Wednesday, March 26, 2008

Economic Musings

I recently posted on former Clinton labor secretary Robert Reich's take on the economic downturn. I said that I didn't know nearly as much about economics as I'd like. I'm trying to remedy this, even if my progress is slow and painful.

One thing Reich said is something I've been thinking for a long time. The Republicans are about reducing taxes on the rich ostensibly so that they'll invest more in building the economy to benefit all of us. But it has long seemed to me, as it does to Reich, that putting more money in the accounts of people who already have more money than they can reasonably spend does little to grow an economy, especially if the rest of us can't afford, as increasingly appears to be the case, to buy the products and services generated by that economy. It seems to me that we need, through higher wages and other changes, to concentrate on putting more money in the hands of everyday consumers rather than in the hands of the obscenely wealthy.

What, if anything, is wrong with my (and Reich's) thinking about this, and if nothing is wrong with it, how might we actualize it?

1 comment:

Tom said...

I think the argument during boom times [and not recessionary times] of lowering taxes for the rich is that they tend to invest, capitalize industries and, thus, create jobs. Low taxes for the rich means they are taking less of a risk in their job-creating activities, which means yet more jobs. Therefore, there is low unemployment and everyone is, generally, happy.

The above may be true, but globalization complicates things. From Republicans' perspective, we are now competing against the world. Other nations want jobs the rich can create. So, to keep jobs here, we need to keep taxes low such that they don't go overseas. Thus, it all becomes a global competition to pander to the rich for the jobs they can create anywhere.

The situation, from my perspective, is, foremost, that we must stop stealing from the future and tackle global warming; it is simply going to be necessary for us to hunker down and America must suffer a long spell of being less affluent.

But statistics tell us we are now living in another Guilded Age of extreme inequities. Something must happen to make life 'more fair,' and force the rich to live less obscenely. The Laissez-faire capitalism of our time is a great injustice. We have legislation that created minimum wages; we should also have maximum wages/salaries.