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      Week-end Wrap – Political Economy – December 4, 2022 by Tony Wikrent   Professional Management Class war on workers Railroading workers [Popular Information, via Naked Capitalism Water Cooler 11-29-2022] “The dispute boils down to one issue: paid sick leave. … Railroad companies have adamantly refused to include any short-term paid leave. That means rail wor […]
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It’s the Economy, Stupid! But Are Too Many People Now Unable to Understand the Economy?

I really should stop watching the news, because it can be infuriating, particularly their reporting on polls, and almost never trying to explain to the viewers so that they might have a better understanding of important things.

Last week, I saw that when people were asked, “Which party’s economic policies do you favor?,” 41% said Republican, and 26% said Democratic. And I wanted to yell at those who took the poll; and the millions of people who by the statistical concepts of the Normal Distribution, have the same percentage of views, allowing for the small margin of error.

How could people be so ignorant and dumb as to think that Republicans’ ‘economic policies” are good for anyone but the one tenth of one percent of people who benefit from them? Have they been asleep for the last fifty years? Did they never learn any American history? Anyone may be entitled to his or her opinions and even biases, but don’t people like to think that they are intelligent, and can understand things, and learn from the past? Well, apparently those cynical and evil people who think that the masses are stupid, and easily manipulated by propaganda, are more accurate than those idealistic people who believe in “vox populi vox dei,” and that the average individual and presumed voter is able to actually understand what he is voting for.

The facts are that the economy almost always fares better under Democrats. This is based on a myriad of data, including GDP growth, employment figures, real wages, and even the stock market, though that latter should really not be viewed as a proxy for the economy. The data on this is readily available. The past is not always a predictor of the future, but in economics it usually is, so why would any reasonable person who is not a multimillionaire see anything positive for them in Republican economic principles or plans?

Here are the Republican economic principles and plans: 1) Continue to cut taxes on the top 1% of earners. 2) Continue to cut corporate taxes. 3) Do not spend on any social programs, unless they directly put more money in the pockets of the ultra-rich. 4) Eliminate (the euphemism is “sunset”) Social Security and Medicare to try to make up for the shortfall.

That is it, and this is not a gloss, it is exactly what they propose. Why would any middle-class American be in favor of that? Is it that they do not understand these simple facts? They somehow still believe in Friedmanite trickle down economics, where if we make the wealthy even wealthier, and have no guards or impediments to anything corporations do, they will make even more immense sums of money, and this will somehow find its way into the pockets of the average citizens? Why, and how?

The people who own corporations (and this has very strangely metamorphosized into the corporation as some kind of living entity which like a science fiction monster has only one purpose, to make more money no matter the carnage), only care about themselves. They think, and they teach as a matter of explanation, that it is not their responsibility to care about anyone else, or the social welfare. It is their purpose to maximize profits, nothing else.

We keep hearing about inflation. The Republicans eagerly cheer for the higher inflation numbers, because they know that the credulous people will blame the Democrats for it, even though every statistic shows that inflation is a worldwide problem right now, and thus has nothing to do with the 15 month policies of the Biden Administration–unless one thinks that the stimulus packages intended to keep people from starving during the pandemic, were a bad idea. Somehow the policies got unemployment down from over 7% to 3.6%, and raised the GDP to record levels. But it is inflation that the Republicans claim is the only important thing; and they, with the media’s utterly predictable help, have convinced most voters that this is why they should prefer Republican policies, as outlined above.

We could discuss inflation in general; and how the pandemic cut the supply chain, and how the return to work increased demand to such an extent, that the supply chain could not meet it. But more simply, and what should be more understandable to people, is that the inflation is most predominantly a matter of corporations raising prices, and thus raking in the most profits ever.

Why does the broadcast media never talk about the steady stream of “X Corporation reported record profits for the last quarter” stories? They keep coming every week. Why are the companies making record profits? Because they are raising prices! And for whatever reasons, they are getting away with it, people continue to buy.

