The American Economy
(Revised 11-16-2009)
Unchecked, unbridled greed and corruption caused most of America’s economic problems, and fear has made them worse. But the main problem is lack of proper regulation and government oversight, and the next biggest problem is insufficient revenue caused by enabling the wealthiest few to pay far less than their fair share of taxes, and rake in obscenely inequitable incomes amounting to multi-millions of dollars per year. Those are the facts of the matter, and we must face them – squarely.
We cannot settle for short-term, band-aid solutions. Of course we must help those suffering from devastating loss of financial security and jobs, and we must repair and maintain the infrastructure. In fact, we should do a lot of things that should have been done long ago. But, we should not reward the greedy predators who caused the problem, as has been done by the Bush Regime and the Obama Administration. The huge banks and lending institutions that received taxpayer money in "bailouts" did not use all that money to help the public. Instead, they helped themselves, and they have recorded record profits. They are still doling out absurdly huge "compensation packages" and bonuses for top executives, and they are charging higher interest rates (up to 29.9 percent on credit cards). Nothing has changed in that regard. In fact, and in some ways things are worse.
We should not allow these robber barons to escape with their ill-gotten booty and loot. We must prosecute and incarcerate them, and we must ensure that people like them cannot pull off such greedy, get-rich schemes again. We must protect ourselves from greedy predators. We must seriously reform and regulate our whole political-economic system, and fix the root causes of the problem.
There was a very good reason why Thomas Jefferson said that "banking institutions are more dangerous to our liberties than standing armies." He warned of the danger of private banks and corporations getting too big and having too much power. He even warned that they could "deprive the people of all property until their children wake-up homeless." But, unfortunately, Alexander Hamilton’s views regarding economics prevailed over Jefferson’s, and banks and corporations flourished. And they have indeed become what Jefferson warned against, and even much worse.
I think it’s a shame that the huge corporate scandals and ripoffs of the 1990s were not enough of a wake up call for Americans. It’s a shame that we’ve had to suffer even more of the consequences of the "deregulation" policies and "welfare for the rich" that the Reaganites initiated in the 1980s. We need to understand how and why they did that. We need to understand how and why most politicians in the U.S. Congress were able to perpetuate and expand Reaganism in the 1990s, and why President Clinton felt it was politically expedient to go along with them. And we need to understand how and why George W. Bush and other like-minded "conservative" politicians expanded it even more between 2000 and 2008.
We are now unavoidably faced with more obvious facts of the matter. More people are realizing or having to admit that tax cuts and financial favors for the wealthiest few unfairly and unreasonably reduced national revenue, and that a whole lot of political and corporate greed and corruption was enabled by deregulation, which gave free rein and license to corporate executives and produced a terrible lack of proper government regulation and oversight.
The truth is that we’ve been terribly harmed by that right-wing conservative folly in a myriad of ways, from the financial sector, to the pharmaceutical industry, to the health care and insurance industry, to the food production and processing industry, to mention only the most notable instances of corporate corruption and wrong-doing. (And the increasing rates of unemployment, job insecurity, financial insecurity, food insecurity, and even poverty, hunger and homelessness are a related part of the story).
Of course, the current financial melt-down broke into the news because of the mortgage scandals and heartless housing foreclosures. And even though that’s just one symptom of the overall problem, it’s become a very painful symptom for millions of victims. And I must point out that when the mortgage scandal news broke, Republicans immediately started blaming the victims rather than the predatory lenders who created the problem. Then, in their criticism of the Obama economic stimulus package, they were still blaming the victims and misleading people by claiming Obama is "rewarding deadbeats who took bad loans." That is deceptive and outrageous, considering the facts of the matter. After all, several years ago there were a number of governors and state attorneys general and others involved in consumer protection who began to warn about predatory lending practices by mortgage lenders who were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive teaser rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. They pointed out how these and other practices were having a devastating effect on home buyers, and they warned that such practices threatened our financial markets. But, even though predatory lending was becoming a national problem, the Bush administration and other Republicans looked the other way and chose to go along with the banks and financial institutions that were victimizing people. Therefore, Republicans should now be hanging their heads in shame, rather than loudly and deceptively blaming the victims.
There is certainly enough blame to go around, but it should be placed where it belongs. And it’s not just on the greedy, corrupt politicians (on both sides of the isle), predatory lenders, and corporate executives. I have to say that the American commercial television news media has been shamefully and woefully negligent in its duty to keep government honest and inform the public about what was happening. And while the print news media has been better, it’s not been good enough.
Even worse, the U.S. system of government has been shamefully and woefully negligent in not protecting the people from greedy and corrupt politicians and the greedy and corrupt corporate executives who bribed them.
