From crisispapers.org: There are no sellers without buyers. Ernest Partridge takes on one underlying cause of the present economic crisis: the nation's wealth flowing from working citizens to the über-rich.
June 17, 2008 (crisispapers.org) – There are no sellers without buyers.
That’s the first law of practical economics. Everyone knows this to be true, whether or not one has ever taken a course in Economics. Everyone except, apparently, a few Ph.D economists who seem to forget this rule when they are hired by the Heritage Foundation, the American Enterprise Institute, etc., from which they migrate, back and forth, between offices in Republican administrations and these right-wing think tanks.
For these worthies, the “first law” is replaced by the dogmas of deregulation, “trickle-down” and market fundamentalism: impoverish the masses, throw money at the rich who will then invest it, and then “the invisible hand” of the unregulated free market will bring forth a cornucopia of goods and services.
Never mind that there will be few if any buyers for these consumer goodies.
Henry Ford saw the fallacy of such a policy when he raised the wages of his workers. His competitors in the auto industry were aghast. “Why did you do that?,” they asked. Ford is said to have replied, “If I don’t pay them more, who will buy my cars?”
It took awhile, but Henry Ford was eventually proved to be right. In 1935, in the depths of the great depression, Congress passed the Wagner Act which greatly enhanced the power of labor unions to bargain collectively on behalf of their members. And after World War II, the G.I. Bill allowed millions of returning war veterans to go to college and then to enter the work force as trained professionals. The ranks of the middle class swelled, and as a result of this gain in disposable income, so did the nation’s economy. In an ongoing and sustainableeconomic symbiosis, the investments of the capitalists “trickled down” to increase the worker’s productivity, income and purchasing power, which in turn “percolated up” to provide generous returns on these investments. Like the fabled golden goose, this economic arrangement promised a perpetual production of “golden eggs” of shared prosperity.
Then came Reaganomics, which allowed the ruling oligarchs with their insatiable appetites for “more, still more,” to dismantle the unions, to cut back workers’ salaries and benefits, to ship manufacturing and management jobs overseas, to starve the tax base through loopholes, regressive tax rates, and off-shore incorporations, and to strip the government of its Constitutionally stipulated function of regulating commerce. (Article One, Section Eight). As most citizens have consequently drifted toward poverty and serfdom, and the government has been taken "to the bathtub” to be drowned, the upward “percolation” has been drying up. Rather than protect and perpetuate the economic system that produced their wealth, the privileged class is cooking and devouring the golden goose.
Senator Bernie Sanders reports the resulting plight of the American middle class:
Meanwhile,the richest one percent of the population possesses more wealth than the bottom ninety percent. (See also G. William Domhoff: "Wealth, Income and Power"
This is how a once-flourishing economy shrivels up and dies: the few who own and control the nation’s wealth refuse to share that wealth with the many who produce that wealth.
Ahead lies ruin for rich and poor alike.