This country once had a stable financial system. It was the direct result of the New Deal. The crash of '29 had been created by greed, lax rules, and government institutions unequipped and ideologically unprepared to tame capitalism's most rapacious players.
Enter FDR and the New Deal. With it Americans enjoyed roughly 50 years of prosperity and a largely stable banking system. The good 'ol days, as conservatives seem to pine. And there was good reason why we look fondly at what seems to have been our economic heyday. What conservatives forget is that we had far less income inequality, higher taxes, greater union membership, lower consumer, state and federal debt. We had a trade surplus, a much larger manufacturing base, and little outsourcing. And we did not have job-killing free trade agreements, such as NAFTA!
Underlying all of this was a rigid set of banking rules that, among other things, kept commercial banks out of the stock market and enforced prudent capitalization requirements. Upon assuming office, President Reagan immediately worked to overturn regulations and help Wall Street's rise to dominance, a rise that continues today despite Obama's half-hearted and ineffectual efforts to reprioritize Main Street.
Banks quickly capitalized on the changes Reagan set in motion; systemic banking failure began within a few years. Those failures have been with us in regular intervals ever since, all the while wealth continues to concentrate in the hands of those who created the economic chaos in the first place.
Here is Elizabeth Warren explaining the process.
Showing posts with label New Deal. Show all posts
Showing posts with label New Deal. Show all posts
Wednesday, October 12, 2011
Saturday, September 17, 2011
What Have Unions Done For Us?
I don't imagine that many have seen this video, but it should at least give pause for thought about this country's ridiculous and staggeringly ill-informed assault on American labor. It started with Republicans, of course; they have hated working Americans for generations. But the real problem is that too few Democrats seem prepared to fight for what made this country great.
Nor can we depend on our feckless media to remind us of what we once had and why we had it. Without a more vigorous media, voters remain confused, uninterested, and susceptable to manipulative framing that has reached absurd levels.
Ignorant shits who can't tell you what GDP stands for, or how many Senators are in their state have convinced themselves they know what this country needs. They have lapped up right wing crap about how "big labor" is strangling the economy. They don't hear, and don't bother to read about, how high union membership coincided and contributed to middle class stability, at a time when we had a much greater manufacturing sector as well as a trade surplus.
All of this happened while the US was a creditor nation, consumers had far less debt, did not rely on two or more jobs to make ends meet, and were able to save far more. Nor did our government depend on our trading partners' dollar surpluses to buy our debt. And it all happened when marginal tax rates were far higher than today.
Now look at the graphs below. You can see that most of America has not done well economically in the last 30+ years, not considering overall growth. This is why we have a stagnant economy; wages are too low, which has led to weak demand. Does it look like the tax burden, regulations, or labor unions have held back the rich? Does it look like they need more tax breaks?
FDR's New Deal created the middle class. Son, if you don't know that, you need to set about reading some American economic history. You do know what FDR stands for, yes?
Nor can we depend on our feckless media to remind us of what we once had and why we had it. Without a more vigorous media, voters remain confused, uninterested, and susceptable to manipulative framing that has reached absurd levels.
Ignorant shits who can't tell you what GDP stands for, or how many Senators are in their state have convinced themselves they know what this country needs. They have lapped up right wing crap about how "big labor" is strangling the economy. They don't hear, and don't bother to read about, how high union membership coincided and contributed to middle class stability, at a time when we had a much greater manufacturing sector as well as a trade surplus.
All of this happened while the US was a creditor nation, consumers had far less debt, did not rely on two or more jobs to make ends meet, and were able to save far more. Nor did our government depend on our trading partners' dollar surpluses to buy our debt. And it all happened when marginal tax rates were far higher than today.
Now look at the graphs below. You can see that most of America has not done well economically in the last 30+ years, not considering overall growth. This is why we have a stagnant economy; wages are too low, which has led to weak demand. Does it look like the tax burden, regulations, or labor unions have held back the rich? Does it look like they need more tax breaks?
FDR's New Deal created the middle class. Son, if you don't know that, you need to set about reading some American economic history. You do know what FDR stands for, yes?
Monday, August 29, 2011
US as Third World
On August 25 I had a post on Wall Street and how it bought and captured the institutions originally meant to ensure the public was served. I wrote then, and I say here again, the outsized role of the financial sector and the obscene, short-sighted, and shameless priorities of a reckless investor class, complete with unprecedented lack of accountability and legal liability, are at the heart of America's economic difficulties.
Corporate America's dominance of media and public discourse gloss over the fact that said financial dominance was what conservatives wanted; it was they that pushed through legislation favorable to the wealthy, investors (wealthy or not), and corporations. Conservatives, especially the wealthy variety, have gotten most of what they have wanted; lower taxes, fewer regulations, free movement of capital, lucrative defense contracts, and more.