So many more people are back to work, and their salaries have risen, and so they pay the prices. Also, the relentless push by Republicans, most directly under Trump, to intimidate the Federal Reserve Board to lower interest rates to essentially zero, and keep them there, made money almost free to borrow and spend. That was why Trump did it, he and his handlers knew that zero interest rates would temporarily juice the economy, and help him win election. That almost always leads to inflation, and the pandemic factors accentuated it.

If the companies had not raised prices well past their costs (that is what record profits come from, after all), there would be much less inflation. Somehow, the corporations have such control of the news media, that no one tells the folks that their higher prices are going directly into the pockets of the companies, and that is why so many of them report record profits. Somehow, there is the belief that they are raising prices because of inflation, not causing it!

Oh, there are some higher costs in raw goods, but they are far subsumed by the price hikes. Because if the raw goods price increases were simply passed along to the consumer, then the companies would at best make the same profits! This is so elementary and obvious, but no one seems to figure it out; or it is simply that the companies, and the Republicans who own them and are funded by them, and the media which is also owned by them, do not want people to figure it out; and people are not intelligent enough to do it on their own.

It is this virtually childish propaganda, which says that if a company has higher costs, it must pass them immediately on to the consumers, it is their responsibility. Of course, they are doing more than passing them on, hence the record profits. It is as if the corporations and their greed are not responsible for any of the inflation, much less most of it.

Ask them why they raise their prices, and they say, “inflation!” Ask them how they got record profits, and they say, “good management,” and hand out immense bonuses, and also use the profits for stock buybacks. And the public cannot perceive this? Or is it that they have long given up on reforming or reining in corporate behavior, so they take out their anger on the Democrats, as the Republicans goad them into thinking that the inflation is due to the Democrats instituting social programs?

Now the new hobgoblin, the one they have all ready for the election, is “Recession!” Yes, as the Fed does what is is charged to do, limit inflation by raising interest rates, it may cause a Recession! We do not want a recession, but does anyone remember how common they were under Republican administrations? There were two under Nixon. Two under Reagan. One under GHW Bush. Under GW Bush, there was an economic calamity, that Republican officials said risked the economic collapse of Europe and America, unless trillions of dollars were poured into banks, and their debts all resolved.

Under Trump, there was another economic collapse, some of which certainly was attributed to the pandemic, but of course also the denial of it, in an effort to win the next election, and because Republicans are social darwinists. So we have the Great Depression, with its almost incalculable suffering; the recessions under Eisenhower, Nixon and GHW Bush; the collapse under GW Bush; the massive unemployment and paltry GDP under Trump–and yet most people favor Republican economic policies?

And we haven’t even gotten to the deficits, which soared under Reagan due to the immense military spending; were actually completely eliminated under Clinton; shot up again under Bush; were halved under Obama; soared again under Trump and a Republican Congress; and now are going down again under Biden.

Was it so far out of memory for people, when Republicans used to constantly talk about deficits under Democratic presidents, to try to make excuses for not wanting to spend any money on social programs; and then when Republicans got into office, ballooning the deficits by cutting corporate tax rates? This happens over and over, and people do not see it?

Eventually, it is the people who vote–to the extent that Republicans allow them to. And if the people cannot understand that Republicans’ “economic policies” are dreadful for them, while Democrats’ policies, based on Keynesian economics, which contends that the economy grows from the bottom and middle up, and that putting more money in people’s pockets will increase demand, and the need for labor supply; and lead to more jobs, are what saves them after Republicans have robbed them, then where are we? I guess we are where a sizeable plurality of potential voters think that they would prefer more Republican policies, which mean no social spending, the end of the safety net, an eventual return to the social darwinism of the Gilded Age or the Roaring Twenties, or the “Greed is Good” of the 1980’s and 2000’s, and probably worse than that.

‘You makes your choice, and then you pays your money,” would be an appropriate inversion of the famous saying. We are only as strong as a nation as the people who comprise it, and their ability to figure things out. Wouldn’t it be nice if the media actually had the ability and the wish to help them do it, before they are duped again?