Dear New Hampshire Voters and Other Americans: Let’s Review Why the Median Income in America has Not Been Good for Decades! Then Vote to Change the System!By Kevin Stoda
Last summer, Larry Beinhart in OP-ED NEWS wrote a brilliant summary of why America had been actually in various phases of a recession for some time. The piece was entitled, “The ‘Mysteries’ of Bushenomics.”
As almost everyone knows, the misguided blueprint of the United States of America for much of the spending habits over the last horrible 7-years comes relatively uncorrupted from the Ronald Reagan and George H.W. Bush administrative periods between 1981-1992.
Ronald Reagan’s approach was to try and grow the pie of economic materialism and infrastructure while slicing the pie a little less equitably among the Janes and John Does of America.
One of the theoretical underpinnings of this confused economic blueprint is that (1) as long as the Ayne Rand characters envisioned in the American Myth of the supposedly Entrepreneurial Free Market of the USA receive their profits unhindered by others—i.e. by governments--, (2) the economic pie will grow bigger and eventually all Americans of every stripe will be blessed by the growing of the American Economic Juggernaut.
I ask you America, “Well, it hasn’t been working for nearly 30 years—so why keep trying?”
While there are some tiny portions of the Ayne Rand theory and of the horrible blue print which hold sway (or hold water) among the better theories of political economy and social productions on the planet, former CIA Director George Herbert Walker Bush in 1980 properly called the theories underpinning of the Reagan economic as simply “voodoo economics”.
In the 1980s, others experiencing the working class world and world of unemployment in U.S. cities at that time ( an unemployment which reached in some neighborhoods nearly 35 to 40% by 1983) called the theory and practices of the Reagan (1) “reward the rich”--and (2) magically create jobs a theory of “trickle down economics”.
LET’S CALL IT A WASH OUT
In short, although the opportunist George Bush, Sr. bit his lip and eventually joined Ronald Reagan as Vice-President of the United States in 1981, America went through a period of numerous uncertain economic transitions and ups-and-downs throughout the 1981-1992 period.
The U.S., itself, was in recession again in 1991-1992 (despite deficit spending on the first Iraq War) and had been in and out of recession over the previous two decades several times.
In short, the Reagan-Bush economy of that particular 12-year period and the Bush program of 2001 till now have been unsuccessful in raising wages or raising the living standards of middle (& lower income earners) and households in the United States.
Dear America, don’t you agree it high time to call the Reagan, Bush I and Bush II models a failure?
It is time to pick up the cards and deal out whole new hands starting in 2008.
We can keep some facets of the theory that have to do with strict scrutiny and efficiences, like the Reagan era focus on efficiency in reducing some of the ills of pork barrel spending the creations of more efficient departments managing mostly social infrastructure in the USA.
However, as for the pet-branches (Defense and Security) of Reagan, Bush 1, and Bush 2 economic and government management go, America has to require that these branches go through the same scrutiny. These departments of indulgence in spending for these 3 misguided economic managers of the American economy and governance are now all clearly located under the branch of homeland security,--but they should also include the secret branches now overseen only by a handful of elite senators and congressmen (who have not done their oversight jobs well) over the past 8 years.
It may not be too farfetched to get rid of or hone down the Department of Homeland Security as the current president and vice-president rarely listen to its advice, anyway.
Where are the Republican and Democrats today who can fill real watch-dog roles concerning the ballooning defense and security related spending of the USA as congressmen or as president in 2008? Are such Americas actually running for office? Well, then vote for them—if not, please demand a new set of cards immediately, otherwise you are joining in another illusion and accepting the same shenanigans as last year.BEINHART’S REASONING
Larry Beinhart began his reasonable critique of “Bushenomics”--and by extension “Reaganomics”--by sharing a favorite humorous irony concerning the illusions people (including compassionate Christians who should know better) have been holding out for Reagan and Bush economics over 3 decades now.
Beinhart’s joke went like this: “Bill Gates walks into a bar. The average income of every person in the room immediately goes up 10,000 percent.”
In short, in looking at real people’s lives in America--i.e. looking at average wealth,
average standard of living,
average access to health care, or
average access to government aid in an emergency--,
looking at average is a political-economic “NO-NO”.
As Beinhart states, we have to look at the median income in society to find out how Americans did or have been doing in the economy.
In terms of cost of living in America over the last 7 years, fuel is up over 100 percent, and education costs are nearly 50% higher. Moreover, health care costs are up by at least 80% at a time when up to 50 million Americans (1/6 of the total population) are without any insurance.
It should be noted that Beinhart’s prescient article was written before the housing market collapsed after June 2007.
As far as measuring any economic success of the Bush administration, only the Dow Jones had done well as a benchmark under Bush 2 economics. However, once the housing market went belly up last summer, even those illusory gains were erased.
