Why the economy isn’t working for you
Stoddard Eccles was Chairman of the Federal Reserve during the presidency of Franklin Roosevelt and was one of the preeminent scholars on the Great Depression. The building currently housing the Federal Reserve in Washington, DC is named after him.
Eccles laid most of the blame for the Depression on the accumulated wealth at the top. He wrote “as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”
In 1929, twenty-three percent of all wealth was in the hands of the upper one percent and it was game over. Contrast that to the most prosperous period in our history was from 1945 to 2000, when the wealthiest took less than half of what they did in 1929. Unfortunately, the election of George W. Bush ushered in the same failed supply side policies of Hoover; and by 2008, the wealthy’s share had returned to over twenty percent. That’s when the game stopped for all too many of us.
Supply side economics is based on this premise: Put as much money as you can in the hands of the elite because they are the dynamic job creators, risk takers who are the best at growing the economy. Theory is, as they become more and more wealthy, they will create a high tide which will rise all boats.
It’s all to apparent the supply side’s boat has an awful lot of holes in it and the high tide is drowning far too many of us in the middle class. Why? Let’s look Missouri’s regressive taxes and St. Louis’s favorite foil, Stan Kroenke.
Driven by game changing campaign contributions from the elite, the Republican legislature has turned Missouri’s taxes upside down. According to the Institute of Taxation & Economic Policy, the average Missouri is taxed nearly double the percentage of income Stan Kroenke is.
Republican legislators say, “We have to keep taxes low on these job creators.” But are they really the job creators? The evidence is to the contrary.
For every dollar you put in the hands of middle and low income family, you can be guaranteed that dollar will be very quickly put right back into our economy. Not so with the Kroenke types. As Eccles pointed out, the rich don’t spend as much money buying goods and services. Kroenke is a great example.
Yes, Kroenke can do great things with his money like building the expansive Chesterfield Valley strip mall. That’s the good, job creating Stan. But Stan also takes hundreds of millions and gives it to other billionaires to buy the Rams, Colorado Avalanche, and Denver Nuggets. How many jobs were created with these purchases? None. It was just changing poker chips between the billionaire winners at the table.
Worst yet, what these financial titans do so often is spend their tax cuts overseas. Can we all say “Manchester Arsenal?” Why are Missourians giving tax abatement deals and lower tax rates to Stan Kroenke? So he can buy an English soccer team? This is the winner picking up his poker chips and leaving for another country.
The latest on Kroenke is his $750 million purchase of a 600,000 acre ranch in Texas thanks to his Missouri the tax breaks.
The best example of Eccles theory the wealthy not putting their money into the economy like the middle class is the InBev buyout of Anheuser Busch. It was the largest “investment” in Missouri history at $47 billion. Jobs weren’t created; they were destroyed. The same can be said for what happened at McDonnell Douglas, Mallincrodt, Pet, Ralston, TWA, May Company, and now possibly Monsanto. This is where all too much of the elite’s money goes. Missourians have to ask, “Why are Republicans always raising taxes on us and giving the elite tax cuts to take away our jobs?”
More to the point, in 2010 during the heart of the Bush recession, over $2 trillion was invested overseas by these so called job creators, and they held another $2 trillion in banks not investing until the recession had pasted. If that money had gone to consumers, the recession would have been over far sooner and the recovery much stronger.
Einstein said, “Insanity is doing the same thing over and over and expecting different results. Every Republican administration since Hoover has tried supply side economics. Except for Nixon, every Republican administration has started a recession where unemployment reached 7.5 percent or more. On the other side, Democrats only had one when Carter deliberately had the Federal Reserve slow down the economy to stop runaway inflation.
The graph shows how the economy grows far faster under Democrats than under Republicans.
Over the last 50 years, Democrats have increase jobs twice as fast, the stock market has gained nine times more, the growth of debt has been smaller, and most importantly income has grown almost four times as fast as under Republicans.
Economist are now warning us America is head towards a permanently stagnant economy like Central and South America where the elites own 40-70 percent of all income. We must stop the poker chips being accumulated at the top before we all fold our hands.
Next year will trigger a massive tax cut geared for the wealthy here in Missouri. In 2014, Republican legislators funded by supply side billionaires, like Kroenke, overrode Gov. Nixon’s veto of a tax cut. This cut brings the average Missourian a measly $24 while giving tens of thousands to millionaires. Contrast that to the last time Democrats were in control and gave a real tax cut to the middle and low income Missourians by eliminating state sales tax on groceries and pharmaceuticals.
This fall let’s stop the insanity and vote the Republican supply siders out.