The Trickle Down

It's a bit late so i'm not going to write for a very long time but I do want to get a thought out of my head. I was just listening to liberal economist Joseph Stiglitz on youtube talking about the financial crisis and the problems with how we are dealing with it. He made a comment about "trickle down" economics and how he's viewed it in practice and it doesn't work. I do, fundamentally, agree with him, but I think it should be explained further than that.

Trickle down theory is supply side economics, a.k.a. let those who will invest (the rich) have as much money as they can so that they can invest and eventually put money into the system, allowing everyone else to have a job and a nice salary, etc etc. Okay, so it sounds like it makes sense. I mean, I'm not going to try and explain some bullshit formula that proves it is right or wrong. The point that those on the left always make is that it tends to increase income inequality. The point that those on the right tend to make is that either, no it doesn't (though i just don't trust them, I can read statistics for myself thank you) or everything equalizes in one way or another. The latter is the more interesting thing that I'd like to say. Stiglitz claims that trickle down doesn't work. Well, what i think the last 30 years have shown us is that it does "work." The real question is, what exactly does it mean for a theory to "work?" Through the massive deregulation of financial markets, the huge cuts in taxes that primarily came in the 1980s, and other such policies credited to the "supply siders," the United States experienced a huge boom in growth. Is this what it means for a theory to "work?" I'm fairly sure the right wingers don't care what the effect is on the average person - if the economy is growing than everything is all good.

What we have to realize is that trickle down economics does create product. It is just not product that is good for everyone. Think of all the technological advances since the 1980s, all of the products that have come out, all of the comforts that we have gained, all of the money that could have been made in the past 30 years. There was a lot of it out there. The thing that must be understood is that trickle down economics did not fail... it led to its logical conclusion. What was the logical conclusion of trickle down economics? Well, apart from the financial crisis and the recession, we are living in it. Think back to 2005.... that was the product of trickle down economics. The politicians and economists let the economy kind of just go wherever it wanted to go because their theories said, and probably were correct in saying that, markets are most efficient. What they didn't ask themselves was whether markets would really serve EVERY American best. The answer to that is undoubtedly no. The economy was allowed to go loose and, consequently, millions of jobs were lost in some sectors (by certain people), millions of jobs gained in other sectors (by different people), billions of dollars made by one small group of people, billions of dollars lost by a lot of other groups of people.

The market had spoken. Meanwhile, we had been seeing some of the greatest economic growth in human history. If the market knows best and there was simultaneously huge amounts of growth... did trickle down economics really fail the United States? Hmmmmm....

Let's call people what they are

In the United States, we have the bad habit of mislabeling. These days, mislabeling is a major problem in politics. The labels of liberal and conservative don't really mean much anymore. In saying this, what I mean to say is that these labels don't represent what they once came to mean. They have been warped by our politics and our culture.

Let's look at reality. The word conservative today means many things. It generally brings to mind: lower taxes, reduce size of federal government, get rid of entitlements, bolster national defense, and order society by institutions of family and religion etc. Conservatism as an idea, however, doesn't entirely fit into this definition. Conservatism literally means conserving the institutions that are already put in place, by the rationale of society changing slowly, evolving over time. The Tea Partiers cannot call themselves conservative activists. If their plan is to dismantle the federal government down to its bare essentials, they are not conservatives but radical libertarians. If we speak of conservatives as the people who conserve the institutions that already exist, we cannot consider anyone who wants to dismantle the welfare system, drastically reform social security, dismantle systems of regulatory oversight, and generally dismantle the federal government.

