So I try not to do these very often on my blog anymore, but occasionally, it just comes out.
With the recent election results, I have come to the conclusion that Americans, as a whole, are not particularly intelligent nor do they possess any patience, at all.
The biggest issue? The economy of course.
Unemployment is high, jobs are few, and people are pissed. However, so few people actually understand how the economy works and what factors caused this terrible recession. Two years ago everyone was blaming George W. Bush. This year, it was all Barack Obama's fault. So what is the problem?
Let me give you a small history lesson.
After the Great Depression of the 30's, banks were regulated heavily by the government and the FDIC was created. The intention was to prevent such a catastrophe from ever occurring again, as well as to keep an eye on the banks and not let them become too powerful.
At the same time, in order to help fund all the incredible infrastructural projects going on in this country, the top-tier tax rate was set at 91% for the highest earners. In addition, large corporations paid a moderately high tax rate, but could enjoy tax breaks as they hired more employees.
At this point in American history, things were going pretty well. The infrastructure build-up led to the creation of a booming middle class. More social services were in place for the less fortunate to help keep them afloat, and, despite a 91% income tax rate, the top earners were living very well.
In the 1970's, however, things changed. Banking de-regulation began, allowing banks to now move into other states and charge the highest possible interest rates. The top earners in the country also began paying less in taxes, causing social services cuts.
In the 1980's, things got exponentially worse under Ronald Reagan, as Wall Street became a power player in Washington DC.
The 90's and 2000's, only served to completely de-regulate the banking system, leading to the housing and lending crash of 2008.
So why is it so hard to get back on our feet?
A few reasons:
Top Income-Tax Rate:
The current top tax rate is 37%, compared to 91% in the1950's and 60's. The government has tried to keep skeletal remains of the social programs that flourished back then, but with little in the way of revenue coming in, they are extremely hard to justify. Another enormous consequence is that when the tax rate for the super-rich is lower, the tax rates for the rest of us go much higher. Income tax, sales tax, etc, all go sky high because the rich are able to play on the fears of the stupid in order to benefit themselves.
This is an issue that pisses me off like no other. Huge corporations get enormous tax breaks by lobbying politicians and making generous campaign donations. Not only that, there have never been any penalties lobbied or even suggested for the businesses that move off-shore and take jobs with them, many of which have devastated entire cities. Yet, Americans still hold on to some vapid belief that if businesses pay less in taxes, they will save money and use it hire new employees, instead of what they actually spend it on, new jets, new houses, lavish vacations, enormous bonuses, etc.
Call me a liberal homer all you want, conservative economic policy does not work! people are blinded into thinking that conservatives are great with budgets and practice frugality. There is a whole lot more to it than that. Conservatives implement something called "trickle-down" economics, wherein they believe that major tax breaks for huge corporate entities will eventually "trickle down" to consumers, resulting in lower cost of goods and increased hiring. This has never, ever worked.
If you have ever heard the old adage, "You need to spend money, to make money" it also applies to the government. When the government creates a new agency (like a government-run healthcare system), they not only create hundreds of thousands of jobs, they also force private enterprise to become more competitive. Government-run services don't depend on profit, they depend on tax dollars, which are not a problem when the top rate is high and businesses pay their fare share. When private enterprises respond to free government services with better prices than normal and, naturally, a better service than that offered by the government, their business tends to increase causing higher profits and more jobs, as the increased demand necessitates new hires. When you combine this theory with a plan to roll back bank de-regulation, making them accountable for their actions and severely limiting their reach and power, you strengthen the power of the consumer and strengthen the economy.
You're welcome, America.