US Economy: Who Performs Better?
By Bob Wood, TMO
Now back into how it has come to pass that so many of us believe things that under any objective scrutiny prove false. â€˜â€™The things we know that ainâ€™t soâ€™â€™.
One last canard that needs a little airing is which political party is the better choice for the performance of the economy and stock market. Iâ€™ll bet most of you believe that the Republican Party is the party of business and that economic growth benefits most under their policies.
You likely think the stock market also does better when the conservatives are in power. Well, on both counts, you would be wrong, and not just a little wrong. You would be dead wrong.
For this, I quote from the description of the new book; theyâ€™re Not Even Close, by Eric Zuesse;
â€˜â€™This is what every educated person knows. Forbes magazine, a capitalist tool, says if you want to help the economy, vote Democrat. Personal disposable income has grown nearly 6 times more under Democratic presidents. Gross Domestic Product (GDP) has grown 7 times more under Democratic presidents. Corporate profits have grown over 16% more per year under Democratic presidents (they actually declined under Republicans by an average of 4.53%/year).
â€˜â€™Average annual compound return on the stock market has been 18 times greater under Democratic presidents (If you invested $100k for 40 years of Republican administrations you had $126k at the end, if you invested $100k for 40 years of Democrat administrations you had $3.9M at the end). Republican presidents added 2.5 times more to the national debt than Democratic presidentsâ€™â€™.
â€˜â€™The two times the economy steered into the ditch (Great Depression and Great Recession) were during Republican, laissez faire administrations. People say it all the time but this time itâ€™s true. The facts are in the book.â€™â€™
Now, argue that all youâ€™d like, but youâ€™ll have to research the data for the past 100 years like this writer did. You likely donâ€™t believe it since youâ€™ve always heard it the other way around. Youâ€™ve heard it repeatedly. We are told this repeatedly since the â€˜â€™moneyed classesâ€™â€™ need us to believe the politicians in their pocket doing their bidding promote whatâ€™s best for all of us. They fund research at think tanks that start with the conclusions they need, and then build the support around it.
Iâ€™ve gotten much pushback on this on how luck and timing played a big part in this. The 100 year Democratic lucky streak! Yes, the party most often associated with Socialism and â€˜â€™wealth redistributionâ€™â€™ has performed much better than the party extolling â€˜â€™superiorâ€™â€™ free market capitalist ideas.
â€˜â€™Fading objective truth out of the worldâ€™â€™ is another high art form and todayâ€™s wealth inequality and debt disaster attests to their wizardry. Lies are indeed being written as history, but itâ€™s up to us to discard rigid thinking and the idea that someone we donâ€™t know talking on television really cares about us and wants us to be rich.
If you didnâ€™t pay them, theyâ€™re not on your side. And to be clear, I am not a Democrat nor do I vote for them, or anyone. All I argue for is fairness in our system that spreads the rewards when profits are earned. I advocate whatâ€™s best for the country, in my opinion.
Think of money as fertilizer. If you spread it around, you can expect growth commensurate with how far you spread it. If you just pile it up behind one manâ€™s house, you should expect little growth, with some nasty side effects and complaints from the neighbors.
All I hope for is an honest debate where people like Bernie Sanders gets equal air time to explain why he takes such risks as calling himself a Socialist.
And no, Iâ€™m not advocating Socialism in America either. What I am all for is a blend of economic policies that works for a greater number of us, recognizing the contributions of the people whose backs went into building the wealth in America.
Somewhere, there is a working model for this whereby the brightest among us and the hardest working still get rich, as was seen during FDRâ€™s era of high taxation. But todayâ€™s imbalanced policies favoring only a very small slice of those contributing to wealth generation has produced the greatest inequality in living memory, the slowest economic growth numbers of this past century, and a debt burden manageable only with printed money from the Fed.
There must surely be a better way. In todayâ€™s winner take all society; the biggest entities skew the advantages their way through the political process. They rig the game in their favor using political influence and call it â€˜â€™having a voiceâ€™â€™, or letting money speak for them. No, itâ€™s bribery disguised as campaign contributions.
Scary talk of class warfare and the widening divide between rich and poor in free societies sets us up for more polarization and division. Surely, a hope for more harmonious relations between all can be achieved through a sense of shared sacrifice, responsibilities, and a broader share of the gains made when entrepreneurs and workers collaborate successfully.
Raising the minimum wage is a great place to start. But the business leaders will warn us both directly, and through their proxies, that whatâ€™s good for workers will really be bad and whatâ€™s bad for them will really be good.
It is argued that if we raise the minimum wage, it will cost jobs at the low end where those wages would be paid. Okay, that sounds right, except that itâ€™s clearly not! Raising the minimum wage in America has never caused job losses at the lowest end, except for the early 1970â€™s when the Arab Oil Embargo did the trick on the entire economy.
the Never has a raised minimum wage in America been followed with job losses at the lowest end, except for the early 1970â€™s when the Arab Oil Embargo did the trick on the entire economy.
Using a little logic will show that a measure like this is actually very simulative for the economy. Give a low wage worker more money, and they will spend it all. Give a billionaire a six figure tax rebate, and how much of that will be spent acquiring things he needed or wanted but didnâ€™t already have?
Weâ€™ve already seen this in action with Reaganâ€™s â€˜â€™trickle downâ€™â€™ policies and the Bush tax cuts so heavily skewed towards the richest among us. Both left office either with the economy entering a recession, or in an outright collapse.
So remember, when youâ€™re hearing economic ideas promoted or discounted as nonsense, an entry to class warfare or the beginning of a slide into Socialism, ask first if any of that is true. Ask if there are any conflicts of interest in those telling you that.
Then ask if there is any hard data to support it, or merely some economic model worked up in some think tank, or college economics division enjoying a nice endowment from a large benefactor, that openly admits to leaning hard one way or the other politically.
Spreading the wealth benefits all of us. Just look at the rise in inequality and the similar rise in government welfare programs such as Medicaid and food stamps. Many on those assistance programs work for low wages at places like Walmart.
But what Walmart doesnâ€™t pay in wages or the rest of us is picking up benefits, and that isnâ€™t going to be paid for by the working poor on the receiving end. It will be charged to those of us most able to pay, or simply added to the national debt as is being done now.
At some point, that piper will demand his due. And as Willie Sutton would explain, that bill will be presented to the rich, simply â€˜â€™because thatâ€™s where the money isâ€™â€™. So odd that todayâ€™s are so eager to put off a small bill today for a larger one tomorrow.