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Michael Tomasky, New York Times Opinion: “The public sector can make better decisions about where money should go than the private sector”

2018-11-02

Michael Tomasky’s opinion piece in today’s New York Times relates a vital job for Democratic strategists: make the party stand for something economically.  That something is the burial of supply-side economics.  It’s time to go back to the demand-side economics that spurred the remarkable period of real growth for the US from the 1940’s to the 1970’s.

So, what is the problem?  Republicans have been deliberately lying about government since the 1970’s and the rise of Ronald Reagan: “government is not the solution, it is the problem.”  Here is the problem: rich people who have to pay for benefits given to poor people object to the transfer of funds from rich to poor.  This is natural.  But it causes problems when we allow rich people to decide how much taxes to pay and who benefits.  They are clearly biased.

The rule of rich people has led to the current degraded state of the Republican party: their entire platform consists of lies in the service of lower taxes for rich people.  See also Paul Krugman’s column in yesterday’s Times for details on the complete platform of lies.

Roosevelt showed, without having to say so, that government was the solution to the rise of fascism in Germany, Italy, and Japan.  So government was allowed to take the reins and there ensued an unprecedented period of prosperity until the 1970’s– when “stagflation” reared its ugly head.  The unaccounted-for costs of oil as a propellant and lubricant for the whole of the transportation industry and for the additional environmental costs of the use of coal for electric energy caused severe damage to the economy that went unrecognized– accounted for as the Arab oil embargo oil 1973-4 and the impeachment hearings in the US House of Representatives that preceded Nixon’s resignation in August 1974.  Inflation was already increasing and became particularly severe in the early 1980’s.

The election of 1980 was partially engineered by a secret agreement between Reagan and an enemy government, that of revolutionary Iran, which held hostages from the US embassy until Reagan was sworn in.  Reagan quickly mastered a brief recession with heavy deficit spending and used Keynesian economics to push GDP growth while preaching “trickle down” policies that directly repudiated Keynes.  At the same time, he oversimplified everything and invented “voodoo economics” that made no sense and only improved the incomes of the top 1%.

Since the US has abandoned the economics of infrastructure spending and progressive taxation, GDP growth and productivity growth has not been accompanied by average income growth; the national median income has remained stagnant against inflation for 40 years.  Democrats should embrace fair, progressive taxation that provides sufficient government income to take care of our nation’s neediest without stint and promotes GDP growth by wise investment in middle-class jobs and construction.  The Republicans are blatantly lying to stir up fear in their base and fool them into continuing to vote for unpopular policies that hurt the very people who vote them in: rural people and poor whites.  The Republican policy of tax cuts and deficit spending during an economic growth period will lead to a distorted economy that can only benefit the richest despite full employment.

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