Finally some good economic news! Sales on Porsches are up! In July alone, Porsche sales climbed 75% from July of 2009. However, sales on Ford, Dodge, and GM averaged about a 5% increase, and Honda and Toyota sales are down, meaning the Middle Class isn’t buying as many new cars this year as last year, and last year, they didn’t buy much at all.
Okay, so my good news was a bit tongue-in-cheek. Yes, the economy rocks for the rich and for Wall Street, but for the Middle Class, according to Newsweek columnist Dan Gross real unemployment remains around16.5%:
That’s the Bureau of Labor’s U6 number, which takes into consideration so-called “discouraged workers” who have given up looking for work, as well as people who are working part-time but would like to be working full-time. Overall, according to Gross, the number means that there is “one out of six adults in this country whose talents and time and skills are not being utilized anywhere near to the extent of their abilities.”
Tax rates on some of those buying Porsches are half of what they were pre-1982, and lower by four to seven percent than in the 1990’s, a period of time marked by low unemployment. Clearly the top tax rates have diddly squat to do with creating jobs. It’s been that way all throughout our history in the 20th century and into the first decade of this one. Anyone who says otherwise is either ignorant, lying, or relies on faith-based economics. Sadly for them, economics aren’t faith-based. Just because you believe the economy starts at the top and trickles down doesn’t make it so. Neither do the actual numbers or consumers, the stuff a real economy is made of.
And what does this current economy tell us?
There aren’t enough consumers spending enough money, despite the glossy Porsche sales reports. That fact is so blatant, so in-your-face that it’s hard to believe some people can’t see it. Let me explain. No matter how many tax breaks you give the top ten percent of earners in the US, there simply aren’t enough of them to make any difference in consumer demand, which drives our economy and job creation.
I was told by Charlie Sykes, talk radio host at WTMJ, Milwaukee, Wisconsin, that I was ignorant of economics. Yes, he actually replied, briefly and insultingly, to my email of the other day, but he was allowed to be insulting since he took my blog post about him as an insult. I’m a big boy…I took it with a thumb in my mouth and only a little bit of whining. Tangent completed.
The reason I bring it up is because Charlie is amongst a large group of people called Conservatives who still believe the economy is driven from the top and trickles down to the Middle Class. But as I stated earlier, there simply aren’t enough of them to create any real demand. What’s my proof?
1. If consumer demand were up, jobs would be created. We’re still losing more jobs than we’re creating. Demand is down. From the US Consumer Demand Index:
After a surprisingly strong upswing in May, the CDI for June fell by more than 20 index points and now stands at -27, down from -5 in May as lower demand for clothing and food drags the aggregated index down. However, this is still 10 points up on the all-time low of February 2009. The three-month moving average is also down but less dramatically so, from -13 in May to -18 in June.
Reminding you that the index was set at 100 as an average for the year of 2000, it’s obvious that we are not yet out of the woods. But on the other hand the new data do not convincingly indicate that there is much further to go to reach the bottom, if we have not already reached it.
2. Despite eight years of lowering taxes on corporations and the top ten percent of earners, from 2001 thru 2008, an average of only 49,000 jobs were created per month. A benchmark of 150,000 jobs is needed each month to accommodate incoming/outgoing workers, to say nothing of actual positive job growth beyond that. Needless to say, when compared to the benchmark, 49,000 jobs created each month is pathetic. It also explains why the first Bush Recession was a jobless recovery.
3. The economy has lost a cumulative total of 3.1 million manufacturing jobs since 2001 according to the U.S. Bureau of Labor Statistics. That’s 28,703 jobs lost per month. I think we know where they went, and where they are going…overseas. But Conservatives like Charlie Sykes and his brethren “believe” that Free Trade is good for American jobs. Just another case where faith-based economics is completely opposite of reality. I know you guys really, really want supply-side economics to be true, but the numbers say, undisguisedly, that supply-side economics is a fairy tale, unless the only goal of trickle-down is to enrich a very few people in the United States while everyone else steadily but rapidly sees their standard of living decline, which, mind you, mimics our current reality.
4. If you still needed evidence that taxes do not affect job creation, this graph says it all. It breaks down job creation, change in GDP, and change in household net worth by decade. Remember, corporate tax rates and tax rates on the highest earners were 70% or above until 1982.
