The Rotten Core of the GOPconomy

At the rotten core of the GOPconomy: Too much wealth in too few hands.

The “conservative” policies of the last 30 years have inexorable lead to too much wealth in the hands of the uber-rich and too little in the hands of the poor and middle class. This is a condition that is very bad for our economy, for any economy and our society and democracy as well. One need only look at the conditions of the third world where a very few control the vast majority of the wealth and most of rest are dirt poor to see examples of why this is not a good thing and why we shouldn’t be going there like we have been.

It would be bad enough if this were the fairy-tale “free-market” working to cause the condition of an economy that does not serve most of the people, it is not. The fact of the matter is that there is no such thing as fairies, frog princes or free markets. These changes have been the direct and conscious result of conservative economic ideology put into practice for three decades. Just ask Warren Buffet who complains that his secretary pays a much higher percentage of her modest income in taxes than he does and says that there is indeed a class war in the U.S. and his class is winning.

Consider these changes (inflation adjusted) in our situation as country:
• The country has twice as much wealth as it did 1980
• A worker that produced $1.00 of value in 1980 now produces $1.70 in the same amount of time
• Almost all of the income growth from the two items above has gone to the top 0.1 and 0.01%
• The top 0.11% now reap the largest share of all income since the late 1920s, (coincidence? I think not)
• 90% of Americans have seen their real wages drop over this time
• The average American makes $73/wk less than they did in 1973.

These are the results of a government whose defacto policy has been to further enrich the rich rather than to build and strengthen the middle class as was the case after the depression and WWII. This is a government that has not only backed away from responsible regulation of markets, but actually worked contrary to transparent market forces and then when the inevitable wages of greed and corruption come due, (at least once per decade over the last 30 years and accelerated under Bu$h), the public is stuck with the bill, shifting the burden down the economic ladder.

Spurred on by the likes Greenspan and predatory lenders, the middle class has now used up the equity that they had been borrowing against to support their consumption of their heretofore middle class lifestyle which could longer be supported by their declining real wages. Now the middle class do not have the wealth necessary to continue to support consumption so they are pulling back on their spending which is further hurting their ability to consume as a group since that causes more of their cohort to lose their jobs or at least feel so insecure in their employment that they're saving instead of spending. Saving is a good thing you say, that money will be loaned out and invested? Not so right, not now anyway.

The uber rich have little incentive to loan/invest the vast sums of money they've accumulated since the dawn of Reagan corporatism by hording to themselves almost all the huge gains in productivity realized lo these one score years and ten. In part this is because there's low confidence that they will be paid back even by those with good credit. Why they may lose their jobs and no matter how good your credit is you can't pay your bills if you lose your job. But even more importantly, they don't want to invest because in an economy driven overwhelmingly by consumerism (bigger even than the dysfunctional financial sector) there's no point in investing when your customers, the folks who do the vast majority of consuming in this country don't have the money to buy your product. So rather than invest, the wealthy look for safe havens like T-bills where at least they can preserve most of their wealth for later. These kinds of investments don't produce jobs or pay wages and so this exacerbates the problems on the other side of the tracks.

In short, our economy has become like a battery where all the charge has migrated and there's not enough potential left to support dynamism. Seems to me it's time for a recharge/redistribution of potential back toward the other pole so we can get the flow going again. Instead through the endless bailouts we're distributing even more wealth to wrong pole where it will sit idle.

We need more than the short fix of government spending to kick start jobs and spending. We need a restructuring of government and tax policy to promote the commonwealth more and the exclusivewealth less.