Now we should understand that deregulation was initially sold to us by Ronald Reagan as "removing government’s smothering hand," and many subsequent Reaganites and later Bushites have claimed it was "getting government off our back." But, that was deceptive propaganda, to say the least.
As most people can now see, it was really designed to enable the wealthiest few and their huge corporations to indulge themselves completely and satisfy their lust for greater and greater profits and incredibly enormous incomes for top executives. And that trend spilled over from the private sector to the public sector, enabling high government officials to rake in higher and higher incomes as well. Thus the rich got increasingly richer, while everyone else became less and less financially secure, the middle class shrunk and more and more people fell into the working poor population, and the working poor became much poorer.
It was actually history repeating itself, and what the Republican Reaganites and Bushites have done is similar to what Republicans did in the 1920s prior to the huge stock market crash of 1929. And we should realize that the Reaganite and Bushite deregulation was part of an overall agenda intended to overturn much of the New Deal programs initiated by the great Democratic President Franklin D. Roosevelt in the early 1930s, to clean up the mess and correct the mistakes and crooked deals that Republicans had made.
Today, more and more of us increasingly suffer the impact and consequences of all the unbridled greed and corruption that politicians have permitted and enabled during the last 28 years, catering to and serving the interests of the wealthiest few and their huge corporations, at the expense of everything and everyone else. And because of the enabling policies and legislation established by right-wing politicians, the system has been rigged to ensure that the top corporate executives can still rake in tens of millions of dollars per year in loot, while millions of people are suffering huge financial losses, losing their financial security, jobs, and homes. Now what’s made matters worse is that the fear of not having enough is causing people to not spend and consume as usual, and that is causing many companies to lay off or fire many employees because they’re not selling what they’ve been producing. It’s a vicious cycle, and it was initially triggered by the inevitable consequences of unbridled greed and corruption.
But, fortunately, we can turn things around, and we can put a stop to the nonsense that has been sold to us by those who deceptively claimed "It’s just good business," and "the problem is not less government, but too much." It’s a big fat lie. It’s like organized crime bosses claiming that we need less police and less law enforcement, not more.
Unfortunately, too many Americans were gullible and believed Bush and the right-wing Republicans. We enabled him to continue and even expand Reaganomics, and the inevitable result has been increasingly detrimental to the rest of us, and increasingly detrimental to the environment, the infrastructure, public safety, public services, etc. And we should realize that the corruption that has been exposed is like the tip of a very huge iceberg.
We need to realize that most wealthy people are wealthy because they are smart, and the trouble is that some of the greediest are very cunning. They know how to sell people on things and ideas, and unfortunately they were very successful at selling right-wing "Neo-Conservative" ideas between 1979 and 2006. That’s when more Americans started to wake up and began to realize the reality that some of us realized all along.
President Barack may try to rebuild and maintain our infrastructure, and help the vast majority of us who have been hurt in so many ways. But, we need far greater reform than Obama can or would provide. For example, he is too enabling of the greedy and corrupt corporate culture that got us into this mess, and he still does not insist that the wealthiest few pay their fair share of taxes. Furthermore, unless we have a reformation of government along with a reformation of religion, Obama could be replaced by yet another deceptive, right-wing partisan demagogue who would do the same thing that Reagan and Bush did.
The way I see it, the more people have, the more they want, and the more afraid they are of losing it. That’s why the wealthiest few love "conservative" politicians who serve their interests, who promise to continue lowering their taxes, establish more tax loopholes for them, and deceptively denigrate "tax and spend liberals" to gain power over liberal progressive Democrats. The "conservatives" ignore the fact that liberal progressives simply want fair and equitable taxation based on our ability to pay. But the conservatives have succeeded during the last two and a half decades in deceiving and misleading many people, trying to make "liberal" a dirty word.
That’s always amazed me, because in fact, the dictionary meaning of the word liberal is "favorable to progress and reform," "advocating individual freedom of action and expression," "advocating representational government rather than aristocracies or monarchies," "free from prejudice or bigotry," "open-minded and generous," etc.
The wealthiest few know that, really, and the greediest of them are afraid that the general public may realize it too. That’s why the wealthiest few have provided 80 percent of the funding for the political campaigns of both Republicans and Democrats during past presidential campaigns. And that’s worked for them. They’ve gotten what they paid for in deregulation, lower and lower taxes, tax breaks, tax shelters and loopholes, subsidies, giveaways, and other government "welfare for the rich." And Democrats are nearly as culpable for that as Republicans are.
I have more to say about our current problems, but first let me show you what I wrote in 2000. For a long time I’ve been saying the U.S. political-economic system is inherently divisive and destabilizing, and it’s inherently corrupt because it’s driven by greed and self-interest. In my second book, written in the late 1990s and published in February 2002, I wrote a lot about that. Some of what I expressed in my books about partisan politics is highlighted on this web site, particularly on the page titled Partisan Politics, and some of what I expressed about economics is on the page titled Poverty in America. But I thought I’d show you some of the other things I’ve written about economics, that I believe are just common sense, and self-evident.
