Let's Make Government Work Again
Of the people, by the people, for the people
After the spectacular stock market crash of 1929 ended our last orgy of unrestrained capitalism1, Franklin Roosevelt built the most successful economy in our country’s history. How? He raised taxes on the rich and used the money to improve the lives of ordinary citizens and make the ‘American Dream’ of a comfortable life for the average working class family a reality.2 This post war ‘Golden Age’ was essentially the Democratic Socialism that conservatives claim will ensure the destruction of our country.
Following economic challenges caused by the US dollar’s peg to gold and the oil embargo, Ronald Reagan was elected on a platform of reform focused on shrinking government and lowering taxes. His promise was that smaller government and policies that favored the business community would generate a booming economy and that the benefits would trickle down to ordinary Americans in the form of a strong labor market and increased wages. He was wrong.
His policies failed to deliver as promised, and instead resulted in stagnation of working class wages and a 50 year long transfer of wealth upwards that today has the wealthiest 1% of households owning 32% of our nations wealth.
Money Doesn’t Trickle Down, It Bubbles Up
Since then the government has been running continuous deficits, meaning that they spend more than collect in income. So what happens to the money that is left in the economy?
The working poor spend all of the money that they receive on basic necessities. Food, housing, transportation, childcare, healthcare, etc. The middle class may have a small surplus that can be saved or invested, but the bulk of their income is also spent.
All of this spending bubbles up to the owners of the farms, grocery stores, banks, landlords, hospitals, etc. that make up the bulk of the wealth of the United States. Over time the result is a continuous concentration of wealth among a smaller and smaller number of individuals. And what do they do with their profits? They compete with each other to buy more assets, inflating asset prices and ultimately pricing out average Americans3.
They can also use their money to lobby bribe politicians to further reduce regulations, lower taxes, and shrink government. The result is that asset owners get wealthier while working people and the middle class see their wages stagnate and their cost of living rise.
How Do We Fix It?
As the Roosevelt administration demonstrated, the solution is to reclaim the deficits that bubble up to the top by raising taxes on the wealthy and using the resulting tax revenue to rebuild the American Dream which promised that a comfortable life is available to anyone who is willing to work for it. A government that fight for all citizens. That believes in the power of public education, universal healthcare, and a living wage. A government that will temper the excesses of unrestrained capitalism. A government that will fight to protect our environment and defend our democracy.
We know that any benefits received by working people will immediately be recycled into the economy. That a healthy working and middle class will re-invigorate our economy through increased consumer spending and the financial freedom to pursue better jobs and start businesses. This is the real engine of a healthy economy.
And as the wealth of the 1% decreases, asset inflation will decrease and create an increased incentive to invest profits on workers and capital expenditures rather than executive salaries and stock buy-backs.
We Can Do This
This transformation requires that we dispel the myth propagated by the wealthy that free markets are efficient and that government is inherently incompetent and should be minimized. The proper role of government is to limit the excesses of unrestrained capitalism and build an economy that benefits all citizens. History tells us that if we fail, the result will be the end of our democracy and the American Dream.
I believe that the excesses of the Trumpublican administration have given us a historic opportunity to reclaim our power and the promise of our founding principles. An opportunity to build a government of, for, and by the people. Join the fight. Make your voice heard. Stop funding the oligarchs. And vote like our future depends on it.
A fair and accurate description of the chain of event that created the in equality that is choking our democracy.
Nicely composed. Historically accurate. Keep it up!