It took a few weeks after the Republicans took the country to the brink of default over the farcical debt ceiling issue, but a welcome strain of thought appeared to be taking hold among Democratic elites, including President Obama: You can't compromise with crazy. Well, OK, since I really don't know any Democratic elites beyond my local county Party chair and board, it was a gelling of thought I detected on the blogs I read. This past Sunday, Mark Sumner at DailyKos really laid out some zingers in Republicans undiscover fire: arguing that we've passed the point where it is safe to continued deluding ourselves that the political debate and competition in USA is between two competing philosophies that have equal claim to being judged on their merits by the voters:
... what's now coming from the right consists of 100% emotional, fear-based appeals without a factual basis. In 2012, a campaign of suggestive fear-mongering seems almost quaint.Indeed, we have reached the point were conservatives and Republicans can preserve their cherished theories only by denying reality. For example, their cherished theory that lower corporate tax burdens will result in higher private investment, is thoroughly discredited by the actual data which is presented in the graph at the beginning of this blog, which is from a January 10, 2012 post over at AngryBear, by Dan Crawford.
...the Republicans have staked out a position that requires that they lie, 24/7, 365. Not shade the facts their way. Not put their own spin on the situation. Lie. Big, sloppy, and constantly.
The lies go beyond instantly dismissible claims like President Obama being the "food stamp president" (why you have to go back one whole administration to discover that more people joined the food stamp ranks under Bush than Obama, but then the Republicans don't seem to remember Bush in any case). The blatant lies extend through every aspect of the Republican platform, such as it is. The simple reason is that the Republicans have no ideas left, at least no ideas that have not been tested and proven to be failures again, and again, and again.
The economy didn't just crash under a Republican president, it crashed under Republican policies. It crashed with low taxes. It crashed with deregulated markets. It crashed with huge restrictions on union activity. It crashed with massive cuts in environmental regulations. It crashed with lowered trade barriers. It crashed with big fat Pentagon spending.
They got what they wanted. They got CEOs with no limits on their wealth. They got banks with no limits on their "creativity." They got trade agreements that guaranteed manufacturing could be moved to the dirtiest, cheapest, most desperate source available. They got massive cuts in capital gains taxes and equally large boosts in the wealth they could pass along in estates. They got everything they said would make us all wealthy. They got record oil and gas drilling. They got record giveaways of public land. They got everything they said would create jobs. They got the middle class to shoulder more, more, more of the burden so that those beautiful job creators would be free to work their magic.
They can't say the economy crashed because taxes went up, because they didn't. They can't say that the economy crashed because there was a raft of new regulation, because there wasn't. They can't blame it on "union thugs" or Saul Alinsky or the guy who writes Happy Holidays cards at Hallmark. They can't blame it on a president who was elected when the world was already in free fall. Only, of course they do. They say it because they have no choice.
As the graph shows, both corporate tax receipts and net business investment as a percent of GDP declined over the period 1950 - 2008. The data does not show an inverse relationship between the two series. Rather, the data shows a substantial positive correlation, i.e., high values in the tax series are associated with high values in the private investment series, and the same association is observed for low values. This counters the idea that business investment increases when the tax burden decreases. Moreover, this decline in business investment suggests that by retaining more and more of their earnings, corporations are failing to make economically productive use of their capital .. and shortchanging growth.Similarly, conservatives and Republicans can preserve their cherished theories only by denying the reality that it is what economists call aggregate demand generation that determines employment and economic growth. This is why conservatives and Republicans go into conniptions when confronted by OccupyWallStreet's insistent theme of income and wealth inequalities. Just look at the spluttering rageball Andrew Breitbart became when he confronted Occupiers protesting the annual Conservative Political Action Conference last week. Three years ago, I posted in a few places on the tubez an excerpt from 1930s Fed Chairman Marriner Eccles' memoirs, in which Eccles explains his conclusion that the First Great Depression was caused by income inequality undermining aggregate demand in the 1920s. Someone did not agree this explanation by the chairman of the U.S. Federal Reserve should be on the Wikipedia page about the causes of the Great Depression, and removed it. I'm confident that the interloper who removed it was a conservative, because the idea that aggregate demand is crucial simply devastates conservative positions on political economy, such as their hatred for organized labor and collective bargaining, their blind ideological faith in giving tax cuts to the wealthy, their opposition to government assistance programs designed to limit and ameliorate poverty, including even Social Security. As progressive billionaire Nick Hanauer pointed out a week ago, we now have record levels of corporate profits and the highest share of national income going to the top ever recorded, yet the economy is still on its back.