What conservatives of today really are, for the most part, are classic liberals. They are, paradoxically, conservative in the sense that they are conserving the original LIBERAL constitution of the United States. All of the founding fathers were children of the Enlightenment, liberals of their time, fighting the conservatives of their time who represented the powers of monarchy. They wrote the U.S. Constitution with the liberal values of the Enlightenment in mind. Conservatives today are trying to preserve that vision - the liberal vision of 1776. The vision that every human being, when left to his or her own devices can make himself/herself into anything they want to be. That is quite a liberal way of looking at humanity. In my opinion, conservatives have something of a contradictory position, and probably wouldn't have much reason to call themselves conservative if they weren't also obsessed with traditional social institutions such as family and church (not that liberals hate family or church).

Liberals of today should be calling themselves what they are. If they actually do follow the words that they seem to preach, the label they deserve would be Social Democrats, Democratic Socialists, etc. "Liberals" put in place social safety nets, welfare systems, increase taxes on the rich to spread the wealth to the poor and middle class, legislate for labor rather than capital (at least historically... maybe not from 1994-2008), regulate the economy in order to protect the working class from economic downturns. If they actually did this job efficiently and honorably, they would deserve the label social democrats... but since they don't do this job efficiently or honorably, most of the time, they deserve the label of "Democrat."

The essence of the idea of being Liberal is sometimes mismatched with the idea of Progressivism and Social Democracy. Liberalism should, ideally, be more associated with someone like Ron Paul than Barack Obama. Liberalism in its very nature is obsessed with freeing constraints and allowing human beings to flourish with as little control as possible. The so-called liberals in this country are not always so happy about freeing constraints and controls... in fact, they quite like controlling the economy if they can get it to act the way they want it to act.

When FDR put in place the New Deal, he was in a sense radically altering the way our government worked and the people of our nation lived (although it is important to note that he was acting towards the logical conclusion of the former "Progressive Movement"). He raised taxes on the rich, created safety nets for the poor and working class, put in place massive corporatist controls on the economy - in some ways aided to the creation of the middle class society of the 1950s and 1960s, which if studied in its entirety was massively socialist in nature, if we are to call it by its true name. Of course, the post-war era wasn't marxist. It was socialist in the sense that it was more equitable and that the government made it that way.

I am not suggesting that we get used to calling Ron Paul a radical liberal or Barack Obama and Nancy Pelosi socialists (although it might be amusing). I'm not exactly saying that the majority of Democrats and Republicans are "conservatives" (because they feel totally fine to just preserve the institutions that already exist and not really do much else). The point of this was that the meaning of all words changes over time. The meaning of documents and ideas change over time as we change. Glenn Beck would probably hate to be called a liberal, but his heroes (the founding fathers) would hate to be called conservatives. What are the implications of this? No idea... maybe i'm just writing for writing's sake.

Another Brick in the Deficit Wall

I've talked about both our deficits and our taxes before. I wouldn't say I've necessarily had any change of heart but there are new things that I'd like to bring up that recent events have seemed to underscore. As a generally left-leaning kind of guy, I tend to look at things from a liberal perspective; however, I do try to look back and see the big picture on occasion.

The truth is, there is politics and then there is reality. The great rule of governance is that, ideally, we can't let politics get in the way of the realities of policy. This is something that the left and the right, and to some extent the center, don't seem to grasp in any sense. The Democrats have recently shown that they are little more than what the Republicans originally painted them as: spoiled rich kids that throw money at every problem. The Democrats recent state aid bill was a perfect example of this. In order to save a load of state jobs (such as those of teachers and cops), the Democrats sent the states a nice aid package. Sure it will likely save the jobs of the teachers but... it doesn't solve the many problems that we are facing. The education system in this country is fairly terrible, meanwhile its been proven over and over that simply throwing money at the teachers won't solve anything. And again, we are still facing huge deficits that are not being solved by throw money at everything politics.

