The Economy
One of the important decisions to be made in the election to come is the best approach to the economy. It’s a complicated problem, and there are no simple or immediate solutions, but there are important choices that we as a country will be making about how best to deal with our current crisis.
One of the major distinctions between the Democrats and Republicans is how a government deals with economic issues. The government, through taxation, incentives, and regulatory policies can shape the economy. There are two general philosophies as to what makes our economy most healthy.
Describing it as more simple than it is, the Republicans tend to believe in an unregulated, or less regulated, approach to business and the “trickle down” theory of the economy. This view holds that if the companies and corporations make a profit that it will “trickle down” to those who work for the corporation and eventually to all of us. They will pay more corporate taxes, expand and hire more people, and the value of their stock will grow. They can do better, the theory goes, if government just gets out of the way.
It’s a great philosophy, except that it doesn’t work, at least for most of us. Some people are greatly benefited by this, particularly those who are extremely well to do. Others are not. Although there is more to it than merely corporate profits, look at the oil companies that have, this year alone, billions of dollars of profits while we all pay more at the pump each time we fill up with gas.
Even though Republicans don’t like to admit it, the economy does well, and the stock market does better, under Democratic administrations. Some studies show that the stock market does almost twice as well in Democratic Presidential administrations than in Republican ones. In fact, the government had no deficit spending, and we were decreasing our national debt, when the Republicans took control of the White House eight years ago. That’s not the case now. Things have gotten much, much worse over the last eight years.
What does change is the gap between people who have a great deal and those who do not. This can even be shown statistically. The Gini Index is a statistical summary of how much of a gap exists between people who have a great deal and those who have very little. It ranges from 0-100. If everyone had exactly the same amount of money, to the penny, the Gini Index would be 0. If one person had absolutely everything, and nobody else had anything at all, the Gini Index would be 100. Developing countries have a high index, with Gini Indexes in the 40s and 50s, because there are typically very wealthy land owners and very poor people who work the land. This tends to become much lower as countries become more modernized and industrialized. Most modern industrial countries, such as England, German, France and the United States, would typically be in the mid 30s. When similar data allowed comparisons beginning about 40 years ago, America used to be fairly close to Europe, with a Gini Index of 39, compared to the 34, 35 and 36 of the rest of modern Europe.
Following economic policies that have been largely Republican, that index has grown with the U.S., but not with other industrial countries. We are no longer partners in the wealth equality with most of the industrialized and modern world. We now have a Gini Index of 47, and are tied, literally, with such countries as Bolivia and the Philippines.
Those at the top of it all really like the trickle down theory, but it doesn’t seem to benefit most of us who are now closer to the bottom.
The Democratic philosophy focuses more upon the people and their lives, their incomes and family wages, and not merely upon corporate wages and corporate wealth. Don’t be mistaken, Democrats like corporations and want them to succeed. We need businesses, we need business skills and business competitiveness, and we need businesses to make a profit if we’re all going to depend upon the stock market and jobs that create take home pay. Democrats are not opposed to business.
Democrats are opposed to tax policies and government policies that benefit business disproportionately, and give far more weight and benefit to large corporations and wealthy people at the expense of the middle class. In truth, the middle class is disappearing, and more and more people are finding that they are funding today by borrowing on tomorrow with mammoth credit card debt and very little to help them out when gas prices increase or if their jobs become rocky.
Democrats support a philosophy of mutual concern for both business and workers. Rather than merely strive for economic benefit for corporations, the Democratic view is that if individuals had greater resources they would be more likely to purchase the goods and services which corporations produce and sell, thus benefiting the corporations. In fact, this seems to have worked to both sustain prosperity and to create it.
In the Great Depression, President Roosevelt had America go into debt, not for a war, but to build such things as the Grand Coulee Dam, roads, bridges, and our country’s infrastructure. This eventually got America out of the Great Depression. I support a similar effort of creating jobs through government sponsored projects to rebuild an infrastructure that’s been overlooked for many years. This does not mean that government workers would do all of these jobs, since it would be far more practical and appropriate for businesses especially suited for such projects to hire the people to do the jobs, but much needs to be done. And it can be done in a way in which more people have money to buy food, automobiles, appliances, and homes from those who produce them.
There are pressing problems, however, which need to be taken into account. One of these is the national debt. It’s $9.5 trillion. That means that the government has borrowed 9.5 trillion dollars ($9,500,000,000,000.00) from its citizens and foreign governments. While some see a national debt as not really a problem, if kept at a low range, almost everybody understands that it’s a significant problem at the great level it is now, affecting the value of our dollar and what our dollar buys from foreign countries. In addition, the increasing industrialization of other parts of the world has added to the demand for petroleum-based products, which has also contributed to the increase in gasoline prices. All of these forces have contributed to the fall of the dollar, in addition to other parts of the world becoming more industrialized and having more need for petroleum based products. It is essential that we reduce the national debt deliberately and quickly, since, literally, the future of our country depends upon how we make such decisions.
It’s clear we need to stimulate the economy with temporary tax reductions, primarily devoted towards those middle class people who most need it, in order to provide the economic stimulus to get the economic engine going again. This cannot go on forever, however, and it needs to be understood that these tax reductions to stimulate the economy cannot continue without disastrous results. It’s much like the shock that gets the heart going again after it stops because of certain cardiac problems. It’s needed, but it’s dangerous to continue shocking the heart thereafter. The same is true with these tax reductions.
We need to reduce unnecessary military spending and make sure that we are preparing our military for the future, not spending billions to wage the wars of the past. We need to become less dependent upon oil and petroleum for our energy needs, since this is core to the economy. We need to stop the inefficiencies in healthcare which make our businesses less competitive, force many people to bankruptcy, and do not serve as an example of responsible ways to deal with questions of health maintenance.
Dealing with these multiple problems and approaches can cause the national debt and deficit to shrink, rather than expand. There are few more important issues facing our country than how we deal with this vital and complex issue, one that demands a thoughtful and deliberate approach. As a person who has successfully run a small business for many years, and who even taught graduate students at Gonzaga University School of Business, I understand these issues from many perspectives.
None of this is easy, and there will be a need for sacrifice, but responding directly with courage and confidence to this issue which is woven into almost every other problem facing our country is essential. Failing to do so would be disastrous to our way of life, freedom, and safety. We can do better. We must do better.
