world's most egalitarian economies and because of that, a prosperous 'consumer' class proved to be the growing market that supports increased investment, increased production. By contrast, the US --among the very least egalitarian nations --inevitably slides into recession/depression whenever a GOP regime favors the increasingly few but richer elites!
Reagan's tax cut of 1982 benefited only the investor class! As a result markets and spending declined. It was a 'depression' of some two years. the worst since the 'Great Depression. It was characterized by decreases in consumer purchasing, declines in jobs, and the shrinking of the US GDP. Sound familiar?
The wrong people, an utterly worthless investor class, got the money!
While a true 'Keynesian' deficit might have stimulated growth, the GOP/Reagan deficit had the opposite effect. The proof of my assertion is the public record. Reagan's tax cut of 1982 was quickly followed by the nation's worst recession since the Great Depression. The economy contracted, people had less money to spend, many lost their jobs and homes and slept under bridges. Where had all that money gone? It would eventually find its way to China! It was Bush Sr, in cahoots with Nixon who set it all up. It was Bush Sr who cut the deals while feasting on 'dog lip' in the Forbidden City. Since then, most (if not all) US wealth has found its way to China.
Reagan's best critics were found inside his regime, primarily, budget director David Stockman who blamed a "noisy faction of Republicans" for Reagan's infamous tax cut and the debacle that followed. Reagan might have achieved the prosperity that Keynes had predicted. That might have happened had his policies rewarded the working and middle classes instead of the rich and idle elites. Fact is --Ronnie was owned! The government is owned! The MIC is owned! We are owned! We are slaves to a system that may be beyond our ability to reform short of revolution.
The Reagan-heads forgot that the wealth of a nation is the result of the 'work' that is done by its people --not the 'offshore investments' of an utterly worthless, idle leisure class. Trickle-down (supply-side) transfers of monies to manufacturers that are over-produced is economic disaster. Similarly, transferring wealth to elites for whom additional consumer purchases are characterized by decreasing utility is foolhardy! Put another way --of what use is more 'spending money' to one who has 'everything'? And for that reason, why should a capitalist get a tax cut for producing product that cannot and will never be sold? The US investor class has solved that much of the problem by exporting manufacturing --our jobs --to China. If you don't believe me, just check out the CIA's own "World Fact Book" which lists the US at the very bottom with the world's largest negative Current Account Balance still often called the 'balance of trade' deficit. China sits atop the list with the world's largest POSITIVE Current Account Balance.
Because the very, very wealthy i.e, those benefiting from GOP tax cuts, most certainly do not increase purchases with tax cut windfalls, wealth does not 'trickle down'! It does not support increased domestic sales nor does it stimulate increased production and, thus, GDP. In fact, the record shows that instead of stimulating the economy by stimulating production, growth and sales, the very opposite invariably occurs. This consistently results in a reduction of the money supply, most prominently:
- lower wages ala Wal-Mart et al for those still fortunate enough to be employed;
- declining purchases followed by declining GDP.
During the Great Depression and, later, Ronald Reagan's 1980s depression of about two years, millions lost their jobs. In 1929, bankers and financiers continued to speculate on stocks, borrowing the money and buying stocks 'on margin'. More recently, 'short sellers' made fortunes on 911! What guilty 'insider knowledge' had they possessed? You can rest assured billions have already been transferred into offshore tax havens --wealth that is perhaps forever lost to the US economy.
Transfers of wealth to everywhere but America not only fail to stimulate the domestic economy, they bleed it! The wealth of a nation is not the money it prints, borrows or coins. The wealth of a nation is the productivity of its people and their industries. Both declined under Reagan and declined again under Bush and declined yet again under the other Bush! When another GOP 'Prez' assumes or steals the office, there will be yet another decline. That assumes, of course, that we survive the current crisis.
One wonders why Reagan didn't just cut out the middle man. A more equitable tax cut or better a more progressive tax might have put more spendable income directly into the hands of consumers. Spent money circulates and drives an economy. That consumers spend money seems to be a fact lost on the likes of Reagan, Bush, and the nation's rich and callous elites.
Surely, there were knowledgeable advisers in Reagan's regime who knew better. The tax cut, therefore, was entirely political, a pay off to the rich for their support, or more precisely, their investment! Nothing has changed in the GOP. The Bush administration made several such "payoffs" during his catastrophic and criminal regime.
The current collapse of the US is the end result of a trend begun with the passage of Ronald Reagan's infamous tax cut for his rich, elite base. The year was 1982. Historians will write of that date that it was the beginning of the end of the American empire.The Dangers of American FascismFollowing is a description of the American fascists who have looted the US and exploited the labors of those whose efforts alone create wealth.
A fascist is one whose lust for money or power is combined with such an intensity of intolerance toward those of other races, parties, classes, religions, cultures, regions or nations as to make him ruthless in his use of deceit or violence to attain his ends. The supreme god of a fascist, to which his ends are directed, may be money or power; may be a race or a class; may be a military, clique or an economic group; or may be a culture, religion, or a political party.In this case, the "gods" of American fascism are greed and lies. While Democrats are flawed and often impotent, the GOP has ceased to be a political party! It is, rather, a crime syndicate, a dangerous, kooky cult of psychopaths and liars!...
--Henry A. Wallace, The Danger of American Fascism, The New York Times, From Henry A. Wallace, Democracy Reborn (New York, 1944), edited by Russell Lord, p. 259.
We're in the Money?
It was Ginger Rogers (July 16, 1911 – April 25, 1995) who 'stole the show' when she sang "We're in the Money" in Gold Diggers of 1933. Goldiggers was a Warner Bros. musical choreographed by Busby Berkeley, starring Ruby Keeler, Dick Powell, Joan Blondell and, famously, Ginger Rogers.
An original stage production ran for 282 performances on Broadway in 1919 and 1920 featuring songs by Harry Warren (music) and Al Dubin (lyrics). In 2003, Gold Diggers of 1933 was selected for preservation in the United States National Film Registry by the Library of Congress as being "culturally, historically, or aesthetically significant". "We're in the Money" is memorable not only for its energy but for a charming performance by Ginger Rogers, singing a verse in Pig Latin accompanied by scantily-clad showgirls dancing with giant coins.
