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The Economy since 1947
Transcript of The Economy since 1947
Balance of Power Capitalism
Government assures balance between:
Government responsible for:
"Government isn't the solution; government is the problem"
The market, if left alone, is capable of solving all of our problems
Balance of Power
The Crisis of the 1870's
The "Long Depression" of 1873
Economy in Recession 41% of the time 1870-1933
Rise of Corporate Power
Depressed prices for farmers
Collapse of confidence in pure capitalism in 1929
Roosevelt's "New Deal"
The Crisis of the 1970's
The defeat in Vietnam
The oil embargo
The fall of Shah and the hostage crisis
Reagan's "It's morning in America"
Dismantling of the New Deal
Triumph of market ideology
New Deal Policies
High taxes on the rich (90%)
Heavy support for education
Heavy support for infrastructure
Medicare (1960's) Last Gasp for New Deal
Reagan's "New Deal"
"Supply-side" Let the rich keep more and they will grow the economy
Drastically cut tax rates, especially for the upper incomes
Air Traffic Controllers - Government would take any measures to break strikes
Outsourcing - "Free trade" to control prices and weaken union negotiating power
Insourcing - Lax enforcement of immigration laws to provide cheaper labor
Expand the military
Let the rich keep more, and they will fix all of our problems
Taxes collections will actually increase if taxes were lower
But in fact, taxes were merely shifted:
From business taxes to individual income taxes
From upper incomes to middle incomes
From income tax to payroll taxes
From the current payers to future payers (borrowing
Fundamental Change in the American Family
Not just the percentage of women working, but the kind of work
Not "supplemental," but "carreer"
Less time for family
More reliance on outside services: restaurants, child care, etc.
Both incomes now essential = Two ways for the familiy to fail economically
Bigger homes, more distant suburbs (better schools)
More borrowing power
Debt vs. Income
The family wage has stagnated since 1998
Debt replaced income as the means of distributing output
The FIRE economy replaced the productive economy
Leads to "The Investor's Dilemma": Make lots of money, but there is no place to invest it
Inevitable "credit crunch"
"Deleveraging" slows any recovery
Slow recovery means that debts can't be paid
Plutonomy vs. Economy
Poor distribution of wealth & income
Characteristic of stagnant, "third-world economies
Growth for few = losses to the many
Leads to plutocracy
"Normalized" distribution of wealth & income
More compatible with democracy
Banks not lending
No way to pay our debts
No means to repair the infrastructure
The Irrelevance of Politics
No "plan" in government addresses these problems
Not Obama's "jobs" plan
Not the Republican "deficit" plan