Crap about how progressive agendas have hurt America are the imaginary domain of the ignorant. Union membership is now at negligible levels, far below similar countries. Labor unions have been weak for the last 30-odd years and getting weaker, just what conservatives wanted.
New Deal legislation had made banking relatively safe and stable for generations. It was conservatives who said barriers between banking and finance were dated and holding us back. So Republicans in Congress overturned Glass-Steagall. Conservatives got what they wanted. Casino capitalism almost immediately ensued; financial meltdown soon followed. They wanted taxpayers to bail out the banks, and without any meaningful reform to prevent further catastrophes or undeserved enrichment. They got that too.
Wages for most workers have been flat for decades, precisely what conservatives have wanted. The US was a wage leader before Reagan; since then, wages for most have been flat. Conservative policy has been to suppress wages however possible. Conservatives got what they wanted.
The list goes on and on; our nation's richest and most powerful get what they want; favorable legislation, weak regulation, accommodating regulators, court rulings, and a compliant press. This should all be obvious to anyone who pays attention and doesn't walk on their knuckles. But reality struggles for attention in the face of a conservative noise machine that continually distracts voters.
Conservatives have also favored free trade, the mantra, the religion, the chiseled-in-stone gospel of laissez faire economics. It is front and center in the pantheon of conservative political economy, right up there with free markets. And here again, conservatives get what they want.
Conservatives, including Republican party operatives, rarely miss a chance to pimp free trade doctrine. American media usually goes along with Republican talking points. Even if one does find articles that dutifully report massive deficits, and even outsourcing, there are few coherent and visible efforts that explain the ramifications in detail and dare to analyze free trade as class warfare or why a lack of industrial policy is destroying us.
To get just an inkling of how international trade is playing out for the US, have a look at the figures below (Data are from Alan Tonelson's America's Increasingly Third World Trade Profile).
Below are the top ten US trade SURPLUS manufacturing categories for Jan.-June, 2011
(billions of current U.S. dollars)
Waste & scrap materials: +$15.53
Spacial classification provisions: +$11.44
Plastics & resins: +$10.19
Soybeans: +$8.81
Non-anthracite coal and petroleum gases: +$7.18
Corn: +$6.67
Wheat: +$6.45
Cotton: +$6.39
Misc. basic organic chemicals: +$3.87
Non-poultry meat: +$3.85
Next are the top ten US trade DEFICIT manufacturing categories for Jan.-June, 2011
(billions of current U.S. dollars)
Crude oil & gas: --$121.13
Autos & light trucks: --$37.82
Petroleum refinery products: --$27.62
Computers: --$22.50
Broadcast & wireless communication. equip.: --$22.35
Goods returned to Canada & reimported: --$21.47
Audio & video equipment: --$15.80
Pharmaceuticals: --$13.38
Telecommunications hardware: --$12.72
Computer parts: --$12.67
Notice a pattern? The US has become a big supplier of scrap and raw materials. Although the data do not show it, this is a substantial reversal of a few decades ago, when the US had a trade surplus in a variety of manufactures, especially high-end, high-tech goods.
Now look at the sectors with the biggest trade deficits. Except for oil, they are all manufactured goods that not long ago were among America's biggest contributors to what we once had, a trade surplus.
There is much to address here. My intention in future posts is to further explore issues in international trade and to demonstrate that America's free-trade ideology and the policies and practices that have resulted, are primarily in the interests of the overclass, have shaped corporate America to serve the interests of that overclass, but are damaging for the country as a whole.
Don't let conservatives tell you the US has a trade deficit because our taxes are too high, wages are too high, unions are too powerful, or regulations are too onerous.
They are wrong on every point.
Corporate America's dominance of media and public discourse gloss over the fact that said financial dominance was what conservatives wanted; it was they that pushed through legislation favorable to the wealthy, investors (wealthy or not), and corporations. Conservatives, especially the wealthy variety, have gotten most of what they have wanted; lower taxes, fewer regulations, free movement of capital, lucrative defense contracts, and more.
Crap about how progressive agendas have hurt America are the imaginary domain of the ignorant. Union membership is now at negligible levels, far below similar countries. Labor unions have been weak for the last 30-odd years and getting weaker, just what conservatives wanted.
New Deal legislation had made banking relatively safe and stable for generations. It was conservatives who said barriers between banking and finance were dated and holding us back. So Republicans in Congress overturned Glass-Steagall. Conservatives got what they wanted. Casino capitalism almost immediately ensued; financial meltdown soon followed. They wanted taxpayers to bail out the banks, and without any meaningful reform to prevent further catastrophes or undeserved enrichment. They got that too.
