Barack Obama said something in his speech that completely floored me.
Obama said that Paul Ryan's budgetary plan for America wasn't just wrong for America, but it ended America as we know it. The reason it floored me was that it was a stark plain statement of exactly the conclusion I have been suggesting concerning the current Republican approach to politics for the last six months.
Let's be clear about some facts up front.
Corporations have made more profits last year than they have since the 1950s.
Corporate CEO salary has gone up 27% in the last year alone.
Median salary for American workers had steadily declined over the last three decades.
Private sector job growth has, by comparison to profits, stalled.
Despite record tax cuts in the last decade, predicted job creation has not materialized.
We do still remember there was a stock crash, right? The whole sub prime mortgage thing. The economy was hemorrhaging jobs as Bush left office. Millions of jobs were gone before Obama was even President as the economy went into a flat spin. The job loss continued under Obama and our economy entered the worst recession it has seen since the Great Depression.
You don't have to usually remind people that government makes the money to do what it does via taxes. What we do seem to have to remind folks of is that as a consequence of the massive economic crash, business and personal tax contributions to government dropped dramatically. Now tax revenue shifts generally lag a year or two behind significant impacts to the private sector. So surprise surprise, it's about 2010 when the economic crash, having torn through the country for two years, finally truly hits the public sector.
But like any crash, it is a temporary situation. Massive spikes and deep drops in economic activity are not sustainable and tend to even out – no matter what policy is enacted. They might right themselves to lower or higher levels than they were, but the deep pit or high plateau they may have shot to is almost never very durable; economic activity will normalize once the events creating them pass.
But here we have Republican governors and leaders acting as if the low spike of the wall street crash is the new normal. Not only that but they set into motion plans to dismantle their state governments and the national government while proposing and enacting massive tax cuts.
Let's sidestep.
Why do Republicans cut taxes?
Well the basic theory is that tax cuts will stimulate spending and investment by the 'job creators': namely corporations and the wealthy. If these sources are seeing a minimal burden from the government and high rates of profit, they will be more free with their capital and through expansion of their private financial footprint create jobs, more revenue, and more profits which in turn will create more taxable revenue allowing the government to fund itself at the lower tax rate.
But look at the list above.
We're not seeing this anymore.
The profits of economic activity by large players in the global market are now so high that giving additional money in the form of tax cuts to these organizations seems to have no effect on their local investment. Companies continue to compensate their executive staff and stockholders with greater and greater returns, but with profits as high as they are, there is simply no need to invest further. Let's pretend you are one of these corporations. If you're making billions in profits every year and the head of the company you saw a 27% raise in 2010, where exactly is the incentive to make changes? After all, expansion ultimately includes risk and expense. Why would you do that if your company is breaking revenue records and is on track to make even more next year? Well, you wouldn't. And because you, and those like you, don't reinvest in the United States despite your gains, the political parties begin to scramble trying to figure out what to do.
Here's the core of it:
The Untied States of America was always a balancing act between it's economic system and it's government. The latter was to play the role of referee and police officer to the progress of that crazy, inventive, spontaneous wild thing we called capitalism.
Politically, on the one side, we have the Democrats, always looking to strengthen and expand the police powers to keep a watch on the dangers of runaway capitalism made all to plain in the industrial revolution and late 20's. When the great depression ripped through America, it left deep scars those of us today can barely comprehend. For example, when a family grandparent died here in Wisconsin, we found a storage box of half used ketchup packets sealed with paper clips in her fridge because she could not bring herself to waste food having lived through that economic collapse and years of near starvation.
On the other side you have the Republicans fighting to make sure that government didn't overstep its bounds and that private enterprise was given the maximum latitude to evolve. The rise of the economic powerhouse that the US became could be traced to the incentives and promise the US economic policy provided to entrepreneurs, researchers, and business. For this to happen at the rate it did, government had to be kept in check and away from the means of production. No socialism here, thank you.
But something changed.
I contend that in the last ten years, the most powerful business players in the United States economic system – it's capitalism – has managed to shrug off the ability of the US government to referee it's activity. The new globalized economy has created a haven for unregulated capitalism that exists between governments and lies beyond the reach of regulatory jurisdiction leaving us, American citizens, in many ways powerless to guide it's growth. Unregulated capitalism is dangerous, amoral, and destructive. This has been proven time and time again from the sweat shops of Malaysia and Taiwan to the factories of China to our own country's industrial revolution. For capitalism to be the good we know it can be, it must be watched and it must be held accountable for its actions and it must be guided away from it's darkest impulses. However there is no global government or set of accountability standards that can enforce our expectations or protect our interests outside of our borders. These companies were no longer 'American' held, they were global and beyond the reach of much of our will as a society.