Boy, the current decade really sucks, doesn’t it? Negative job growth, negative household net worth gain, and the lowest GDP since the Great Depression. President Bush and President Obama must be so proud. I really do believe they are going to set unbreakable records for economic futility. Even the 1970’s beats this decade, and we all remember how sucky that decade was. The 70’s didn’t just beat this decade, they kicked its ass; which means Nixon, Viet Nam, the oil embargo, an impeachment, Ford, and Carter did better economically speaking than Bush and Obama. How’s that for a pathetic record? A record, I might add, that includes tax rates that are half of what they were during the seventies, when, you know, high corporate tax rates stagnated job growth…umm, except, from the graph, it looks like taxes didn’t have any effect whatsoever on job growth in the 70’s. Or in the 60’s, or in the 50’s, or in the 40’s…or ever.
Will Charlie, or people like him finally admit the error of their ways? Will they, at the very least, admit that the numbers don’t look so hot? If not, why not? Facts are facts. You can’t hide from these numbers, they are what they are, and sadly, I used to be a Supply-sider. Not any more. Not once I started studying the actual statistics. And if I can change, I have to believe that Charlie and others can, too. I was a staunch supporter of trickle down and everything Reagan. To some extent, I’m still an apologist for Reagan; I just love the guy. But when you run into the actual numbers, you have to make a choice; will you accept that what you’ve believed for three decades has been false, or will you continue to “believe” in a lie?
And if you continue to believe in that lie, why? What are you trying to protect? The numbers of this economy don’t protect the Middle Class; they destroy it. The last time I checked, most of the people I know are Middle Class, including Charlie and most Conservatives. So what have you to gain by protecting a faith-based economic system that has never loved you back?
16.5% real unemployment. 9.5% by the government’s count, and over 9% unemployment for eighteen consecutive months. 3.1 Million manufacturing jobs lost. With a benchmark of 150,000 jobs needed to be created per month to keep pace with population growth, the Bush average of 49,000 fell over 100,000 short per month, amidst the largest corporate tax cut in two decades. Even the “good” times in the Bush presidency were shockingly bad by every historical standard since the Great Depression, with regards to the Middle Class.
If the Middle Class can’t buy because they don’t earn enough or don’t have a job, demand suffers. If that condition persists long enough, it becomes chronic, and the hole gets deeper and harder to climb out of with each passing month. That unemployment persistently remains so high is an indicator of a huge lack of consumer demand, and nothing else. Some writers report that corporations are hoarding their cash and not hiring even though they have the reserves to do so. I don’t doubt that, and I won’t blame them. If there’s no demand, why bother hiring? Even corporations are showing by their unwillingness to hire that it is demand that drives this economy, and not corporations and wealthy people flush with cash who just want to fling a few chips down to the peasants. Trickle down is a lie, a fable, nothing more. American corporations flush with cash but not hiring are proving that fact beyond the shadow of a doubt.
My rule number three of economics applies here. That corporations are flush with cash and aren’t hiring isn’t a sign that they are leery of the deficit, or of higher taxes. Rather, it’s the strongest indicator that demand is non-existent. Because remember, in Capitalism, where there is demand, someone will always meet it. If you are a corporation that refuses to meet that demand, don’t worry, someone else will. If there were any actual demand present, these corporations would be hiring, to meet it, or they would be amongst the dumbest of business models ever invented.
If you and Charlie are still inclined to “believe” that supply-side (trickle down, voodoo, call it whatever you want) economics is the only way to make the American economy work for everyone, then might I suggest that you click your heels together three times in rapid succession, and maybe you’ll find yourself in the dream-land where trickle-down really works.
Do you need more statistics? Do you want more? I could go on all year if you need me to, if it would make any difference. But somehow, I think it won’t. I think Charlie, and those who “believe” in supply-side economics do so because they don’t want to see the truth…they just want to be right, even if being “right” means being ignorant of the facts.
Faith-based economics will not save you, or America. If you love America, do the one thing for yourself that you still can. Vote according to your own interests, like corporations do with their lobbyist minions. But before you vote, you better make damned sure of what’s best for your interests. For three decades, Republicans have been tooting the supply-side horn. They’re tooting it louder than ever this year. But we’ve USED supply-side economics for the last three decades, and look where it’s gotten us? Even with Obama’s tax increase, corporations and the top earners are paying half of what they did before supply-side hit America. Half.
And maybe you, or someone you know has been out of work for a long time, or has lost the pension he contributed to for decades, or did everything right…saved twenty percent of his income and invested the way Money Magazine told him to, and all he has left, if he is lucky, is his original investment. Or maybe you or someone you know lost his job to someone overseas, and the next job he got saw him earning twenty percent less than before. Maybe your parents paid for your college education, and try as you might, you can see no way of paying for your children’s education. Perhaps you are nearing retirement, and are worried about what the most recent bear markets did to your chances of financially surviving retirement.
Your interests are the only thing you should be focused on right now. Any economic plan that focuses on corporations and the wealthy few is, by definition, not focused on you.
Think about that. Ω
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