By Jack Jodell, Aug.7, 2011


All one needs to do is to look at recent headlines to know beyond the shadow of all doubt that capitalism, as it is being badly-mismanaged today with its winner-take-all-and-to-hell-with-everybody-else “free market” assumptions,  is FAILING US BADLY. A mere glance through these current headlines bears this out: “DOW DROPS NEARLY 513 POINTS”, “MARKETS PLUMMET  ON GLOBAL FEARS”, “CHILDREN ARE LOSING THEIR BATTLE WITH FAMINE IN SOMALIA”, and “A JOBLESS ‘RECOVERY’ ?” they all scream.  The truth of the matter, and the root of all this evil, lies in the fact that these free-market enthusiasts, beginning with Milton Friedman and Ayn Rand on down, have been feeding the American public one MYTH after another ever since the dawn of 1981’s “Reagan Revolution.” The end result of this nonsense is becoming abundantly clear. The rich are simply getting exponentially richer, AND EVERYBODY ELSE IS SIMPLY BECOMING POORER.

THIRTY YEARS AGO, we were fed the MYTH about “trickle-down economics.” You may remember how we were told that, if only the wealthy and corporations weren’t taxed so much, their increased savings and wealth would be free to trickle down and benefit all other segments of the economy.  That they wpuld have the freedom to invest in new, high paying jobs and develop new industries. What a naughty government we had, to interfere  with that process by overtaxing those with lots of money!  Economic advisers like David Stockman were proponents of this foolishness. Years later, this same Stockman admitted that the proposed policy was a sham totally put forth to lower taxes mainly for the government-hating wealthy. He and Reagan were successful in strongarming Congress to pass those tax breaks back then, and today, Stockman still marvels at how easy it was to pass them with a fair amount of support from even congressional Democrats. As we all know now, things didn’t turn out quite as Reagan and Stockman had forecast. Their formula only provided a windfall for billionaires on Wall Street, and there was little if any trickle down for the rest of the economy. Very few high pay jobs were created; most of the job creation was for modest or low pay service sector jobs. The recovery from Reagan’s 1982 recession was limited, even though his harsh measures like raising interest rates DID whip inflation and restore confidence to the market. About this time, the beginning elements of the “free trade” crowd began to be heard. Then as now, they wanted a hands-off , anything-goes approach to business and particularly foreign trade. As a result, Reagan stood by and let Japanese automobiles and electronics flood our market. The end rsult was massive loss of market share for American automobile manufacturers and the eventual dismantling of the vAmerican electronics industry. Reagan was also instrumental in providing impetus to the anti-labor sentiments expressed by fellow free-traders. His busting of the PATCO union led to the successful destruction of unions in much of the country in a wide variety of industries.  So much for the MYTH of providing high pay American jobs!

The top marginal tax rate when Reagan took office in 1981 was 70%. By the time he left office in 1989, it had been reduced to a mere 28%, REAGAN  ACCOMPLISHED THIS BY SHIFTING THE TAX BURDEN FROM THE WEALTHY TO THOSE BENEATH THEM ON THE INCOME SCALE. In fact, Reagan INCREASED TAXES a total of 15 TIMES , but always on the poorer and middle class segments of the economy. Meanwhile, he began a huge increase in military spending, which led to a THEN-RECORD BUDGET DEFICIT. Congressional Republicans AND Democrats in large part supported this activity. Reagan also was responsible for pushing and passing the 1984 Trade and Tariff Act, which was a forerunner to the disastrous NAFTA treaty (more on this in part two of this series). That poor decision by Congress gave the President fast-track authority to negotiate foreign trade deals, almost all of which hurt American workers. Meanwhile, the wages and buying power of the American public had begun to stagnate and even slip as a result of Reagan’s anti-union actions.  But as long as conservative Republicans were able to protect their wealthy constituents from tax increases, they simply didn’t care.

