Friday, November 13, 2009

Fixing the Economy

I have long believed that the economic policies of conservatives which have been supported by way too many Democrats would destroy America. Democracy only works when people have not only political freedom but economic freedom. However, the policies of the past 30 years have created a haves and have-nots society.

By dramatically lowering the tax rate on the highest earners, two things happened. One is that enormous amounts of wealth went up to the top one percent of earners. Who paid the price for this? The middle class, which has not seen real wages increase in those 30 years. We essentially have a flat tax now, instead of a progressive one.

A second consequence of lowering the tax rate on the highest earners, I believe, is the huge fluctuations that our economy has gone through -- the repeated booms and busts. When top earners have so much money, they can afford to lose a lot in market booms and busts. We in the middle class can't.

Other factors have also played into this. Globalization meant cheap products from emerging markets and cheap credit kept middle class buying power up which allowed the middle class to think they were doing OK when they were actually losing ground. Anti-union movements had huge negative impacts on the middle class. Empowering Wall Street way beyond their due and -- and this is huge -- deregulation of the financial industry really screwed things up.

Without the wealthy paying their fair share, without the middle class seeing its income and savings ability growing, we are doomed. We will not be able to support our aging population, repair infrastructure, expand education and compete on a global scale.

This is not the America I expected to live in as I grew old. I call again for revolution -- we need major changes in how we think about taxes, government benefits (health care, Social Security, aid to cities/towns, infrastructure, education, etc); unions; and corporate regulation. That is the change we can believe in.