In this long article we’ll look at the economic cycles, how workers are losing out, and how rich people will lose out big-time if they continue to do nothing.
The Virtuous Cycle
That looks like Heaven and smells like money, and these are the main components:
- Wages Increase
- Workers Buy More
- Companies Hire More
- Tax Revenues Increase
- Government Invests More
- Workers Become Better Educated
- Economy Expands
- Productivity Grows
This is the ideal state of the economy, but unfortunately we ditched that model a long time ago, before I was born and probably when my parents were still in high school.
Yeah, see, economic models like that benefit everyone, but that’s exactly what we don’t want to be doing today.
When everyone benefits the 10% can’t turn into the 1% and the 1% can’t turn into the 0.5%. Let me ask you – is that really a world worth living in?
The Vicious Cycle
See, with this economy we saw our tax rates go from around 77% to about 34% under George W. Bush and to about 39% today.
What does that look like? How about this:
- Wages Stagnate
- Workers Buy Less
- Companies Downsize
- Tax Revenues Decrease
- Government Cuts Programs
- Workers are Less Educated
- Unemployment Rises
- Deficit Grows
That last point is what Republicans are getting all riled-up about right now, so much so that a goodly-sized portion of their electoral base has splintered-off into some quasi-anarchistic organization called the Tea Party.
Irrationalism and a lack of accountability dominate that mindset, even though those are exact things they’re railing against.
What’s so unfortunate here in Montana is that these folks have a complete ignorance when it comes to their own history.
See, the Tea Party in Montana has a lot more in common with the Progressives of the late 19th century. Back then we had the exact same problems we’re having now:
- Unbridled wealth creation in the hands of a few;
- Workers enslaved to a subsistence-based economy;
- Upward mobility replaced by downward spirals;
- Anger and resentment at the betrayal of democracy.
That last is perhaps the most dangerous, and the stage we’re in now.
Oh, you don’t think we’ve got those top three? Let’s take a look.
Workers Lose Out
Next, workers are not making more money even though they’re producing more. In fact, they haven’t been making more since the 1970s. What they have been doing are three things:
- Women are working more to prop up the failing economic models that we call households;
- Men and women are working more hours, and for less money, just so they can get by;
- Workers are using credit cards to buy things they don’t need and most of the time don’t want, for the sole purpose of propping up those who are already propped-up by their piles of unspent money.
Remember the Virtuous Cycle? Spending is the only thing that creates jobs or wealth, and the vast majority of that spending is from consumers, the vast majority of whom come from the middle class.
No, they’re not a myth – the middle class is something we had for much of the 20th century, right up to about the time that those in charge of the country, not necessarily politicians, decided workers weren’t important.
Perhaps machines were, or maybe those overseas. It could have even been that the main business entity (the corporation) just couldn’t do otherwise, not with shareholders represented by a Board of narrow-minded business interests with no regard or concern for American ideals or institutions and who decided that old ways of doing business no longer applied.
When you can make your own rules and have the rule-makers make sure you sign-off on them first then you’ve really got a deal. No, you’ve got more than that – you’ve got a system by the nose, one you can do whatever you please with.
So What Does This Have to Do With Montana?
Back in 1893 we had quite the recession. It was called the Panic of 1893 because in that year President Grover Cleveland decided that the US could no longer buy silver.
Yep, we were taken off the silver-standard. What did this mean for Montana? After all, we were one of the largest silver-producing states in the nation.
It devastated some, but not all. The town of Granite was finished, and many people left overnight. Butte, which had already decided to go the way of copper long before (the original founders of Butte wanted silver, not copper), did quite well, taking many of these bankrupt silver mines under their wing.
Of course by the time those Butte Mining companies like Montana and Boston and Boston and Montana were merged under a buyout by eastern moneyed-interests it meant that what Montana wanted didn’t really matter one bit, unless it would make the shareholders happy, wherever they were, which most of the time wasn’t where the raw product was coming from.
That pretty much caused lower wages over time. It’s interesting how history can repeat itself. Unfortunately what was isolated to a few years in the 1890s has been widespread for my whole life.
How long will it take for the greed of the corporations and those that buy elections to be cowed by the discontent of the middle-class? Hopefully not too much longer – I don’t think our country or pocketbooks can take it much more.
So What Can Be Done?
This is where you see the propaganda machines really running smoothly. That vast majority of people aren’t going to be taxed more and will only benefit if taxes on the wealthy are raised.
I guess the real question is, do we want to continue this slide into the economic doldrums that we’ve been on for the past generation or longer, pretty much starting when those tax rates from the 1970s dropped?
I don’t think so.