This anti-tax mania begun by pampered trust-funder Grover Norquist (the son of a wealthy Polaroid executive) was soon wildly accepted and adopted by conservative Republicans and caused Reagan’s successor, George H.W. Bush, to declare “Read my lips – no new taxes!” in his successful election campaign. But in the face of rising deficits CAUSED by those lowered tax rates, Bush soon found that he HAD to raise taxes. So, in 1990, Bush raised the marginal top tax rate up to 31%. Conservative Republicans were furious. They preferred a candidate who would follow the dictums of the ridiculous taxpayer protection pledge Norquist was peddling, which prohibited a tax increase by elected officials for any reason at any time. As a result, Bush failed in his attempt to be reelected and was defeated in a 3-way race by Bill Clinton. Prior to this, and even after a number of years of a greatly-reduced top tax rate, the econmy began to slide into a mild recession as Wall Street had once again chosen to sit on their profits and tell American workers to go to hell. Before he left office, Bush signed the ill-fated NAFTA treaty with Canada and Mexico, and left it to be ratifiedby Congress  during his successor’s term. So much again for the MYTH of  “trickle-down” economics,  In reality, they were trickling UPWARD!

To his credit, Clinton almost immediately began an intensive jobs and retraining program for displaced American workers. Many were trained for the new up-and coming internet dot-com boom. To pay for this program and to further reduce the federal deficit, CLINTON WISELY RAISED TAXES ON THE TOP INCOME SCALES, TO 39.6%; A WHOPPING 8.6% INCREASE! Rather than doom and gloom, Clinton’s tax increase FUELSD ONE OF THE MOST PRODUCTIVE PERIODS IN OUR POST-WORLD WAR II ECONOMIC HISTORY! An incredible 22 MILLION NEW HIGH-TECH JOBS WERE CREATED and prosperity once again returned to nearly all levels of the economy! In fact, an actual labor SHORTAGE began to appear in certain low pay segments. Not content with leaving well enough alone, congressional Republicans egged on both congressional Democrats AND President Clinton to pass the first of what would become a number of similar one-sided trade agreements, the North American Free Trade Aggrement, otherwise known as NAFTA. This agreement lifted duties on goods shipped to and from the United States to and from Canada and Mexico. It was widely touted as a job booster for all the signatories, but this, too, turned out to be another MYTH. Signing NAFTA into law was perhaps Clinton’s most glaring economic mistake.

UP NEXT IN PART TWO: The lies of the Bush presidency and the devastating effect of conservative Republican trade policies on American jobs.

About jackjodell53

I am an American Dissident trapped in a country where poor and middle class people are constantly being exploited and lied to by a very rigid and conservative plutocratic elite. I believe in government OF, FOR, and BY the people, not one controlled as it now is by corporations and special interests.
This entry was posted in commentary, conservative Republicans, labor unions, Politics, taxes, Uncategorized and tagged , , , , , , . Bookmark the permalink.


  1. Stimpson says:

    The widening gap between rich and poor is like the lead-up to the Great Depression. The rich are getting richer, and spending little of their extra income in the consumer market. The poor and middle class, on the other hand, have seen their disposable incomes shrink.

    The net result is a slowdown on the demand side of the economy, and it won’t improve if more and more of the population has to live on Walmart-level wages. The future doesn’t look bright for the U.S. economy and its neighbors’ economies.

    Nice work, Jack.

    • jackjodell53 says:

      Thank you, Mike.
      You summed it up perfectly. In part 2 I will cover the lies of the Bush presidency plus the rise of the crazy tea party and the disappointment Obama has been.

  2. Lots of good, solid information in a great post. A couple of additional things bear mentioning, though.

    First, all the things you covered came on top of accelerating advances in job-destroying technology. Go back to the early 1960s, when all over America Ma Bell replaced probably a million or more telephone operators with automated switching. Within a decade, the occupation of phone operator disappeared. Automated elevators did the same thing to elevator operators. In the 1980’s, IBM came out with a computer it intended to be the PC of choice for every home in America, the PCjr. To manufacture this new computer, IBM built a factory in Texas that was the most thoroughly automated factory ever created. It took raw materials in one end and pushed boxed PCjrs. out the other end with no more than a handful of technicians and workers needed to keep the automated processes running. The PCjr. bombed in the marketplace because it was a bad design, deliberately made slower and less powerful than the more-expensive and profitable IBM PC the company intended to sell to businesses. However, IBM pointed the way to producing vast quantities of complex electronic products with as few workers as possible.

    Minimizing the payroll has become the law of the land in all American business, not just in manufacturing, since the 1980’s. Even now, at Wal Mart and some other big retailers, you’ll see several do-it-yourself checkout stands. They’re trying to get customers accustomed to the idea of working with a machine so that someday soon retailers can do away with most of their checkout associates. This relentless automation is a major cause of the declining fortunes of working- and middle-class people.

