Once we enter the general election season and its culmination in November’s selection of our next President, the rhetoric will turn, as it always does, to the economy. At that point, we will be down to just two viable candidates, and it is important that the American public have the opportunity to decide from two different points of view on how best to grow that economy.
We can all see this one coming. The establishment politicians, particularly those on the right (and one Wall Street backer on the left), will call for a lessening of taxes on corporate America, because corporate leaders create jobs and Americans need jobs. Nonsense.
As they have since the Reagan era and what was then referred to as Supply Side Economics, the corporate establishment have lobbied for an ever lessening tax burden on the assumption that lower taxes on big business would allow said business to produce at greater levels, thus creating the room for a larger workforce and better pay. The wealth then, that would be consolidated in the upper echelon of corporate America, would trickle down to everyone below it. Those of us who have been running back and forth with our buckets to try to gather up this trickle, know otherwise. Trickle down economics has never worked and is built upon a basic economic fallacy.
While the establishment wants us to believe that wealth creates jobs, that jobs are created from the Supply side, nothing could be further from the truth. Jobs are created from the Demand side.
Imagine for a moment that there is a person who has grown up with a great love of history. Now, when he reaches adulthood, his real estate mogul father gifts him with a few billion spare smackeroos. This enterprising young lad decides then to go into business and, following his love of history, opens a factory producing authentic Roman War Chariots. These are the finest war chariots in the land, made of the finest materials available. His factory starts up and employs one hundred craftsmen. So far, so good for Supply side economics. There is just one problem. There is no Demand for authentic Roman War Chariots, with or without Corinthian leather appointments. He is instantly overstocked with a lifetime supply of a product no one wants, the factory has to be closed, workers laid off, and a bankruptcy filed (whew, at least there is a tax write off).
Jobs are not created by Supply, they are created by Demand. Yes, Henry Ford revolutionized American industry with the mass production of the automobile, but it was America’s demand for the automobile that rationalized mass production in the first place. Had the Demand not been there, Henry Ford would be remembered as a fine craftsman of a limited line of a particular luxury item, manufactured in his three bay garage. Instead, that Demand made possible the growth of Detroit into a major economic power and put hundreds of thousands of people to work there, and millions more across the country in related fields.
Of course, like any field of endeavor into which the government steps, Supply Side Economics was further crippled by a series of horrifically bad trade agreements, starting with NAFTA and continuing today with the Trans Pacific Partnership. These deals allowed for the wealth at the top of the economic food chain to be trickled down, not to American workers, but to workers in foreign markets, because the same amount of goods could be manufactured there, that much more cheaply.
It is long past time to abandon Supply Side Economics and embrace Demand Side Economics.
Do Americans need jobs? No. Americans don’t need jobs, they need good paying, meaningful jobs. They need jobs on which they can feed their families. They also need jobs which give them a sense of purpose within their communities, a sense of having an impact on their communities and on the lives of others within those communities.
Right now, the stagnation of our economy has become something of a death spiral. When consumers, the Demand side, have less money to spend, they have fewer opportunities to express Demand and influence the growth of Supply. Look at the growing job sectors in America. What are people buying? Fast food, cell phone apps and cheap housewares. When Wal-Mart is the largest employer in America, selling cut-rate junk products from third world manufacturers and paying starvation wages to part-time employees, it is easy to see that there is increasingly limited opportunity for Demand to influence Supply. Demand is struggling to make ends meet, to keep the lights on. Right now, Demand hasn’t the capital to create jobs and Supply knows that its customers can only support a meaningless, low-rent service economy.
If, instead of consolidating the wealth at the top of the ladder, we spread it out among the lower rungs, the consumer would do what consumers have always done, spend that money as an expression of Demand. Then, the enterprising young lad with the Chariot backlog, could retool his factory to produce the products or deliver the services that people actually want. And, since people have different tastes and different needs, the more money that is put in the pockets of consumers, the more varied a Demand will be created. This is what led to the rise of American industry in the first place, an insatiable demand from a populace with more money to spend than was required to meet their basic needs.
So, how do we turn the tables on the economy and shift to a Demand Side economic model? Abandon the trade agreements which have consigned our workforce to meaningless jobs in a Wal-Mart paradise. Support middle and working class Americans with legislation for better wages and with a lessened tax burden, so they have more money to spend. Close tax loopholes for the large corporate concerns and put that money into creating good paying jobs which can’t be outsourced (like rebuilding our infrastructure). Create incentives for American corporations to stay at home, paying American workers to build quality goods and provide quality services. Educate our young people so they can perform in better paying fields of endeavor. And yes, provide affordable health care to all Americans, so that the out of pocket costs of their health care are minimized. They will gladly allow that extra cash to burn a hole in their pockets, exercising their Demand and creating the need for an increased Supply.
This fall, we will have a choice of two candidates to lead this country. We all know the level of economic stagnation in which the middle and working classes have been struggling for close to forty years. We also know that one political party will back a nominee who will work to continue a failed system of Trickle Down Economics. We can not afford to have two nominees embracing that same nonsensical ideal.
Put the People first. Put the economy in the hands of those people. Demand will show us the new industrial models. Supply will still make money if it is smart enough to recognize the Demand. Better jobs and healthier communities will follow. And don’t worry, Corporate America, the wealth will trickle up to you.