Wednesday, February 28, 2007



"Trickle down" fails again

Remember "trickle-down economics"? That was the lie the Revolutionaries told us in the 80's and 90's to justify tax cuts for the rich. The idea was that they would get richer, but that some of their gains would "trickle down" to the rest of us, thus making everyone better off. It didn't work - instead, the rich got richer, and the rest of us got poorer in real terms. And according to a study of recent US census data by McClatchy Newspapers, exactly the same thing has happened in the US as a result of Bush's economic policies. Tax cuts for the rich combined with policies that keep unions weak and inflation low have ensured that virtually all economic growth has been funnelled into the pockets of the already rich - corporate profits now utterly dwarf wages. Meanwhile, everyone else is falling down the income pyramid, getting worse off in real terms ("the median household income of working-age families, adjusted for inflation, has fallen for five straight years"), while poverty levels are rising. And extreme poverty - defined as having an individual or family income less than half the poverty line - is at its highest levels since 1975, and growing 56% faster than poverty overall. In other words, people aren't just becoming poor - but bankrupt. Which is what you'd expect in a country with no social safety net and no public services, where many people are just a short period of unemployment - or an illness, or a divorce - away from destitution.

How can this happen in a democracy where people can vote for alternative policies? Part of the reason is that not enough Americans vote. But as the Independent points out, another reason is that American politicians just don't talk about inequality and poverty:

These figures are rarely discussed in political forums in America in part because the economy has, in large part, ceased to be regarded as a political issue - John Edwards' "two Americas" theme in his presidential campaign being a rare exception - and because the right-wing think-tanks that have sprouted and thrived since the Reagan administration have done a good job of minimising the importance of the trends.

This is a warning to us. The National Party still has not forsworn these policies (and Don Brash was pretty explicit about wanting to see them return). We should not let that happen. And the best way of preventing it is by ensuring that the subject is visible and that politicians don't just stop talking about it. On this front, perhaps John Key is doing us a favour.

11 comments:

I understand one of the key reasons why people lean right in america is because so many people think they are richer than most others and also expect to be richer in the next few years (the american dream I guess). What that means is that a tax cut for the top 10% (let's say) gets suport from maybe 50% of the population.

That and poor people don't seem to vote.

BTW if the economy isn't a political issue what is? and I note that sounds like a recepie for an economic disaster...

GNZ

Posted by Anonymous : 2/28/2007 07:55:00 AM

GNZ: BTW if the economy isn't a political issue what is?

Monica Lewinsky's blue dress, Janet Jackson's nipple, and whether Barack Obama is secretly an Al Qaeda agent "posing as a Christian".

It is sometimes hard to have faith in democracy when challenged with such utter stupidity.

Posted by Idiot/Savant : 2/28/2007 08:55:00 AM

"It is sometimes hard to have faith in democracy when challenged with such utter stupidity."

Unfortunately democracy isn't something you can order over the internet like a pizza.. it is more like a relationship, and unless all parties (including voters, the media and politicians) are actively and positively engaged, then it's no more successful or desirable than a benign dictatorship.
That's why I fail to get all excited purely because a country starts to vote - it might be a step forward or it might not.

Posted by Huskynut : 2/28/2007 09:26:00 AM

I think that Chomkys is right when he says that there is one political party (the Business party) which has two wings.

While the Democrats tend to run the country more responsibly, it can hardly be argued that they represent the kind of fundamental change that is required to address the issues facing the populace of the United States.

Posted by Mikaere Curtis : 2/28/2007 11:27:00 AM

Tax cuts for the rich combined with policies that keep unions weak and inflation low have ensured that virtually all economic growth has been funnelled into the pockets of the already rich

Did Larry Page and Sergay Brin become rich because of these things? Or was it something else? Were they already rich?

And didn't everyone, including you writing this blog right now, become richer as a result of what they did?

Similarly for the founders of YouTube, eBay, Amazon etc.

Surely just using median wage as a measure of wealth is misleading in that a lot of important information about how people have become richer is missing?

And doesn't the above give a hint to the reason for the decline of unionisaton: the nature of work in America has changed dramatically; it is not some conspiracy wrought by the US government.

Posted by Brian S : 2/28/2007 11:32:00 AM

...one of the key reasons why people lean right in america...

Not to sound pedantic, but people appear to be on the right to our way of thiking because left & right have different meanings in the US, compared to here in NZ.

Like Mikaere says, their two parties are wings of the same political machine (and those wings change alliance over time).

Posted by Pablo : 2/28/2007 02:34:00 PM

I call bullshit.

Here's a challenge for you I/S: give me one example of a politician (or any New Zealand "Revolutionary") that advocated the trickle-down theory that you've described in your post.

You might claim it's difficult due to lapse of time, but I suggest it's impossible because it never happened.

Posted by fly : 2/28/2007 07:43:00 PM

the "revolutionaries" never used the phrase "trickle-down economics". it was a phrase invented by the left to attack them. you should be fair in making this clear - that no one the right argued for "trickle-down economics"; it was an interpretation of a policy by the left

Posted by Anonymous : 2/28/2007 08:14:00 PM

" give me one example of a politician (or any New Zealand "Revolutionary") that advocated the trickle-down theory"

Douglas.

Richardson.

Posted by Anonymous : 3/01/2007 11:16:00 PM

"Douglas.

Richardson."

Ok, those are some names, now can you give a quote? Just one line where those two put forward the "trickle down" theory?

I don't know why I'm bothering even typing this, none of you will admit that you believe in bullshit.

Posted by fly : 3/02/2007 09:14:00 PM

I/S, you and your readers might appreciate today's post at 'Not PC,' 'Trickle Down Again.'

It is, I trust, a gentle if fairly substantial disagreement on one or two of your points here -- on 'trickle down' for example -- while agreeing on a number of other points.

Posted by PC : 3/03/2007 05:56:00 PM