The Final Verdict on Supply Side Economics

By Wes Rackley

In Larry M. Bartels study of the impact of public policy on changes to U.S. Income distribution from data collected over the last fifty years, he draws some startling conclusions.

In theory, public opinion constrains the ideological convictions of the political elites in democratic political system. He finds however that in practice there is a dramatic divergence from the democratic ideal.

On average the real incomes of middle class families have grown twice as fast under Democrats as they have under Republicans, while the real incomes of the working poor have grown six times as fast on average under Democrats as they have under Republican administrations!

These extraordinary partisan revelations persist even after allowing for differences in economic circumstances and historical trends beyond the policy controls of individual presidents. The largest part of income inequality is directly attributable to the policies and priorities of Republican presidents.

So how and why do Republican presidents enjoy electoral success despite their startling negative economic impact on the fortunes of the majority of voters the middle class and the working poor?

One explanation is the organizational ability, the depth of financial resources and lack of scruples of the political elites representation through their employer advocacy organization, The United States Chamber of Commerce headed by Tom Donohue who still stipulates that everything is just fine. And that our job crisis is the fault poor education and training. And endorses a filibuster deadlocked Senate as effective democratic governance. And is fervently opposed to democratic, collective bargaining by organized labor.

There is no labor advocate that doesn’t understand this treacherous economic dichotomy, and Leo Gerard is no exception. The United Steelworkers’ International President discusses with Bill Moyers the position of collective bargaining and economic crisis.

Even as we discover that without concern for economic stability and with Wall Street’s help, Greece has engaged in a decade-long efforts to dodge European debt limits. Once again demonstrating the propensity of globalized political elites to exploit the wealth and security of working families.

Gilbert Mercier reported on NJP yesterday:

“According to The New York Times report, a team from Goldman Sachs, led by Gary Cohn, came to Athens in November 2009 to propose to the Greek government a new financial scheme which would have pushed debt from Greece’s health care system far into the future.

The News York Times reports that as early as 2001, shortly after Greece was admitted into the European monetary system, Goldman Sachs help the government borrow billions. The deal was hidden from European regulators because Goldman Sachs made the transactions appear as a currency trade not a loan. The secret deal helped Greece meet Europe’s strict deficit rules while continuing to spend more than what they had.”

It is the paycheck of working families that defines quality-of-life. The income that families receive through work, government benefits, or return on investments enables expenditures on house holds, to raise children, and invest in their future. Income not consumed flows into greater wealth, underpinning a stable, sustainable more equitable economy for everyone from the working poor to global bankers. The global economic superstructure has received far, far more over the last half century than its fair share.

It is a great American tragedy that we have let the countervailing force of labors collective bargaining atrophy. A study by the non-partisan Economic Policy Institute findings are no less destructive to the Republican anti-labor, trickle down philosophy.

EPI finds that in the most recent business cycle of the 2000’s that even though the American workforce worked harder, faster, smarter and more efficiently families received stagnant or declining real wage incomes. The sharp rise in income inequality demonstrates conclusively that the links between growth and a fair distribution of the income gains are broken.

A comprehensive analysis of income concentrations going back to 1913 show that the top 1% of wage earners now hold 23% of the total income, the highest level of income inequality on record barring the year 1928. The last few years alone EPI finds that $400 billion of pretax income flowed from the bottom 95% to the top 5%, a loss of $3,660 per an average household. All while the Bush tax cuts lavished the top 1% with a $50,000 unfunded bonus.

The story that EPI tells in The State of Working America is again, one of the diminishing power of labor through collective bargaining, not claiming their fair share of the growth they themselves created. Feeding instead a system that directly contradicts their democratic values and their economic interest.

Our elected officials should get their seats from us by advocating proven policies that directly serve our economic interest. Promoting a more fair and healthy wealth distribution. Candidates campaigning by masking failed ideologies in the fog hyperbole and hot button issues or scorched earth methods should be shunned by everyone regardless of political pedigree. This shameful behavior should be a deal breaker for any and every American.

If we ran as far and as hard left as possible and unionized every single worker, how many decades would it still take to develop an adequate countervailing force to answer the cumulative, corrosive effect of global political elitism?

And how many decades to outlive the damage to our system by their democratically indefensible trickle down argument and the political divisiveness they’ve habituated in the effort to blind the American electorate to it’s failure?

When do we say enough already and start voting for our own interest rather than Republican supply side hallucinations?

Editor’s Note: Please follow Wes Rackley on Twitter.