If it was true that the rich and business were the job creators, we'd be drowning in jobs today.... if you took corporate profits from the high that they are now and dropped them to a "normal" rate, you would cut loose about $750 billion. If you spread that $750 billion among 100,000,000 middle-income workers, that's $7,500 a worker. Imagine how robust our economy would be."Over at AngryBear at the beginning of this month, Jazzbumpa went about asking a question that you would think every Democratic politician should be asking "Where did the money go?" The four-part series began by pointing readers to Michael Hudson most recent post Democracy and Debt, summarizing the argument, thus:
The relevant point here is that the increasing capture of wealth, as rents, by a creditor class impoverishes society in general, and this eventually leads to severe repression, major social upheaval, or both.Also especially interesting - given that we are judging the post three decades' grand experiment with conservative political economy - is that in Part 1, Jazzbumpa also pointed out the dramatic phase shift that occurred following the "Reagan revolution."
In Part 2, Jazzbumpa shows what happened to profits of the financial and banking sector. It fully supports Hudson's observation that banking and finance have become a rentier faction imposing a net drain on the economy as a whole.
And Jazzbumpa noticed something else:
The finance sector has captured an increasing fraction of corporate profits, which have been growing at an increasing rate since WWII. And the growth rates are greatest when the economy is doing the worst. Take another look at the first graph. The correlation of finance sector profit peaks with recessions is close to perfect. Peaks are in Q2-1949, Q3-1952, Q4-1953, Q1-1958, Q1-1961, Q4-1970, Q1-1986, Q1-1991, Q4-2001. The peak in 1986 is the only one that does not correspond to a recession. (Emphasis mine).In Part 3, Jazzbumpa shows (with graphs that are not as clear as they could or should be) that
not only has GDP growth slowed, the amount captured in disposable income has decreased, quite dramatically.I think a more interesting, and damning, look at what's happened to disposable income is the advertising industry blunt conclusion that it no longer pays to try and market to the USA middle class, because the middle class just does not have enough income in what the admen acknowledge is a plutonomy. From my June 2011 post, Madison Ave.: mass affluence is over, quoting the advertising industry’s top trade journal:
That's a whole lot of wealth that is NOT ending up in the hands of ordinary people. Which is why it doesn't get spent.
. . . the accrual of wealth among the very few is of great consequence for marketers, since 10% of U.S. households "account for almost half of the consumer spending" and represent about one-third of total GDP, according to the American Affluence Research Council.The bottom ranks of the population are doing so badly, even WalMart executives are getting worried. Also, consider this trend: United States of Dollar Stores – dollar stores see a rise in households making $70,000 a year or higher as a customer base. What does the rise of dollar stores say about the middle class?
Simply put, a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending and has outsize purchasing influence -- particularly in categories such as technology, financial services, travel, automotive, apparel and personal care.
In Part 4, Jazzbumpa presents another graph of reality that devastates conservative and Republican ideology.
I'll let Jazzbumpa explain, again:
Dividends/ Profits are in green; Taxes/Profits in red. I've added 13 year moving averages to clarify the trends over time. The Dividend percentage bottomed in 1978 at 20.6%. I've marked that year on both curves with a yellow dot. After that, dividend payments took off sharply and have been mostly in the 40 to 50 % range since 1989. The tax rate on dividends was reduced to 15% in 2003, also marked with a yellow dot, but I don't think that change has had much effect on dividend payout. The gyrations in the payout percentage since 2003 are largely due to the denominator affect, as profitability increased after the 2001-2 recession, and plummeted during the recent Great Recession. Notably, 2010 profits are the highest ever.The results of the past thirty years of increasingly "free market" economics simply are facts that the conservatives and Republicans don't like, and refuse to acknoweldge. But reality has a way of intruding itself - like with Nyoot Gingrich's attacks last month on Mitt Rmoney's record as a vulture capitalist at Bain. No matter how much truth was contained in those attacks, it was clearly the most vile apostasy for conservative "thinkers" who intuitively know that any critique of Rmoney and Bain Capital is also valid as a wider critique of the predatory financial capitalism that has developed since the Reagan revolution took power.