This contrasts with a the Dow Jones having increased during the Clinton Administration by 320% in 8 years. (The Clinton Administration applied efficiency to spending and taxing far better than his predecessors, Bush, Sr. or Reagan.)ONLY THROWING MONEY AT IT
Beinhart notes that when “a government wants an economy to grow, it throws money at it.”
This “throwing of money at a problem economy”, actually only works to a small degree.
For example, the Ronald Reagan increased government spending drastically in the 1980s—however, only mostly in the areas of security and defense spending—and yet the recessions came again and under his presidency the Dow Jones crashed again—but at a crash level which had not occurred since 1929.
This is because (1) tax breaks were being given mostly to the wealthiest sectors of the economy, so (2) people and banks which then had more money to take home during the Reagan era, looked around to invest in things, like stocks for quick earnings.
In short, these Ayne Rand wannabees weren’t investing initially in greater American infrastructure—like trains, new electrification, or new road networks—as had occurred in the U.S. in both the 19th and after the Depression in the 20th.
Meanwhile, as economists had alreadt noted, (3) spending on defense is likely to have the least direct trickle down effect on the median wage earner and/or small businesses in America.
Therefore, when in 1986--and thereafter-- Congress had to begin to get the Reagan and Bush mis-spending in line, cut-backs came on defense projects, like the Star Wars program.
This was appropriate as those benefiting from arms contracts are the usual suspects of the big business world—arms industrial producers—who have the least positive washback on the economy as a whole.
At the same time, America had to determine what to do to help the median income earners—as costs of living and education continued to grow through every single decade of the Reagan Bush experiments.
The quick fix “salvation” and source of profit for some giants, like Wal-Mart and thousands of America’s newer dollar stores, was the opening up of China and Mexico to trade and investment.
In short, as the Reagan, Bush 1, Clinton,and Bush 2 economies have marched on through 2008, the quick fix to diminishing standards of living in the median household, Americans have found as the only solution these sort of cheap imports
That is, the quasi-free capitalism of Bush- and Reaganomics offered only cheap imports and new lower paid service industry employment to many Americans. (Meanwhile university education costs spiraled out of control. U.S. youth have to go to Cuba and elsewhere to study medicine. Thousands of other medical students’ education costs continue to drive up America’s health care industry-user costs each year.)
Besides recent pork barrel spending from the congresses under the George W. Bush Administration only the pharmaceutical and defense contractors have made out big-time under Busehenomics II.
On the other hand, the government—instead of demanding health care for all and other minimum standards as many a government has seen the right to do—, Bushenomics ans its forefather faiths I trickle-down economics and shock economic theory have continued to pretend that the spending practices of the Reagan era are still good models for America in the 21st Century.
As Beinhart says, America must throw out the Reagan and Bush mythology and move on beyond building a mediocre country and planet in 2008!
It is such a transformation in thinking and government planning which will be essential for a real recovery in America.RECOVERY OF SOCIO-ECONOMIC CONSCIOUSNESS
Beinhart shares another economic parable that is accurate, but it should not be read as irony because the matter is too serious for the average American who cannot even dream of owning a home in 2008.
Beihnard explains how the credit economy benefits the bigger banks and wealthier lenders of the land without producing a building or any tangible piece of infrastructure themselves. (You may notice I am a fan of many credit unions—but not a fan of many banks although there are some good bankers out there.)
The example is concerned with housing loans but could apply to student, car, business, education, and other loan—including the usage of credit cards:
“You own a house. It’s worth $100,000. Someone buys the house, no money down. They borrow that money. Let’s say it’s a straight 8 percent, 30-year mortgage. Forget closing costs, points, and any other complication—that’s $220,000 debt. It goes on the banks books as an asset.”
Beinhart continues with his parable, “Now you have $100,000. The bank has $220,000 (on paper). The buyer has a house worth $100,000. The bank has a lien on it , but the buyer will be gaining equity, plus he can get a second mortgage and home-improvement and other loans on it.”
Concluding, Beihart notes, “Again, this is a vast oversimplification, but that transaction has ‘created’ something like $420,000 that is now “in play,” as part of the economy.”
So, American mythmakers have been able to claim that the economy has continued to grow over the past ten years—even though tens of millions of Americans have experienced otherwise.
This is the grand illusion of the big spenders, bankers, Reaganomics, and Bushenomics (perhaps to some degree Cintonomics, too,) types.
The fact is, not since the 1930s, 1940s, and 1950s has the U.S. spent its money strategically well to help directly most regions and peoples. From the 1960s onwards, middle men (& very many of them) and the wealthiest have been depended on to grow the pie.
There have been no great national rural electrification projects,
no major new mass transit systems (like bullet trains),
no great social security innovation, and
no attempt to provide inexpensive higher education to masses of people as occurred in our grandfather’s time.
