A new study confirms tax cuts for the rich do not benefit the rest. Recovery from the pandemic is a chance to change course
Napkin economics visualized by the 1980s economist Arthur Laffer only has been found to serve the fat cats at the table – until the 2020 Pandemic came to town. As Robert Reich (@rbreich) has emphasized in his United Kingdom based article, labor left unpaid only serves the rich employer.
When William Jennings Bryan’s “Tax the Rich” philosophies became “vogue”, the United State’s was on the cusp of the Industrial Revolution. The causes of America’s Civil War were being mended and new political strife would unwind to create World War 1 and II. Modernizing economies were able to enhance society by retooling and reorganizing resources into improved methods of work. Educating a work force on these new ways became ultimately industry’s responsibility.
Ronald Regan photographed by John Loengard, Copyright © Time Inc/Meredith Inc.
What was understood is Carnegie, Morgan and the like had organized industry to employ labor needing to work at a price they would accept. Labor ultimately found a unionized voice to price fix for workers and let consumer habits pay the bills. Bills like $600 toilet seats and $435 hammers were the norm for the 1980s government where Reagan and Laffer reigned. At least in America, government became the rich employer overseeing the starving populace – those unorganized, unrepresented and either unemployed or “self-employed.”
Fast forward to today’s world: We live in a society choosing between productive and non-productive uses of resources. Technology has allowed efficiencies where physical movement has been stifled by political pandering. In 2020, the pandemic has allowed politicians to protect their careers by first coming to the rescue with unchecked bailouts and then matched with unchecked local public health policies. One only needs to look at the independently owned restaurant to understand how bad these choices have been.
Reich’s reference of reinvesting into certain industries has merit. Again just take a drive down any American city bridge and you will know that city, state and federal dollars are far from your private ride’s tires. Pot holes galore and failing physical infrastructure riddles the American way. Leaders like Eisenhower rebuilt America’s highway system to allow mass ground transportation of goods, services and people. The worker willing to build out the highways found a job – one where manual labor was rewarded for time and for a viable result: a working, smooth new road.
“Build Back Better” proposed by President Elect Biden is only going to work when government is right sized and consumers are allowed to consume. Robert Reich’s own San Fransisco is a corporate battlefield with politicians failing to side with workers. Homelessness and new addictions are a result of bureaucratic red tape. Scooters left curbside is an outgrowth of private industry and consumer preference working around failed government and fat cat contractors. Not to mention highways that are over used, poorly planned and terribly expensive.
Nationally, America has allowed the world to flourish at her internal expense. American politicians have failed its own electorate by imposing poorly crafted legislation. The “Cares Act” became a rush when market forces and overall hysteria globally became a flashing red light for all politicians – and major businesses. If the American consumer stopped the engine which feed the world, the world would have come to a cold hard slowdown including temporarily in China.
Individual resourcefulness and corporate innovation requires a working and viable government. Trickle-Down economics depends on the latter. With politicians focused on their own interests, the fat get fatter while placing society at peril. Nationalism vs. International Co-operation are given new life with many willing to blindly follow out of desperation, hate and their own ignorance. Biden and team need to right size taxation to ensure America mends quickly and profitably.
Industry has already re-organized. Technology has allowed remote workers to stay at home. Technology has allowed local food delivery. Technology has allowed a vaccine to become ready for public use. Technology has enabled those willing to use it to flourish and be productive. Technology has only been possible because of government investment in future concepts yet to be proven. And technology depends on labor, properly educated and feed. The question which needs to be asked and answered: are technology companies ready to re-invest in their local communities to reward their future interests. When they are, many will rise above the current overshoot of failed philosophies like Trickle-down economics.
Source: Trickle-down economics doesn’t work but build-up does – is Biden listening? | Robert Reich