Neither party knows how to handle this.
Democrats feel powerless. They feel unable to get government back onto the field and watch as corporations commit atrocities and walk away with annual bonuses instead of penalties. For example, BP gave it's executives bonuses for business safety in the same year as the gulf disaster. With companies spread over the entire world and able to influence politics with unprecedented funds, the idea of performing the basic role of watchdog on business growth seems out of reach. Democrats flounder with this, trying to come up with new legislative strategies for controlling corporate growth which raise a never ending stream of alarms among Republicans who see the scrambling as the rise of classic liberal over-reach.
But Republicans know something is wrong too. They know that something about their model is not working, but default to simply ramping up what THEY normally do. This assumption is that it must be interference from government that is keeping business and the economy down. In the past, their strategies have worked when properly applied, and so they try to apply them harder and harder to this new situation only to watch the economic vehicle remain dormant. Tax cuts don't start it. Maybe if we cut government some more, it'll work. Maybe if we give even more tax cuts and refuse to hunt for owed tax revenue and let major corporations continue to not pay any taxes and prostate the country even further to the largest players, maybe then we'll see things turn around. But they don't, and they don't know what else to do.
Between the two, America is spinning around a whirlpool slowly circling a very dark place. Republicans are flirting with removing government from the picture entirely to let capitalism reign unbalanced and unopposed. Culturally they seem not to remember just how awful pure capitalism can be and why some sixty years ago we built government up dramatically to watch the field, call the fouls, and keep the game fair.
We have to find a way to restore that balance. We cannot simply remove government from the picture and expect good things to happen. We've been there. We've seen what kind of hell that creates. The consequence of failing to reign in and oversee a pure capitalist movement will rival our worst fears of communism. Make no mistake, the future of our country is what this dialogue is about. Obama's statement could not have been more vivid and accurate: This is no normal budgetary battle nitpicking pet projects. This is about what we want the United States to become and the risk that in chasing economic idealism we may sacrifice everything we understand to be our national identity.
Obama said that Paul Ryan's budgetary plan for America wasn't just wrong for America, but it ended America as we know it. The reason it floored me was that it was a stark plain statement of exactly the conclusion I have been suggesting concerning the current Republican approach to politics for the last six months.
Let's be clear about some facts up front.
Corporations have made more profits last year than they have since the 1950s.
Corporate CEO salary has gone up 27% in the last year alone.
Median salary for American workers had steadily declined over the last three decades.
Private sector job growth has, by comparison to profits, stalled.
Despite record tax cuts in the last decade, predicted job creation has not materialized.
We do still remember there was a stock crash, right? The whole sub prime mortgage thing. The economy was hemorrhaging jobs as Bush left office. Millions of jobs were gone before Obama was even President as the economy went into a flat spin. The job loss continued under Obama and our economy entered the worst recession it has seen since the Great Depression.
You don't have to usually remind people that government makes the money to do what it does via taxes. What we do seem to have to remind folks of is that as a consequence of the massive economic crash, business and personal tax contributions to government dropped dramatically. Now tax revenue shifts generally lag a year or two behind significant impacts to the private sector. So surprise surprise, it's about 2010 when the economic crash, having torn through the country for two years, finally truly hits the public sector.
But like any crash, it is a temporary situation. Massive spikes and deep drops in economic activity are not sustainable and tend to even out – no matter what policy is enacted. They might right themselves to lower or higher levels than they were, but the deep pit or high plateau they may have shot to is almost never very durable; economic activity will normalize once the events creating them pass.
But here we have Republican governors and leaders acting as if the low spike of the wall street crash is the new normal. Not only that but they set into motion plans to dismantle their state governments and the national government while proposing and enacting massive tax cuts.
Let's sidestep.
Why do Republicans cut taxes?
Well the basic theory is that tax cuts will stimulate spending and investment by the 'job creators': namely corporations and the wealthy. If these sources are seeing a minimal burden from the government and high rates of profit, they will be more free with their capital and through expansion of their private financial footprint create jobs, more revenue, and more profits which in turn will create more taxable revenue allowing the government to fund itself at the lower tax rate.
But look at the list above.
We're not seeing this anymore.