The tax payout drop lagged the dividend increase by several years, and didn't start dropping until 1987. In 1986, the tax payout rate was 45.2%. After a sharp drop to 27.7% in 1992, the payout rate increased throughout the Clinton administration, topping at 34.5% in 2000. Then, there was another sharp drop. It has since leveled off, averaging 25% since 2004.
In 1978, the 13 year averages were 24.2% for dividends and 42.4% for taxes. Those averages are now 45.7 and rising for dividends; and 28.3% and dropping for taxes - essentially a reversal of positions. The net result is a massive funneling of money from government to dividend recipients who now are paying only 15% tax on their dividend income.
In the end, how do you prevent someone from asserting their own "facts" -- "facts" which are so wildly at variance with reality? Perhaps, all you can do is make fun of them. Ridicule them, and share the joke with as many people as possible. Which is why I enjoy Hunter at DailyKos so very much. So, I conclude by pointing you to Hunter's Sunday skewering of conservatives and Republicans, Rep. Steve King and the scary lightbulbs of scary doom. It seems Rep. Steve King regaled the adoring crowd at the Conservative Political Action Conference with a tale of how he bravely bested Nancy Pelosi's dictatorial regime when she was Speaker, and she ordered the fascist janitorial service of the Capitol to change out all the old incandescent light bulbs with new, energy efficient ones.
"I would screw them out and send the interns out to get me some of those good Edison lightbulbs," he said, the crowd cheering. "And those interns would come back sometimes empty-handed in tears, because they couldn't come up with a regular Edison light-bulb."I guarantee you a barrel of laughs, if you go read the entire parody. Just remember, you can't compromise with crazy.
Really? Really? If I had interns that burst into tears because they could not find the proper kind of lightbulbs, I honestly would have to question the quality of my interns. Is his staff populated with four-year-olds? Is there some prescription drug dependency that needs to be looked into? I have to say, if Steve King has interns coming back in tears because they could not find Steve King the kind of lightbulbs Steve King demanded, then Steve King must be a horrible person to work for.
Also: I am sorry, but if you are sent on an errand to find incandescent lightbulbs and yet cannot find them, you quite possibly might be a moron. Even today, after the cruel regime of lightbulb-Gestapoism has done its devastating work across our great land, I can find incandescent lightbulbs in no less than a dozen stores in my tiny, suspiciously leftist-sympathizing town. I dare say that I could find incandescent lightbulbs in two of those stores while blindfolded, without help from onlookers or any kind of lightbulb-sniffing dog. Maybe this is a skill only available to the coastal elites (there are many, it turns out: I once stunned a visiting crowd from Tennessee by flattening a box before putting it in my recycling bin, thus magically making room for more recycling) but I have confidence it can be learned, with practice.
UPDATE: In the second installment of The 99 Percent Plan, a joint Roosevelt Institute and Salon series discussing how progressives can shape a new vision for the economy (rather than acquiesce to "an economic discourse largely set by conservative principles, hostile to state action while idolizing free markets and corporate power), America’s failed promise of equal opportunity, Alex Gourevitch and Aziz Rana begin with an extremely useful compilation of links to studies and articles brimming with the statistics and facts outlining the basic economic realities that conservatives and republicans refuse to acknowledge:
Americans are increasingly aware that the ideal of equal opportunity is a false promise, but neither party really seems to get it.
Republicans barely admit the problem exists, or if they do, they think tax cuts are the answer. All facts point in the opposite direction. Despite various tax cuts over the past 30 years, not only have income and wealth inequality dramatically increased, but the ability of individuals to rise out of their own class has declined. Social stagnation is increasingly the norm, with poverty rates the highest in 15 years, real wage gains worse even than during the decade of the Great Depression, average earnings barely above what they were 50 years ago, and more than 80 percent of the income growth of the past 25 years going to the top 1 percent. In fact, since 1983, the bottom 40 percent of households have seen real declines in their income and the same goes for the bottom 60 percent when it comes to wealth. We know what the economic status quo does: It redistributes upwards.