by Jerry Alatalo
rom 1945 until 1980 and the election of Ronald Reagan as President of the United States, there was balance between the nation’s productivity increase and wage increases. This was attributable to the strength of unions in America, until Ronald Reagan, who, according to Dr. Ravi Batra was “tired of paying high taxes”, convinced the American people “supply side” economics and large tax breaks for the wealthy were good for everyone. Since then supply side economics has become called “trickle-down” economics.
Dr. Batra points out that the Reagan tax cuts weren’t really tax cuts because while lowering them for the wealthy, poor and middle class people saw a rise in payroll, social security, excise, and gas taxes, decreasing their purchasing power in the process. During the time of Reagan, unions began losing power in America, so wages began falling behind growth in productivity, with the result being lack of demand, layoffs, and a trend toward pushing down labor – the poor and middle class – in the country.
At the same time, instead of the wealthy who received large tax cuts investing and creating jobs, because of lack of demand those corporations and wealthy people invested in government debt run up to increase demand and stimulate the economy. Combined with deregulation, ignoring enforcement of anti-trust laws, larger and larger mergers leading to more layoffs, the export of jobs and capital overseas for higher profits, and Americans going into debt to purchase goods they could no longer afford, the wealthy made more money on those debts.
In his discussion with Henry George Scholl of Social Science President Andrew Mazzone, Ravi Batra went on to talk about the 16th Amendment establishing the American tax system, when taxes replaced tariffs on foreign imports as the revenues to finance government operations. His view is that economic theorists who advocate for so-called supply side (trickle-down) are offering an economy that is self-serving.
His recommendations include:
Reversing the tax cuts which started in 1981
Active enforcement of already existing anti-trust legislation
Breaking up existing monopolies to increase competition
Put and end to outsourcing of jobs across U.S. industries
Balancing the national trade deficits instead of creating more of them
Re-institute strong regulations like Glass-Steagall
Tax poor and middle class people less and push the nation’s tax burden up and more on the rich
In Dr. Ravi Batra’s view, for the economic health of America “we have to get rid of monopoly capitalism”. For example, he believes that if Barack Obama accomplished just one of his recommendations – an FDIC-managed bank charging 5% on credit cards instead of 15-30% – he would effectively guarantee the Democratic party’s winning back the House of Representatives and Senate in 2016.
An interesting and “outside-the-box” discussion of economics.
For more information: www.henrygeorgeschool.org
(Thank you to Henry George School of Social Science at YouTube)