The profits of economic activity by large players in the global market are now so high that giving additional money in the form of tax cuts to these organizations seems to have no effect on their local investment. Companies continue to compensate their executive staff and stockholders with greater and greater returns, but with profits as high as they are, there is simply no need to invest further. Let's pretend you are one of these corporations. If you're making billions in profits every year and the head of the company you saw a 27% raise in 2010, where exactly is the incentive to make changes? After all, expansion ultimately includes risk and expense. Why would you do that if your company is breaking revenue records and is on track to make even more next year? Well, you wouldn't. And because you, and those like you, don't reinvest in the United States despite your gains, the political parties begin to scramble trying to figure out what to do.
Here's the core of it:
The Untied States of America was always a balancing act between it's economic system and it's government. The latter was to play the role of referee and police officer to the progress of that crazy, inventive, spontaneous wild thing we called capitalism.
Politically, on the one side, we have the Democrats, always looking to strengthen and expand the police powers to keep a watch on the dangers of runaway capitalism made all to plain in the industrial revolution and late 20's. When the great depression ripped through America, it left deep scars those of us today can barely comprehend. For example, when a family grandparent died here in Wisconsin, we found a storage box of half used ketchup packets sealed with paper clips in her fridge because she could not bring herself to waste food having lived through that economic collapse and years of near starvation.
On the other side you have the Republicans fighting to make sure that government didn't overstep its bounds and that private enterprise was given the maximum latitude to evolve. The rise of the economic powerhouse that the US became could be traced to the incentives and promise the US economic policy provided to entrepreneurs, researchers, and business. For this to happen at the rate it did, government had to be kept in check and away from the means of production. No socialism here, thank you.
But something changed.
I contend that in the last ten years, the most powerful business players in the United States economic system – it's capitalism – has managed to shrug off the ability of the US government to referee it's activity. The new globalized economy has created a haven for unregulated capitalism that exists between governments and lies beyond the reach of regulatory jurisdiction leaving us, American citizens, in many ways powerless to guide it's growth. Unregulated capitalism is dangerous, amoral, and destructive. This has been proven time and time again from the sweat shops of Malaysia and Taiwan to the factories of China to our own country's industrial revolution. For capitalism to be the good we know it can be, it must be watched and it must be held accountable for its actions and it must be guided away from it's darkest impulses. However there is no global government or set of accountability standards that can enforce our expectations or protect our interests outside of our borders. These companies were no longer 'American' held, they were global and beyond the reach of much of our will as a society.
Neither party knows how to handle this.
Democrats feel powerless. They feel unable to get government back onto the field and watch as corporations commit atrocities and walk away with annual bonuses instead of penalties. For example, BP gave it's executives bonuses for business safety in the same year as the gulf disaster. With companies spread over the entire world and able to influence politics with unprecedented funds, the idea of performing the basic role of watchdog on business growth seems out of reach. Democrats flounder with this, trying to come up with new legislative strategies for controlling corporate growth which raise a never ending stream of alarms among Republicans who see the scrambling as the rise of classic liberal over-reach.
But Republicans know something is wrong too. They know that something about their model is not working, but default to simply ramping up what THEY normally do. This assumption is that it must be interference from government that is keeping business and the economy down. In the past, their strategies have worked when properly applied, and so they try to apply them harder and harder to this new situation only to watch the economic vehicle remain dormant. Tax cuts don't start it. Maybe if we cut government some more, it'll work. Maybe if we give even more tax cuts and refuse to hunt for owed tax revenue and let major corporations continue to not pay any taxes and prostate the country even further to the largest players, maybe then we'll see things turn around. But they don't, and they don't know what else to do.
Between the two, America is spinning around a whirlpool slowly circling a very dark place. Republicans are flirting with removing government from the picture entirely to let capitalism reign unbalanced and unopposed. Culturally they seem not to remember just how awful pure capitalism can be and why some sixty years ago we built government up dramatically to watch the field, call the fouls, and keep the game fair.
We have to find a way to restore that balance. We cannot simply remove government from the picture and expect good things to happen. We've been there. We've seen what kind of hell that creates. The consequence of failing to reign in and oversee a pure capitalist movement will rival our worst fears of communism. Make no mistake, the future of our country is what this dialogue is about. Obama's statement could not have been more vivid and accurate: This is no normal budgetary battle nitpicking pet projects. This is about what we want the United States to become and the risk that in chasing economic idealism we may sacrifice everything we understand to be our national identity.
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