The following is quoted from chapter 3 of my second book, published in February 2002
:When I was a young man in the late fifties I could buy a gallon of gas or a loaf of bread for twenty-five cents. My first car, a 1947 model which I bought used in 1957 (only ten years old), cost $149. My first apartment when I left home in 1959 to go away to college was $70 per month. Bank savings earned five percent interest. The first house I bought in 1967 (a pretty nice two bedroom house with an attached studio apartment to rent out), cost $18,000, with a mortgage with five percent interest and payments of $80 per month.
In other words, back then, one could buy a nice house for less money than what most new cars cost today. If we look further back, we would see that the rate and impact of inflation has been even worse than that. The trouble is, it has been escalating at a far more rapid rate, and just considering those figures of just a few decades ago, it seems painfully evident how our economy and its built-in inflation has gotten totally out of hand, to the point of absurdity. After all, isn’t it absurd that a house that cost $18,000 just thirty-three years ago now costs several hundred thousand dollars, and that a ten year old car once cost $149 and now costs about $10,000? Certainly that is absurd, and if you project how much things will cost in thirty more years if we allow things to keep going the way they have been, it becomes even more absurd.
Fortunately, this is not beyond our control. It has only gotten out of control because we’ve allowed our economy to be driven by greed and self-interest rather than by fairness, common sense, and common interest. It doesn’t have to just keeping getting worse. We can control our own greed, and we can definitely control the greed of the landlords, the banks, the financial institutions, the merchants, the corporations, and other rich financial power brokers. We the people can do as we choose. We can make the rules and do what we know is right. But we need to fully understand the problem first.
We need to understand that inflation is a steadily worsening problem because we’ve actually been doing what we know is wrong. After all, we have created and maintained a vicious cycle, a treacherous economic game that is played by everyone trying to get ahead, and by everyone else trying to catch up. This is only natural, perhaps (being the nature of the beast), but when you really think about it you can see it is wrong and even a little foolish. We just keep raising the numbers on prices and wages, going back and forth in turn, trying to make our incomes rise. But while there may be temporary gains, in the long run all the numbers keep going up, and nobody wins! It’s just a vicious cycle that we perpetuate, all because everyone thinks they’re going to get ahead by raising the numbers. Unfortunately, while all the numbers get bigger, actual value and worth remains virtually the same.
Now, as we all know, the fact is that some people have made huge financial gains as a result of inflation. Some people have even made a "killing," especially in real estate, high technology, sports, and entertainment. Some people have gained enormously because of the economic practices and laws that allow inflation, while many people have suffered because of it.
A good example of that is how the minimum wage has gone up only very slightly during the last twenty years as its buying power has actually diminished, while during the same time the highest incomes of corporate executives, government officials, professional athletes, entertainers, and other highly paid individuals have soared by hundreds of thousands and even by hundreds of millions of dollars annually. Similarly, the prices and costs of certain basic commodities and goods and services have gone up only slightly in comparison to the prices and costs of some other things, and it has far less to do with the supply and demand than with greed and the abuse of power. In other words, it has not been balanced, and it has not been fair.
(Quoted from Chapter 3 of More Observations & Suggestions: The Followup to Real Prophecy Unveiled, published by iUniverse, Inc. in February 2002.)
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The following is from the first chapter of that book
:We have some very big and very serious socio-political-economic problems that are creating terrible injustice, inequity, hardship, suffering, and death — and I would be remiss if I did not fully expose them and bring them to light. That’s my job. I have to share my view, which is that in the last two decades since 1980 we have unwittingly allowed the dark shadow of Reaganism to thoroughly creep into our lives. We have allowed the basic elements of Reaganomics to take a very firm hold, enabling the rich to get incredibly richer while the rest of us have become less well off, while the working poor and the disadvantaged poor have become much poorer. And this was happening even while the economy was booming [in the 1990s].
In the last two decades we have allowed the gap between the rich and the poor to continue growing wider and wider until it has become a huge, gaping chasm. What’s more, we have allowed right-wing conservative politicians who serve the interests of the rich to adopt ever-newer and more plentiful ways for them to use their surplus private wealth to make even more money — to invest it in ways that pretty much guarantee huge profits and financial gains.
In that respect, the political-economic climate of the 1980s and 1990s was like a balmy caressing breeze for the rich. It allowed those who have a lot of surplus wealth to profit enormously from it in a wide variety of ways, and that’s why there are now (in 2001) 298 billionaires in the U.S., when in 1982 there were only 13 billionaires. According to Forbes magazine, 47 new people entered the 400 richest club, which took a minimum of $725 million to enter. And this happened while many formerly middle class people fell into the working poor population, and the number of homeless American families reached an all-time high.