Instead, after 1964, for example, the U.S. government created the student loan program and prices in higher education have skyrocketed. (How many of you have had family members who have gotten in trouble due to their inability to pay back loans?)
America needs to return to better core investment strategies of its resources in this 21st century—in a way that good strategies made America so strong after WWII. These well-thought out spending strategies included direct government transfers to the poorest and more underdeveloped parts of our society. This is how Americans gained access to telephone, radio and televisions faster than any other peoples on the planet—investment in infrastructure and human being which empowered America.
When I think about a needed American Recovery, I believe a full-recovery of values that commit each American more to helping each other out will absolutely include not only private sector good-will but those wise usage of resources practices which made America so fruitful a hundred years ago—but in a way that has not been seen in over a half a century. (Just look at how competitive Germany has become in recent years through better allocation and reallocation of resources than any American governments has demonstrated in decades. Look at the whole European Union for a smorgasbord of political-economic practices which Europeans learned the hard way—and sometimes by copying our forefathers.)
America needs to recover a vision of building better social-infrastructure, i.e. infrastructure that helps almost every person in the country (not relying on trickle down) to solidify a flailing unity which once dominated America in the post-Depression era but has since been erased by made-for-TV illusions of wealthy investors running U.S. media and politics.WHY NOT A WORLD VISION BEYOND MEDIOCRITY?
For several decades, I have been dismayed at the mediocrity that so many Americans and American households have been willing to put up with under an illusion that they are living or pursuing (or have access to) the American Dream.
The American Dream I was raised on was revealed in the visions of Dr. Martin Luther King, Jr. (and others at mid-century) who asked Americans not to assume that we have achieved a great society but asked us to strive for the day when we were a great society—a beacon on the hill to others as well as to our offspring.
2008 is the year to march forward on such a path.
For example, labor unions in the USA are finally realizing that the cause of workers in other countries from China to Bangladesh are related to their own struggles on behalf of improving the standard of working and living at home in the USA. However, awareness is only a first step. International cooperation lifting standards of labor and lifestyle for all are important and our government must practice the tact and right people-to-people tools to get things done. (I.e. stop throwing bombs and asking questions later!)
The U.S., if it is to continue to pursue trade treaties and work under the WTO (or any newer trade regime), has got to be a leader in promoting labor and citizen rights in other countries.
We are all in this boat together-just as we live under the same polluted skies and alongside polluted or overflowing sea beds
Nonetheless, it is the American Socio-Economic situation that is in such poor shape in geographical in 2008. therefore, it America is absolutely in need of serious revamping and restructuring of national spending and distribution of resources (& priorities) focusing on core areas of need and of future human potential.
These core areas include the need to create an energy system that is sustainable.
Many of the poorer U.S. states an their citizens could benefit from the U.S. government taking a $100 billion dollars out of Homeland Security Spending (already costing 2.4 trillion dollars in Iraq and Afghanistan Wars, etc.) for a great jump start in the way of efficient clean energy production.
Similarly, $100 billion could build the foundation of a great Health Care system for all.
Or, $100 billion could build or initiate the main infrastructure for electrified fast trains across the USA—trains that carry automobiles, trailers, and trucks as well as passengers.
Americans can determine a better future—that is, if they refuse to depend solely on unqualified economic theories and look again to making key social investments--instead of only throwing money around to the facets of an economy that have the worst and most indirect support for developing individual wealth and for improving the quality of living for all.
Here is one final warning from Beinhart, “If we are to invest public funs—through government borrowing or spending or through simply spending tax revenues—we are to be aware that rich people running around with bags of money won’t necessarily do what’s good for the wealth of our nation. They may run us into bankruptcy, the way the smartest guys in the room ran Enron into bankruptcy.”
Don’t forget how closely tied Enron was to the Bushenomics folks and how theysupported George W. Bush and his policies in the period prior to Enron’s collapse in late 2001.
That food-for-thought alone should give you a clue as to who benefits under Reagan-based Bushenomics of any era.
American leaders owe America a better theory to base its future destiny on. Demand it from political candidates, like me, in 2008 (and onward).NOTES
Beinhart, Larry, “The ‘Mysteries’ of Bushenomics”, http://www.opednews.com/maxwrite/showtags.php?tid=3996
Stoda, Kevin, “Dear Iowa Voters, Shake up the System . . ., “ http://www.opednews.com/articles/opedne_alone_080102_iowa_voters_2c_please_2c.htm
Stoda, Kevin, “Dear Republicans and Progressive Evangelicals . . .,”
Stoda, Kevin, “Greenspan Vs. Naomi Klein and Amy Goodman”, http://www.opednews.com/articles/opedne_alone_070926_important_debate_hel.htm