Uncommon Sense

October 2, 2010

The Chinese Understand, Republicans Not So Much

Filed under: Economics,Politics — Steve Ruis @ 12:42 pm
Tags: , , ,

I have mentioned a number of times in this blog that the decade in American history with the greatest economic growth was the 1960’s. The reason for this was the creation of a prominent middle class for the first time in our history. How this came about is important. Prior to the Great Depression in the 1930’s the vast majority of the American people were poor, whether or not they had regular work. As a response to the Great Depression and during World War II the Roosevelt administration made profound changes in the American economic system (The New Deal). Primary among these were the establishment of a social network in the form of Social Security and unemployment insurance, plus a major bolstering of the American union movement.

When the soldiers returned from the war, hundreds of thousands fewer than had left, there was a great need to get back to normalcy. But the economy had been geared to create the tools of war and it took some time to refit the engines of our industry back to domestic goods. At the same time, the GI Bill made college possible for large numbers of men, previously not considered “college material.” After a transition period, the economy soared from the late 50’s, through the 60’s and into the seventies.

The Republican Party was dominated during that period by people who were set on repealing every New Deal program they could identify. These people eventually ran out of steam (or got steamroller) but there are still Republicans banging on a “repeal the New Deal” drum. Recently Republicans have referred to people receiving unemployment benefits as being “lazy” disregarding the fact that people are required to pay for an insurance policy expressly for the eventuality that they lost their jobs. Also, Social Security is now called “the third rail” of American politics in that, like the third rail of an electric train, touching it is fatal. (In the case of Social Security, touch it and your political career dies.) The reason? There are large numbers of voters getting Social Security benefits who do not want them eliminated or lessened or at least are fearful of changes. Even so, several Republican candidates currently running for national office have various proposals to “fix” Social Security, by various schemes like “privatization.” They hate it that much. They can’t help themselves.

Now, consider China. China is on everyone’s lips. Their economy is on a rocket trajectory, already having become the third largest economy in the world. And they are currently undertaking the Herculean process of lifting 300 million people out of poverty into their middle class. That is a population roughly equivalent to the entire U.S. population! Why would they do this? They are very clear about their intentions. They want there to be a very large middle class in China as a market for Chinese businesses so that those businesses are not so dependent on exporting their products. Remember, the establishment of a large middle class is exactly what fueled the greatest economic decade in this country, the 1960’s. China understands this. The best basis for an economy is a domestic one.

Contrast this with what the Republicans have been working on for the last 40 years. Middle class wages have been largely stagnant. Wealth has been concentrated to previously unattained levels in the upper few percent of the population. Unions have been crushed and disadvantaged to relative meaninglessness. The tax burden has been shifted from the more wealthy to the less. In the 1930’s there was established a basic moral principle that money earned by the sweat of one’s brow should not be taxed at a higher rate than money earned by investment, that is without effort. If you haven’t noticed, the Bush tax cuts eliminated estate taxes, cut taxes on the wealthy, and made the capital gains tax (the tax paid on investments) 15%. If you haven’t noticed, you are paying from 15% to 28% on your income. So much for Republican morality.

Then Republicans gave tax breaks to corporations which ship our jobs overseas. (Republicans just defeated a bill in the Senate to provide tax breaks for companies which bring jobs back! Their reasoning that it would hurt job creation!)

So, while the Chinese understand that a healthy and large middle class is the best market for their own businesses, the Republicans are busy doing just the opposite—reducing the size and buying power of the American middle class.

And, of course, at the same time they blame Democrats for “the decline of America.”

What hypocrites.

They think we are stupid.

Are we going to prove it by putting them back into power?

Blog at WordPress.com.