Wages for most workers have been flat for decades, precisely what conservatives have wanted. The US was a wage leader before Reagan; since then, wages for most have been flat. Conservative policy has been to suppress wages however possible. Conservatives got what they wanted.
The list goes on and on; our nation's richest and most powerful get what they want; favorable legislation, weak regulation, accommodating regulators, court rulings, and a compliant press. This should all be obvious to anyone who pays attention and doesn't walk on their knuckles. But reality struggles for attention in the face of a conservative noise machine that continually distracts voters.
Conservatives have also favored free trade, the mantra, the religion, the chiseled-in-stone gospel of laissez faire economics. It is front and center in the pantheon of conservative political economy, right up there with free markets. And here again, conservatives get what they want.
Conservatives, including Republican party operatives, rarely miss a chance to pimp free trade doctrine. American media usually goes along with Republican talking points. Even if one does find articles that dutifully report massive deficits, and even outsourcing, there are few coherent and visible efforts that explain the ramifications in detail and dare to analyze free trade as class warfare or why a lack of industrial policy is destroying us.
To get just an inkling of how international trade is playing out for the US, have a look at the figures below (Data are from Alan Tonelson's America's Increasingly Third World Trade Profile).
Below are the top ten US trade SURPLUS manufacturing categories for Jan.-June, 2011
(billions of current U.S. dollars)
Waste & scrap materials: +$15.53
Spacial classification provisions: +$11.44
Plastics & resins: +$10.19
Soybeans: +$8.81
Non-anthracite coal and petroleum gases: +$7.18
Corn: +$6.67
Wheat: +$6.45
Cotton: +$6.39
Misc. basic organic chemicals: +$3.87
Non-poultry meat: +$3.85
Next are the top ten US trade DEFICIT manufacturing categories for Jan.-June, 2011
(billions of current U.S. dollars)
Crude oil & gas: --$121.13
Autos & light trucks: --$37.82
Petroleum refinery products: --$27.62
Computers: --$22.50
Broadcast & wireless communication. equip.: --$22.35
Goods returned to Canada & reimported: --$21.47
Audio & video equipment: --$15.80
Pharmaceuticals: --$13.38
Telecommunications hardware: --$12.72
Computer parts: --$12.67
Notice a pattern? The US has become a big supplier of scrap and raw materials. Although the data do not show it, this is a substantial reversal of a few decades ago, when the US had a trade surplus in a variety of manufactures, especially high-end, high-tech goods.
Now look at the sectors with the biggest trade deficits. Except for oil, they are all manufactured goods that not long ago were among America's biggest contributors to what we once had, a trade surplus.
There is much to address here. My intention in future posts is to further explore issues in international trade and to demonstrate that America's free-trade ideology and the policies and practices that have resulted, are primarily in the interests of the overclass, have shaped corporate America to serve the interests of that overclass, but are damaging for the country as a whole.
Don't let conservatives tell you the US has a trade deficit because our taxes are too high, wages are too high, unions are too powerful, or regulations are too onerous.
They are wrong on every point.
Wednesday, April 20, 2011
Why the Rich Vote Republican
On March 23, I posted an article on the results of wage suppression and the shift in wealth from Main Street to Wall Street. Here is another revealing graph. Not sure you can see it well, but the vertical green line indicates the beginning of the Reagan Presidency. The blue line represents the average income in real terms, of the bottom 99% of all Americans; the pink line indicates the top 1%.
The effects of FDR's New Deal, beginning in 1935, vividly show how the American middle class was created. The graph also shows how that same middle class has been squeezed in recent decades as conservative policies, such as outsourcing, hostility to unions, financial deregulation, an indifference to deindustrialization and other feckless trade policies, have dramatically stunted average income for the bottom 99% (a trend that began before Reagan) and have boosted average incomes for the top 1%, primarily through tax cuts, just as dramatically.
If you are the least bit willing to give your brain a chance, you must surely realize that Republicans are pushing policies to further undermine the middle class and shift ever more wealth to the very top.
The effects of FDR's New Deal, beginning in 1935, vividly show how the American middle class was created. The graph also shows how that same middle class has been squeezed in recent decades as conservative policies, such as outsourcing, hostility to unions, financial deregulation, an indifference to deindustrialization and other feckless trade policies, have dramatically stunted average income for the bottom 99% (a trend that began before Reagan) and have boosted average incomes for the top 1%, primarily through tax cuts, just as dramatically.
If you are the least bit willing to give your brain a chance, you must surely realize that Republicans are pushing policies to further undermine the middle class and shift ever more wealth to the very top.
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