In the last two decades since Ronald Reagan rose to power, the business-friendly economic climate has allowed the income of the richest 20 percent of the population to grow by 30 percent, while the incomes of the lowest paid 20 percent of us declined by more than 20 percent. Even worse, it has diminished the buying power of the minimum wage by 20 percent, which makes it even more inadequate than it has ever been, leaving the poorest of the working poor in extremely serious financial difficulty. And again, all this happened even while the economy was still booming, because it was booming only for the rich. Moreover, in 2000 and 2001 the economic downturn has made everything worse, except for the very rich.
We, the people, allowed all that to happen.
(Quoted from Chapter 1 of More Observations & Suggestions: The Followup to Real Prophecy Unveiled, published by iUniverse, Inc. in February 2002.)
*****
Please note that I point out that the problem kept getting worse even when a Democrat was in the office of U.S. President for eight years during the 1990s. Bill Clinton could not stop Reaganism or Reaganomics, and while part of the reason for that was a Republican-controlled Congress, many Democrats were also culpable and shared complicity in enabling the wealthiest few and their corporations to grow more and more powerful, and more and more corrupt.
As I said on the page titled Poverty in America, there is nothing wrong with being wealthy if you deserve it. There are some people who very much deserve to be reasonably wealthy, and there is nothing wrong with that. Those who are hard working deserve to be amply rewarded for their hard work, and those who are hard working and highly talented and skilled deserve to be richly rewarded.
However, many of the wealthiest few are really not deserving of the immense wealth they've managed to amass, and no one deserves to be as absurdly and excessively wealthy as some of the wealthiest few are now. The fact is that they have benefitted from and taken advantage of a very unfair, inequitable political-economic system that serves and caters to the wealthiest few, at the expense of the majority, the environment, the infrastructure, and everything else.
The trouble is, right-wing conservative Republican politicians have persistently and dishonestly claimed otherwise. Even worse, hypocritical right-wing neo-conservatives who claim and pretend to be "Christian" leaders have persistently colluded with them, and pushed and sold the absurd idea that great excessive wealth is a reward from God, and that the poor deserve their lot because they don't work hard enough and don’t have true faith in God. And Democrats and other moderate politicians have shared complicity and culpability, because they’ve either been unable or unwilling to break from the status quo. After all, it’s very profitable for them too.
Many people have "made a killing," financially speaking, but they do not realize how literally true that is, and they do not realize what they’ve killed.
In my view, it is unfair and totally absurd to put the country deep in debt while reducing taxes for the wealthy, who keep getting wealthier and wealthier and can certainly afford to pay their fair share in taxes. In fact, the wealthy can afford to pay and should pay at least 50 percent of their annual income in taxes, as they do in Europe. But, in America many of the very wealthiest few pay only about seven percent after taking advantage of all the tax cuts, tax breaks, shelters, loopholes and subsidies, and thus pay less of a percentage of their income than low income taxpayers do.
In my view it is also unfair that we have to pay sales tax for buying the necessities of life, when speculators on Wall Street can buy $100 million worth of corporate derivatives and not pay one penny in sales tax. They should be required to pay a large tax on such transactions, just as wealthy individuals, companies and corporations should pay a large tax on large profits, capital gains and other large incomes. They should pay a large tax especially on the things that benefit only them rather than society as a whole, and that should be a much higher priority than having middle and lower income workers being required to pay unfair taxes on income for honest labor or real human needs.
If we did that, revenues could then be gleaned mostly by taxing the wealthiest few and their speculative stock market trades, financial market transactions, capital gains, excessive windfall profits, currency trades across borders, pollution-producing companies and corporations, gambling winnings, and the harmful food addictive industries. And such high taxes would discourage those activities which have least value and provide no benefit to the public or society. After all, they only make individuals and corporate executives richer, and if we taxed them appropriately we could significantly reduce the income tax on income from honest, productive labor.
Instead, Politicians have given us unfair and utterly insane economic and tax policies. As I see it, "Reaganomics," which Bush continued and expanded, is based on the deceptive and erroneous notion that it will benefit everyone if we allow the wealthiest few to profit so enormously, and to keep more and more of the excessive profits and incomes they manage to rake in at our expense. Ironically, Bush’s father called it "Voodoo Economics" in 1979 when he was running against Ronald Reagan, and he was right. But the younger Bush loved it, because he was supported by the most corrupt of the wealthiest few who love it. But it is terribly unfair, and it gives the wealthiest few so many tax breaks, benefits and advantages that it has been called "welfare for the rich."
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