The American Crisis

US payrolls were slashed by 524,000 jobs in December and by 1.9 million in the last four months of 2008. All told,  2.6 million jobs were lost in all of 2008. That's quite a dubious achievement but this didn't happen by accident, it happened by design. Conservative free market ideology and their devotion to a race to the bottom they call low taxes is the cause of all this. Let's not ever forget this. Conservatives profess to love their country and they profess to hate government. The pity is that, at times, they can't differentiate between the two. There is clearly a difference between the country and the government. The former is much larger if more nebulous than than latter but let's not forget that the government, in all its manifestations, is part of the visible edifice and the ledger of our country. In their zeal to drown the edifice of government in a bathtub, conservatives have managed to drown the country's ledger in a near eleven trillion dollar debt and throw at least 7.2% of us out of work.  It's not just the government that owes that lofty sum, it's the country. It's us. It's Americans who are now increasingly out of work thanks to the nefarious effects of an ideology that benefits the few at the expense of the many.

Conservatives so hate government that they can't seem to see that they are destroying the country in said pursuit. Even now. This is not a charge I say lightly. Even though conservatives have long impugned the patriotism of liberals for several generations now, we, as liberals, have failed to answer back. It's time we do. Conservatives wrap themselves in the flag even while they trample the rights, liberties and livelihoods of most Americans. Free markets are not free, there are costs. Witness AIG. There is no such thing as free trade, it too has costs. These are euphemisms for a perverse notion that conservatives call "economic liberty". By this, they mean unregulated markets, low taxes, the right to move capital across global markets (to call them countries is so 19th century) in pursuit of unholy profits based on tapping the cheap labour of the unprotected masses in the developing world. Backed by a devotion to a strong dollar and weak barriers to trade, they have dismantled brick by brick American manufacturing moving it to China, Bangladesh or wherever the lowest cost worker happens to be. I ask you is this patriotic? Is this love of country?

Americans need to know what us brought us to this hour. Now I like Pat Buchanan, I really do. I think that as a political pundit, there are few better. But in terms of economic ideology, there are few more reprehensible. His latest column for the Pittsburgh Tribune is precisely an example of conservatives not being able to see the results of their pursuit of lower taxes, free markets and free trade:

Consider, now, how Ronald Reagan responded to the economic crisis of 1980, the worst since the Depression. In the "stagflation" of that Jimmy Carter era, interest rates had reached 21 percent and inflation 13 percent.

Reagan's answer was the tight money policy of Fed Chairman Paul Volcker and across-the-board tax cuts of 25 percent, while slashing the highest rates from 70 percent to 28 percent.

While unemployment hit 10 percent in 1982 and Reagan lost 26 House seats, in 1983 the tax cuts kicked in.

From there on out, it was boom times until Reagan rode off into the sunset, having created 20 million new jobs. "The Seven Fat Years," author Robert Bartley called them.

Reagan had followed the lead of Warren Harding and Cal Coolidge, who had cut Woodrow Wilson's wartime tax rates of near 70 percent to 25 percent, resulting in "The Roaring '20s," a time of unrivaled prosperity.

The roaring 20s? Unrivaled prosperity?  It was a binge of excess that directly led to the Crash of 1929. More tax cuts? Surely, you jest. These ideas are bankrupt. They defy credibility and are devoid of economic logic. Tax cuts are nothing more than a race to the bottom, the conservative adherence to limited government is also a subterfuge for a perpetuation of a widening social gulf in the country that is frankly not just worrisome but also immoral and unpatriotic. These tax cuts also led to widest distribution of income, the biggest gap between rich and poor, in US history. Not once, but twice. In this past decade, we have just repeated the 1920s.

While I am not convinced that most Americans understand the historical significance of all that has occurred since 1968, an era of unbridled deregulation and widening income inequality that has sapped the power of the country during which the Democratic Party devolved from its working class roots to become a GOP-lite tied intimately to corporatist interests and espousing an economic ideology more Friedmanist than Keynesian, the American electorate in 2008 I think did voice a deep and profound rejection of trickle down economics, globalization run amok and regressive tax policies that has left most Americans falling behind in global living standards and socio-economic metrics. The US ranks 38th in life expectancy in 2008. In 1964, the US ranked 10th. But let's dig a little deeper.