    The other thing is political. Republicans constantly promote their brand and their ideology. They do it right up front, in your face. When challenged, Republicans launch into a full frontal attack on whoever makes negative noises. Democrats rarely promote their brand or their core beliefs. They will talk about particular issues, about particular candidates (or their election opponent) and sometimes take a generalized swipe at trickle-down. But Democrats almost never carefully and thoroughly explain what’s behind a liberal approach and why that’s preferable for most Americans to what Republicans are pushing. They almost never thoughtfully explain how and why government is helpful to people, and how and why using the government to accomplish certain things is better than turning it over to the private sector. I follow these things closely and have for years, yet I don’t begin to understand why this difference in approach and messaging exists or why it’s so pronounced. I do know it’s a factor in Republicans being more successful in winning and holding power than they logically should be.

    BTW, I think you would find Robert Reich’s book, SuperCapitalism, fascinating, very readable and informative, as I did.

    • jackjodell53 says:

      I can’t thank you enough for this intelligent and well-reasoned comment here. You raise a magnificent number of relevant and thought-provoking points. The info on Bell Co. and the Democrats’ failure to successfully promote their brand is very revealing and fascinating. This trend toward streamlining business is also dehumanizing and makes me wonder when business will finally start to apply some common sense to the equation. Maybe never, huh?

      I am a great admirer of Robert Reich. I have not yet had the time to delve into that book, but I shall!

      • “This trend toward streamlining business is also dehumanizing . . .”

        Another trend, longstanding but accelerating over the past 25 to 30 years, is one where employers reconfigure jobs, or break jobs down, so persons filling those jobs need exercise no judgment or make any decisions. Why? Because employees relied on for good judgment and decisions cost more and are harder to replace. They thus are have more bargaining power if they ask for a raise or seek a promotion, and are better situated to seek a job elsewhere if turned down. Employees who exercise minimal judgment and virtually never have to make a decision can be replaced quickly, easily and cheaply. What’s more, that kind of employee has virtually no bargaining power.

        You might think this trend affects only minimum-wage workers, but it doesn’t. Increasingly it affects college-educated people in traditionally more-complex and demanding jobs. I’d say this trend is also dehumanizing.

  3. Jolly Roger says:

    The first thing I would like to do is to take slight issue with SW’s summary. The fact of the matter is that while it is true that manufacturing has employed a smaller and smaller share of the percentage of workforce Americans, the raw numbers of Americans thus employed actually GREW (through 1979) until “free” trade agreements with countries that allow near-slavery and wanton pollution took hold. There is, and can be, a manufacturing base in this country, and it can employ quite a few people. What is needed is to come up with a tariff that properly assesses the amount of damage done to the American economy and the world environment.

    the second point is that there is no “free market” here. This is an oligarchy, and the barriers to any competition are every bit as stiff as they were in Stalin’s USSR. Mao-Mart gets bigger because Mao-Mart is able to quickly shut down any competitors, no matter how much better they may actually be. And this is true throughout most sectors of the American economy-the big dogs own it, and they protect their turf.

    • jackjodell53 says:

      Jolly Roger,
      I like your idea of a tariff. Naturally, it would cause a great outcry of “protectionism”, but we have a loooonnnnngggg way to go before ANYONE could accuse us of out and out protectionism. As things stand today, many of the countries we have exported jobs to ARE heavy polluters who, together with our corporations, are heavily exploiting the work force.

      You are right to claim there is no freedom in our market here. Not only is competition stifled here, but so are workers’ rights and freedoms. Collective bargaining has all but disappeared, and what’s left of it is under direct attack by the far right Republicans. For that matter, CONSUMERS don’t really have a voice here either. The oil companies demonstrate this every day. They raise and lower prices at will, throwing consumers around like yoyos. Definitely NOT “free” for ALL of the players!

  4. J.R., you seem to think I made an argument of “it’s this and not that.” I didn’t. I simply mentioned another aspect of why we have a jobs shortage. Piling the job destruction caused by free trade on top of the problems inevitably caused by automation was like spraying water on an oil fire. It exacerbated the already serious jobs shortage we’ve had since the turn of the century.

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