This is a fantastic article about the increase in income disparity. In 1915 "the richest 1 percent accounted for 18 percent of the nation's income. Today, the richest 1 percent account for 24 percent of the nation's income. What caused this to happen?" This is the first in a series that Slate magazine is running all this week.
Personally, I think it's because post WWII, we had a philosophy of building and protecting the Middle Class. We had a sustainable, demand-side economy- like Henry Ford's practice of paying his employees enough so that they could afford his automobiles.
Since 1980 however, the philosophy has been to protect the super-rich. Just in case we ever win the lottery or mysteriously inherit a massive fortune, we won't want anyone laying a finger on our fortune. We'd all like to think that we'll be among the super-rich some day.
Since Reagan, we keep experimenting with the unsustainable supply-side economics. The theory is that if we free-up more money for those with the means (capital) of production, they'll reinvest in production, providing jobs, thereby helping everyone, not just themselves. In practice, they spend it on themselves or on schemes to make even more money without practicing corporate or civil responsibility let alone any kind of altruism.
Ultimately what results is too much supply, and not enough demand. In other words, too much inventory and no market for it, too much stuff but not enough people who can afford it. A bunch of huge empty houses and tons of empty office building with no buyers.
Author Tim Noah reports that most economists, both Republicans and Democrats don't really know how to reverse this "Great Divergence." I believe we need to re-evaluate our tax code and perhaps return to the progressive tax structure like the one we had under Eisenhower. Even if we returned to the tax rates under Reagan, it would be a step in the right direction.
Unfortunately, the Obama Administration is considering actually renewing some of the massive and reckless tax cuts for the wealthiest 2% implemented by George W. Bush before 9/11. Even the richest men in America, Bill Gates and Warren Buffett believe that the Bush cuts were irresponsible. Tax relief will only be successful in stimulating the economy when it benefits the middle class and/or helps the working-poor become middle class.
Click here to view a visual guide to inequality, it's pretty clear and pretty compelling.
Demand-side vs. supply-side is not "socialism," or communism. It's common sense, not to mention common decency. I don't consider this a partisan issue, even though it has largely been conservatives who have advocated for supply-side for the past 30 years. This is an issue what's in the best interest of the vast majority of the American people.
Although, one of the things we need to find a way to do is to separate social and emotional issues from pragmatic and economic ones. And we need to allow ourselves to consider the possibility that just because a candidate or a party is right on one issue, or even some issues, that doesn't mean that they can't be wrong on other issues. Too often, members of both parties assume that their side is right about everything just because they are opposed to one or two things that the member is opposed to.
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