On average, US life expectancy rose by three years (from 73.7 to 76.7) between 1980 and 2000, but the largest gains were made by the most affluent layers of the population, leading to a growing gap in life expectancy between the lower and higher income groups.

In a study for US Department of Health and Human Services (HHS), Dr. Gopal Singh and Professor Mohammed Siahpush measured social and economic conditions in every US county by examining 2000 census data on education, income, poverty, housing and other factors.

The report said in 1980-1982, people in the most affluent group could expect to live 2.8 years longer than those in the poorest (75.8 versus 73 years). By 1998-2000, the difference in life expectancy had increased to 4.5 years (79.2 versus 74.7), and it continues to widen.

"Life expectancy was higher for the most affluent in 1980 than for the most deprived group in 2000," he said. "If you look at the extremes in 2000," Dr. Singh added, "men in the most deprived counties had 10 years' shorter life expectancy than women in the most affluent counties (71.5 versus 81.3 years)."

On almost every measure, Americans are growing apart. The chasm between rich and poor is not just wider but also deeper. In short, as Paul Krugman noted at height of the market turbulence this past Autumn "we are a banana republic with nukes." These results aren't by accident. In 2008, the US is far poorer as a collective society than we were in 1964 despite our many technological comforts. The harsh reality is that the United States is a clefted nation as a result of the Friedmanistic economic policies pursued by Republican and Democrat alike since 1968 and clefted nations have a propensity to fail.

Nancy Krieger, a professor at the Harvard School of Public Health, has found that trends in life expectancy have paralleled the decrease or increase in social inequality over the past 40 years. Kreiger found that the rate of premature mortality--dying before the age of 65--and infant death from 1960 to 2002, shrank between 1966 and 1980, but then widened over the next 20 years.

"The recent trend of growing disparities in health status is not inevitable," she said. "From 1966 to 1980, socio-economic disparities declined in tandem with a decline in mortality rates." She said the creation of Medicaid and Medicare--the two major federal programs for the poor and elderly--along with health centers, the social programs of LBJ's "war on poverty" had contributed to a narrowing the earlier inequalities in health.

The dismantling of these programs--by both Republican and Democratic administrations--over the last four decades, and the redistribution of wealth to the top -- a trickle up -- that has resulted, has produced a catastrophe for a majority of Americans to the extent it has even affected life spans. This is the result of the Republican espousal of Friedmanism and Democratic acquiescence of the right's not so gilded Gilded Age. The great deregulators were Carter, Reagan and Clinton.

When all is said and done, the Bush legacy for Americans is a widening income disparity. Not that this should be a surprise, after all, George W. Bush boasted at a fundraiser in 2000 of the nation's high and mighty that what he saw there that night dinner was the "haves" and the "have-mores". That top 1% should be quite appreciative. The rest of us should have taken up pitchforks long ago.

Bush's top economic priority was to cut taxes on the supra-wealthy; as he famously said at that dinner, the "have-mores" are his political base. The marginal income-tax rate, the estate tax, the tax on dividends, and the proceeds of the profits tax all fell sharply in his first term. The result is below. The table shows average income gains, adjusted for inflation, from 2002 through 2006.






Income GroupDollar IncreasePercentage Increase
Bottom 90 Percent$1,4464.6%
Next 9 Percent$14,49610.0%
Top 1 Percent$321,13241.8%
Top 0.1 Percent$1,809,82457.6%
Source: Washington Monthly

From the Center for Budget and Policy Priorties:

Average pre-tax incomes in 2006 jumped by about $60,000 (5.8 percent) for the top 1 percent of households, but just $430 (1.4 percent) for the bottom 90 percent, after adjusting for inflation, according to a new update in the groundbreaking series on income inequality by economists Thomas Piketty and Emmanuel Saez. Their analysis of newly released IRS data shows that in 2006, the shares of the nation's income flowing to the top 1 percent and top 0.1 percent of households were higher than in any year since 1928.

