What’s Wrong with the US Economy?
As this image shows, what’s wrong with the US economy is the vast inequality in distribution of income. At the high point, 1929, nearly 20% of income went to the top 1%. Of course we all know what happened near the end of 1929 under the Hoover administration. The Great Depression not only caused worldwide economic distress, it also set the stage for the rise of fascism and World War II. Much of this was due to an inept response at home and abroad–austerity being no more successful then than now.
Not only did Hoover fail to respond adequately to the crisis as he did not believe in charity by government, he made several counterproductive moves. These included eliminating taxes, which primarily benefitted the “Job Creators” in the mistaken belief cutting taxes would encourage “Job Creators” to hire more workers and thereby stimulate the economy. He also removed his own money from the stock market which undermined confidence, further damaging the crippled economy. Hoover was pilloried for his botched response to the crisis and the shanty towns which sprung as the numbers of homeless increased were dubbed Hoovervilles. Due to his failure to address the national crises, Hoover was easily defeated by Franklin Delano Roosevelt in 1932.
During the 1930s under Franklin Delano Roosevelt, the top 1%’s share falls to around 10%. This was due to wealth redistribution, most of which went to building infrastructure and much of the electrical power grid. But with the outbreak of World War II–a direct result of the Worldwide Great Depression, the top 1%’s share ticks up at first because while they are costly to the people, wars are profitable for those in a position to “take advantage.” And they love to “take advantage.”
As Roosevelt introduced higher tax rates on the top 1%, their share began to drop. By the time of Dwight Eisenhower, the top 1%’s share fell to less than 10% of total income. Again this was due to wealth redistribution—this time by a Republican Administration. Much of this wealth was redistributed via the construction of the Interstate Highway system, vital to our modern infrastructure and college educations for WWII veterans, which was vital to the robust era and rapid progress which followed. Under Ike, the top tax rate was 91%, yet the top 1% still managed to keep about 7.5% of the total income. This period beginning with Eisenhower and ending with the election of Ronald Reagan, is known by scholars as the Great Compression—inarguably, the Golden Age of the USA, with a robust economy and consistent low unemployment rates. During this time, we put men on the moon, kept the Soviet paper tiger in check, spent a trillion dollars on the ill-fated Viet Nam War, and continued to improve the US infrastructure with aerospace and computer research and development.
Under Reagan, the top 1% increased their share of total income by twofold, to about 13%. Under George H. W. Bush the top 1%’s share continued to rise for first two years. With the outbreak of the Gulf War, however, George H. W. Bush was bright enough to understand when you go to war, you also have to raise money to pay for it and the top 1%’s share fell slightly. Under Clinton’s two terms of peace and prosperity the top 1%’s share dropped slightly. But the with the repeal of the Glass Steagall Act, the top 1%’s share began a meteoric rise. Under George W. Bush the top 1%’s share reached its highest point since the Great Depression, and of course we all know how that the worked out as well. We call that one the Great Recession, though the Term Great Depression II is a more accurate description.
So how does the “Job Creators” argument hold up to this data? Well, the data indicates times of the highest tax rates for the top 1% coincide with low unemployment and a robust economy—not the other way around.
Now let’s look at what the current GOP presumptive nominee has planned—yes, more tax cuts for the richest among us, tax hikes for the middle class and the poor and a reduction of services. He argues this will lead to lower unemployment and more robust economy, yet history indicates it leads to disaster. Who do you believe history or an elite who wants to buy the White House with other people’s money while his wife dabbles in Dressage?
“And I saw a beast rising up out of the sea, having seven heads and ten horns, and on his horns ten crowns, and on his heads a blasphemous name.” Revelations 13:1-3.
And the beast called itself GOP and written upon its seven heads are: Avarice, Cowardice, Entitlement, Homophobia, Ignorance, Misogyny, and Racism. And the meek shall cry out in agony. And the beast shall be slain by the Lamb, in their name. And the beast's name shall be erased from the minds of men forever.