Left Side of the Aisle #105 - Part 3

What the economy needs

I spoke last week about the economic reality we are facing, including that fact that the richest 1% have gotten 121% of all the income gains over the last two years because they got all gains while the rest of us lost ground. I also said that what politicos and pundits across both parties - the GOPpers, the Dems, the White House, everybody - is proposing to do is exactly wrong.

What they're proposing is various degrees of austerity. However they phrase it, however they parse it, however the plead it, that's what they're talking about. They're talking about austerity. About cutbacks. About reductions. About providing less. About having less. They vary in the degree of austerity, they vary in how harsh they would be, but all of them are talking about austerity, about them doing less and us doing without. The keep claiming that this is what will get the economy going again.

That is complete nonsense. We need to stimulate the economy, not rein it in. Early in his administration, Obama had a stimulus plan, but when push came to shove, he of course chickened out and wound up pushing a package that was half of what was needed and a lot of that was in the form of tax cuts of type that were not going to stimulate anything. Economists predicted it would not work and guess what, it didn't.

What should be obvious but apparently isn't to our misleaders, if you want to stimulate the economy, if you want it to get moving, get growing, you've got to stimulate economic activity, stimulate the buying and selling of stuff. If you have something want to sell, you need people with the money to spend on buying it. If you want to expand the economy, you need more people who want the goods and services that are there to be bought and who have the money to buy them; that is, you need greater consumer demand. Consumer demand remains the big driver of the economy. And there is only one agency in society that can actually create additional demand and that is government - and it can do it by taking money from those who have it and aren't spending it and giving it to those who don't have it and will.

You want to call that redistribution of wealth, yes, fine; you want to call it "soak the rich," go right ahead. The fact remains that if you want to stimulate the economy, that's what you have to do: You have to get more money moving through the economy and the only way to do that is to get more money into the hands of people who need it and will spend it on the things that they need.

Remember what I told you: Corporations are making record profits. They have the money to hire people, but they aren't doing it. Or, to amend that to be more exact, they are hiring people, slowly, but not enough to seriously affect unemployment. The point remains: They could hire but they don't because there is no demand for the work those people would do. Corporations are not going to hire people if they are not going to make a profit on the work those people do.

So what should be do in the short-term? Bluntly, tax the rich. Tax the rich and use the money to fund social services to those in need, to fund Medicaid, Medicare, Food Stamps, TANF (what we used to call welfare); use it to protect the environment, to protectg public and worker safety, use it for consumer protection; use it to fund public sector jobs on infrastructure, use it to pay for schools, hospitals, transportation, and other projects that will provide construction jobs in the short term, maintenance, repair, and professional jobs in the longer term, and valuable social services throughout.

And in the longer term? That’s something I want to talk about more over the coming weeks.

It’s time we faced the hard issue of if in the face of a massive and growing concentration of wealth and the political power it brings in the hands of fewer and fewer people, we have to face the issue of in face of that if a bit more tinkering or a bit more stimulus will suffice - or do we need to face the need to dramatically reshape our economy and more importantly, the way we think about that economy.

And yes, that even involves the dreaded “S” word. But before you rush to reject the idea, you might give some thought to just where that fear comes from and just who it benefits. Because it sure ain’t most of us.