Meanwhile, on the Republican side of the aisle, we find politics and reality colliding in a just as destructive way. Ideologically and philosophically, I can understand the reasons behind extending the bush tax cuts in times like we have now. I wouldn't have understood them at the time but now it kind of makes sense, at least from the view of a supply side economist. Times are bad, businesses need investment and capital expansion and all of that stuff, so investment by the rich wouldn't be a bad thing. Okay. Deficit Hawks (other than Ron Paul, maybe), however, need to be realistic. If we are going to cut down social security in order to make it fiscally viable, if we are going to gut health care reform and reform medicare, then we cannot continue this path of ridiculous defense spending either. The deficit, undoubtedly, has some of its roots in entitlements; however, the massive deficits that we have today that built themselves over the last eight years were not due to entitlements. 9/11 caused something like a total doubling of the defense budget in this country. It is no wonder we now have a deficit like never before.

You want to be a real deficit hawk? Alright, let's make the retirement age 70, let's limit social security's reach to certain income brackets (we're not socialists after all!), but let's also get out of Iraq completely, get out of Afghanistan completely rather than trying to fulfill the foolhardy mission of rebuilding a nation. If Republicans believe, ideologically, that the government cannot fix the United States, why would we be able to fix another country?

The Problems of Americans

I haven't written anything in a long time. I guess I could say there have been personal issues in my life that kept me extremely out of the mood to do anything even slightly creative.

I don't want to take my life's frustrations out on politics but i must say... I am goddamn sick with our government. I am sick of all of these corrupt and/or incompetent Democrats who make the left out to be one huge hypocritical joke about limousine liberals who don't even pay the taxes they enacted on their own limousines. Hypocrites that AT BEST criticize the rich (those they claim don't pay their fair share) while potentially hiding the fact that they are also rich and all wish to stay that way, regardless of how much they tend to pander to the poor and working class. Meanwhile, they help enact taxes on the rich that they themselves try their hardest to evade (like Charlie Rangel evading income tax and John Kerry evading state taxes on his yacht... yeah enough said).

Meanwhile, on the other side, what do you find? Most likely you will find a group of highly misinformed Americans spouting nonsense about how tax cuts fix everything and the free market is the only way to go (meanwhile it is the free market that is causing some of the most troubling of problems for the American people).

I don't care how "American" the idea of a "free market" is, it is not very American in my opinion that what we are finding ourselves in a caste society devoid of any social mobility whatsoever. In this country, there is the mass upper class... well-educated (private/or good public high school and private college), with fairly high-paying secure jobs (though in a sense, this recession has effected both); and a mass underclass... with an education that most likely ends at high school though might continue into a public college. The mass underclass these days is plagued by the rising costs of education and the stagnation of their family income. They are therefore much less likely to be able to pay for a higher education or are more likely to have an enormous household debt, which is never good.

Such is the problem that plagues American society. Oh, but it doesn't end there. You see, I could give the garden variety left wing argument that there should be some kind of equalization in America, but that would not fix the problems that we tend to have. Like it or not (and the left tends to not like this part), our problem is not only in our economy but in our culture at large. Let's say the government did somehow take lots of money from the mass upperclass and give it to the mass underclass through wealth redistribution or something of the sort. This would not sort out the problem of culture that plagues America. Our problem, to some extent, is that we are in fact Americans - and that no matter how much money we really have we feel entitled to act like Americans.

Americans, regardless of income, are obsessed with the life that is being "middle class," even though a mass middle class hasn't existed for decades. Americans, though of course not all of them, take vacations when they can't actually afford them, buy TVs and other modern pleasures when they don't need them. They spend money that they do not have on things that they do not need, rather than spending that money on things that make sense like paying down that mortgage or financing their child's education. I hate to sound cynical about Americans but it wouldn't surprise me if the world the Left created, a world that in many ways mimicked the 1950s (with mass unionization, high taxes on the highest tax brackets, "wealth redistribution," etc), was not very much unlike our own in the sense that legislatures could not change culture. The wealth that would be spread through left-wing agendas (though i agree with them in principle) would not change how people spend their money. Many families might use their higher wages to buy more useless crap rather than finance their child's education.

If that is the country that we live in, will any drastic change in our politics really alleviate that pain?