For the last 30 years the economy has been hijacked by the rich and powerful who forged it into a tool to use against the working classes. Republicans were smart in their deception, hijacking the American dream by crippling the programs that support it and then funneling the government's revenues to the rich through tax cuts and other benefits. They looted the government treasury and then pleaded governmental poverty when it came time to fund the services required by the people, such as Medicare and Social Security.
The gullible middle class and working poor were told that all of this was good for them, and whether out of ignorance or fear or prejudice or foolishness, many believed it. They signed onto tax policies that worked like a shell game that took from the poor and middle classes and gave to the rich. They were sold on "trickle down" – with the speeches of the Great Communicator (Reagan) having so addled their brains that they thought it was a wonderful idea to hand over their share of the nation's wealth to those who were already extremely wealthy. They were told that doing this would create jobs.
Contrary to what Republicans say, what they do is a different matter. They say they believe in small government, but when they are in power they do not shrink the government. Instead, they enlarge it by spending billions more on the military, turning the bounty over to the rich through no-bid government contracts. The difference between Republicans and Democrats is not the size of government, but what the money is spent on.
The foundation for the crash of the financial sector was set in place around 35 years ago. It all began when control of the U.S. economy was turned over to the banks and the investment firms of the Western world. It was called financial “deregulation,” which was started about 35 years ago under Nixon, continued by Reagan, made worse under Clinton who signed the 1999 Gramm-Leach Act which repealed the 1933 Glass-Steagall Act, with the result that bankers, brokers, and insurance companies can combine into humongous corporations deemed too big to fail. The Glass-Steagall Act had kept commercial banking separate from its investment-house cousins. Finally, the Bush administration turned a blind eye to what was going on with the financial markets, refusing to admit that the economy was in a recession until it blew up in their faces. Although Republicans deny that they were part of the problem, it was on Bush's Watch that the financial industry unraveled and took Main Street with it.
From 1994 to 2006 the financial industry ran amok due to a filibuster-proof Republican majority in Congress, led by iron-fisted Tom Delay who locked out debate on all legislation. (It's funny how the Republicans are now begging the Democrats to not do that.) Clinton acted with complicity when he signed the Gramm-Leach Act. Then, George W. Bush handed complete power over to the financial and oil industries, unwittingly setting our country up for the 2008 Crash. His actions were not surprising considering that fact that the Bush family has served the Wall Street financiers and oil barons for three generations.
This recession is a perfect storm, the result of a financial system where the money pool is largely created by bank lending. First, the system was based on credit/debt that currently cannot be repaid. Secondly, it is bankrupt because since about 1980, starting with clothing manufacturers, our industry and jobs have been increasingly outsourced abroad to cheap labor markets or cheap labor has been imported to replace the higher paid American worker. This caused middle class incomes to lose ground who, after running up their debt as high as possible, can no longer participate in the retail market. Third, it is bankrupt because deregulation allowed large banking institutions to gamble with high risk derivatives.
In the first few decades following World War II, the United States, despite many serious flaws, established the model of a highly productive society that shared its prosperity widely and made investments that were geared toward a more prosperous, more fulfilling future. The American dream was alive and well and seemingly unassailable. But following the oil shocks, the hyperinflation, and other traumas of the 1970s, and then being hypnotized by Reaganomics in the 1980s, Americans allowed the right-wingers to get a toehold and begin the serious work of hijacking the American dream.
During all this time the public has been like sheep, believing and following the Republicans into deregulation, financial shell games, and ponzi schemes. But, due to widespread greed and everyone trying to carve out their own very large piece of the pie by running up huge debts, the financial house of cards – built on too high leverage – came crashing down.
We are now caught up in a downward spiral that Washington is trying to stabilize. People who work for a living no longer have enough purchasing power to pay their debts or to buy anything much beyond necessities. This loss of purchasing power is hurting retail, which hurts the stock market, which causes tightening of the credit market and further slowing of production. But, as I said in previous posts, the recession train had already left the station well over a year ago – since December 2007 – with signs of weakness long before then. Two of the most prominent signs were stagnant middle class wages and the loss of jobs to other countries. Blue and white collar workers were told to quit whining and re-educate themselves for a different occupation while those at the top continued to rake in millions.
But working families were in trouble long before this recession hit because public officials, who should have been looking out for the middle class and the poor, were part of the collusion of Republican conservatives and corporate leaders that rigged the economy in favor of the rich – and ultimately brought it down completely. Abandoned by big business and their ideological henchmen in government, the hard working citizens of our country were exploited and denied the rewards of their increasing productivity. They were treated ruthlessly whenever they tried to organize. They were never reasonably protected against the revolutions in technology and global trade, NAFTA, or jobs being shipped overseas enabling corporations to increase the dividends paid to investors.
The New York Times’ David Johnston, noted that from 1980 (the year Ronald Reagan was elected) to 2005, the national economy, adjusted for inflation, more than doubled. Yet, the peak income year for 90 percent of Americans was way back in 1973, when the average income per taxpayer, in today’s dollars (adjusted for inflation), was $33,000. According to Johnston, that was nearly $4,000 higher than in 2005. This means that the average income for working Americans actually declined during the last 35 years. Men have done particularly worse because those who are now in their 30s – the prime age for raising families – earn less money than members of their fathers' generation did at the same age. What’s worse is during this economic downturn, men are losing their jobs at a much higher rate than their lower paid female counterparts.
So, why did so many in the middle class decide to live so high on the hog? It was not because incomes grew. It was because women entered the workplace in droves causing the average family to believe they could take on more debt in order to increase their standard of living. Now these hapless victims in the middle and working classes are watching their incomes shrink, jobs taken away, pensions disappear, and homes foreclosed on. Many are saddled with ever-increasing debt while they deal with the stress of trying to pay for gas and food price inflation.
Do not get me wrong – the majority of businesses seek only a fair profit to provide for and sustain their owners, employees, and share-holders, and are law-abiding and good citizens of their communities. But the largest ones, just like the East India Company of 1773 and the railroads of the 1880s, are out of control. These humongous corporations are threatening the very fabric of our nation, our society, and our world. They not only control our financial system, but also our daily lives, the food we eat, the water we drink, the air we breathe, the information we receive and therefore the thoughts in our head. They demand that we buy, buy, buy from them in a never-ending loop of subservient transfer of our capital, our time, and our freedoms directly into their coffers. Some of these corporations would kill for a dollar and destroy the world for an extra billion. Indeed, as you are reading this sentence many are doing just that, aided and abetted by conservative politicians and power-mongers all along the way.
At this point in time, with the economy likely to get worse for awhile, We the People have an opportunity to follow President Obama’s lead in reshaping our society, moving it toward a fairer, smarter, and more productive direction. The wealthy do not want that to happen, because it causes them to be less rich – maybe only worth a few million instead of many millions – which is why they are rooting so hard for President Barack Obama's initiatives to fail. They do not want to go back to the tax level they paid under Clinton and Bush I regardless of the fact that it was just 3% more. Most seem to have no understanding of the idea that “with wealth comes responsibility.” Many seem to not understand that they owe their allegiance and help to the country in which they made their millions. They apparently do not understand the word ‘sacrifice.’
Over the past 35 years the rich got richer while the rest of us barely treaded water. The only people who still have a more-or-less ‘normal life’ are in the upper middle classes and higher. Many of them truly do believe that they are privileged and the only ones who should own the Dream – to them we are serfs. The wealthy class, the corporate CEOs, many in the financial sector, would all love to do it all over again: dupe the middle class into paying the most taxes, etc, so they can hijack the American Dream for just themselves.