1928 and 2008. Free markets have failed us. Not once, but twice. How much more punishment do you want us to endure? This American Crisis is on the conservative movement and their failed ideology.

Tags: Free Market Ideology, pat buchanan, US Economy, US Unemployment (all tags)

Comments

6 Comments

Conservatives hate the government????

Ever since MOST AMERICAN'S drank Reagan's "trickle down" "deregulate" "government is the enemy" purple lemonade America has been walking down the road to today's end game. To PROVE we agreed with REAGAN we elected the stupidest man on earth - TWICE!!!

Very soon - when Obama tries to "print" the money he's about to "invent" the final domino of America will fall - the dollar. (He'll have to "print" it because there won't be enough available abroad to "borrow.")

No industry, no jobs, no housing, no money, no currency. Game, set, match.

by 1Mylegacy 2009-01-09 05:39PM | 0 recs
Re: Conservatives hate the government????

You don't worry about inflation when you're dealing with a crisis like the one we're in.  We'll be lucky to get to the point where we have to worry about inflation.

by shalca 2009-01-09 07:04PM | 0 recs
Conservatives don't hate this country.

They have a different outlook than progressives, but I would not go so far as to say they hate the country.  I agree that they're helping to destroy the country's economy, but that's not because they hate the nation, it's because they're misinformed.

It would make more sense to rail against the mediocre education most people receive in this country than rail against the products of our flawed system.  Of course, it's getting harder to address that problem as many of those undereducated conservatives are attempting to have schools teach even less.  Science without the science? ugh.

In any case, I am disturbed that the incoming administration is thinking about allowing these Bush tax cuts to remain for some time.  There is a credit crisis, people aren't lending money.  Allowing the very rich to continue saving their income doesn't help anyone.  That trillion dollar deficit is bad enough, we can afford to raise taxes on the top 5% of income earners.  It's in their long term interest to see us come out of this recession.

by shalca 2009-01-09 07:20PM | 0 recs
Re: Conservatives don't hate this country.

Perhaps I failed to make the argument as nuanced as I should have. It's not that they hate the country but that in their assault on government, they can't seem to differentiate between government and country. By aiming to destroy govt., they are destroying the country. But they just don't see that.

by Charles Lemos 2009-01-09 07:48PM | 0 recs
Re: The American Crisis

Blaming the current recession on low taxes appears a bit far-fetched.  Easy money from the Federal reserve board, leading to a housing bubble that supported people going into unsupportable debt, appears to be much more to the point.

You could propose that 'if we had the right regulations...' but what regulations would you propose?  You could, I suppose, ban multiple mortgages and Home Equity Line of Credit loans, but there are workarounds.  You could cap mortgage loans - a mortgage being something whose interest you can deduct from income -- at one mortgage per family, and no more than the traditional two or three years net income as the value of the loan. You could line up mortgages with student loans, something you cannot escape by declaring bankruptcy in the absence of gross negative changes in your ability to earn money, e.g., unexpected accident leading to blindness and paralysis.  You should realize that those rules will have negative impacts on people who took those loans and choose to be thrifty enough to pay them off.  

However, it was not lower taxes that pushed the price of a house -- where I live -- from a typical $60 a square foot to a typical near-$200 a square foot.

by phillies 2009-01-10 05:03AM | 0 recs
Re: The American Crisis

It's not just low taxes that have brought us though that is certainly a part of it. It's the whole notion of free markets, free trade, a strong dollar, no barriers to capital flows. What caused my anger, was Pat Buchanan's recitation of a bankrupt ideology as the cure for what ails us. In truth, there are a number of edits that I would do to revise this post.

I wrote that "there is no such thing as a free market." I should have written "free markets are not free, there are costs to free market." Same with free trade. It isn't free. There are costs.

by Charles Lemos 2009-01-10 01:17PM | 0 recs

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