So who is whining?

Recently, a top economic advisor to the presumptive Republican nominee indicated that the perception that the American economy is in trouble is psychological, rather than an objective indicator of the state of the economy, that the fundamentals of the economy are sound, and that the American people are just a bunch of whiners.  This should not have come as a surpise.  President Bush has consistently maintained that the economy is in good shape, and John McCain himself indicated only a few months back that he thought that most Americans were better off than they had been at the beginning of the Bush presidency, and that the economy was doing well.

So if Americans are really whiners, who is doing the whining?  Oops! Maybe that is the wrong question.  We should be asking who has been helped economically by Republican policies, and who has been hurt. The key policies in question are, first, the unfettered operation of a global free market.  The Bush administration has been a strong supporter of free trade, and has not set down any preconditions for free trade.  Specifically, the present administration has not addressed the working conditions, or the wages and benefits paid to workers, or the levels of government subsidy of manufacturing in countries with whom trade is being carried out.  American companies have been free to establish plants in other countries with no accountabiliy to the federal government with respect to these matters.  Nor have any expectations been set forth to other governments for their native industries whose goods are finding their way to US markets.  Moreover, many American companies have created a legal fiction that their headquarters are in some low tax overseas locality in order to avoid the payment of taxes in the United States.  Such policies have indirectly put the American worker in the position of having to accept lower wages and fewer benefits when it has seemed important to keep American industries competitive with those in other countries.  

Secondly, the policies of Republican administrations, as well as the Democratic administration during the Clinton years, have inclined toward deregulation.  Historical regulations of the creation of secuirities as well as of the trading of commodities have been set aside.  This has led to such practices as the bundling together of loans that are then sold as securities, although the loans may not be well secured.  It has also led to extensive trade in commodities by persons who are not in the supply and demand chain of those commodities, but are interested in no more than buying and selling futures with no interest in ever receiving delivery of those commodities, in other words, speculators.  These are just two practices that have contributed to current economic problems.

Thirdly, Republican administrations have consistently pressed for tax cuts which benefit large investors such as reductions in capital gains as well as the general lowering of tax rates on high end incomes.  While middle class workers have received some reduction in their taxes as well, the greatest beneficiaries of the Bush tax cuts have been for those in higher income brackets. 

In any capitalist economy there are investors and there are those whoe livelihood depends on the prodction of goods or the provision of services.  Investors make their living by risking their capital by purchasing shares in companies that provide goods and services.  Providers of goods and services make their living by their labor whether mental or physical.  To be sure, to the extent that providers of goods and services own shares in pension funds, or have their own IRA they are also among the investors.  It is clear that all of the Bush economic policies have favored the investors, rather than the providers of goods and services.  Republican policies have resulted in the creation of jobs domestically.  But they have also had two results which adversely affected the providers of goods and services.  First, they have resulted in the massive movement of manufacturing jobs, as well as many service jobs, overseas.  Secondly, they have driven down wages and benefits for those working in the United States. 

So if there is whining going on, it is far more likely that those who primarily depend for their livelihood on making investments are the ones who are whining.  They are whining because there are circumstances that have made their life more difficult–a credit crunch, the decline in the value of the dollar (although that benefits those selling goods and services in foreign markets), foreign competition, inflation, the possibility of higher interest rates, etc., etc.  As for those who depend for their livelihood on the provision of goods and services, it is clear that the policies that have favored investors have hurt those who live by the value of their labor.  Average, middle-class white collar, or blue collar workers, are not whining.  They are reeling from the consequences of the reduced value placed on their labor even as the prices which they have to pay for goods and services are rising rapidly.

Advertisements

Tags: ,

2 Responses to “So who is whining?”

  1. goodtimepolitics Says:

    Couch potatoes that are laying around waiting for a job to come knocking on their doors. Wait a minute they don’t want a job period, they want to have more babies that will give them a larger welfare check you see 3, 4, 5 or more out of wed-lock kids with no fathers. Then you have the young people that want to start at the top, not work their way upwards. Like Obama still wet behind the ears and wants to be president!

  2. Notsofastmyfriends Says:

    One of the key changes over the last 20 years has been the role of the U.S. government and private industry no longer working together to invest in development in other countries. This has led enterprise organizations to solve fiscal business solutions on their own. For a recent example of how this can still work today, google the details of the China investment in Congo or Spain’s invesment in toll roads in the U.S. Two examples of how completely different contries investing in first world and third world countries can succed with this model still. In a global economy, innovation in all aspects of business and leveraging all assets are the only way to survive.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: