In a response to the Lehman Brothers and Merrill Lynch collapse that is roiling our markets -- why do these thing keep happening on Sundays when the markets are closed? -- Barack Obama comes up with the best line about supply side economics since the first George Bush called it Voodoo Economics. (my emphasis)
I certainly don’t fault Senator McCain for these problems, but I do fault the economic philosophy he subscribes to. It’s a philosophy we’ve had for the last eight years – one that says we should give more and more to those with the most and hope that prosperity trickles down to everyone else. It’s a philosophy that says even common-sense regulations are unnecessary and unwise, and one that says we should just stick our heads in the sand and ignore economic problems until they spiral into crises.
Well now, instead of prosperity trickling down, the pain has trickled up – from the struggles of hardworking Americans on Main Street to the largest firms of Wall Street.
I think this is a great explanation of what's happening, except for the fact that he is blaming only the past eight years and not the past 28. It perfectly encapsulates the fact that supply side economics and trickle-down policies create a disparity between the rich and poor that inevitably leads to massive collapses just like this one.
During the late 19th century and early 20th century we had the same disparities, and they led to incredible depressions. The robber barons and wall street fat cats were left to their own devices without regulation, and their greed to squeeze every penny out of the economy led not only to poor wages and benefits for workers (and the income disparities) but also to outsized and poorly considered risk.
And as they stood on their pile of risk raising champagne glasses and eating veal or caviar, they missed all the rumblings that the pile was starting to collapse. As a result the end of the 19th century was a massive economic collapse, and in the 30s we had the worse depression in our nation's history.
To keep this from happening again, the United States created banking and insurance regulations and protections, social programs that protected every working family from reaching the worst of poverty, workplace protections to prevent exploitation and ensure a living wage, and restrictions on media and other corporate consolidation that led to monopolies that choked out the economy and risked all our wellbeing if they failed.
As a result we had fifty to seventy years of the best and safest economic growth in history. Middle class incomes rose to the level where families could not only survive, but thrive and create lives that benefited not only their own but also the community. Charity increased, volunteerism increased, political involvement increased.
There were significant problems, of course, regarding race and rural and other issues. But things were moving toward a more balanced and equal economy that included more and more Americans. Many lagged, and that still needs to be addressed, but I'm not claiming we were perfect. Only that we were on the right track.
But then the Reagan Revolution happened and we started undoing all these programs and policies. The idea that the richer the rich got the better the country would be took fire, and the dream everyone has of being a multi-millionaire and being on Robyn Leach's show took hold. Everyone wanted the rich to pay less because they thought they too could become rich.
And as a result income disparity rose again, and the ability of the Wall Street and corporate leaders to assume insane levels of risk returned. This is directly because of the policies of the Republican Party and with the assistance of the Blue Dog Democrats and DLC.
And now we are reaping the benefit: potential economic collapse and disaster for our country.
Obama is absolutely right: The pain has trickled up, and now we are all going to suffer for the economic and regulatory policies John McCain and Sarah Palin want to continue for another four years.