Thursday, February 28, 2008

trickle down, trickle up

I understand the principles and how Reaganomics is supposed to work, but I don't buy it. Haven't for years. The divide between blue and white collar classes grew tremendously during the Reagan-Bush years, because while the rising tide might have lifted all boats, it lifted the yachts much higher than it lifted the rowboats and rafts.

Let's call it what it is: It's giving favors to the wealthy. I don't see that as particularly compatible with a Kingdom of God mindset.

I'm not sure over the long haul that all boats have been lifted, nor am I convinced that Reagan's trickle-down policies deserve all the credit they get for getting the economy going again. The economy is a complex system, and it's reductionist to the point of absurdity to credit the recovery of the economy in the 1980s solely to an economic policy that favors the wealthy over the working class.

There are other factors to consider, including efforts by the Fed during the Carter years to reduce inflation, and the sharp decline in oil prices owing to supply shocks in the Middle East that led to a vast increase in the amount of oil on the market. You're my age; I'm sure you recall the days of gas rationing and can imagine the constraints that placed on travel and transportation, and the palpable relief we all felt when rationing ended. He may have been president when that happened, but I don't think Reagan deserves credit for changes in the oil market.

Nor does Reagan deserve credit for Fed policies that had been in place well before he was elected to the presidency. I recall in 1984, though I was only entering ninth grade, some of the debate as to whether Reagan should be credited for the economic recovery, or if it should go to Carter, though I can't say that I was attentive enough to the issue at the time to understand the arguments involved.

Did trickle-down economics have some role in the economic recovery? It's possible; still if you make that money available to the neediest members of society, it also is reinvested, in their neighborhoods, both in terms of purchases and in terms of long-term capital improvements and investments, with start-up businesses and such. And it'll eventually trickle its way up to the "lucky ducks" at the top of the pond too.

Reaganomics also assumes that the wealthy and the corporations will spend their money here in America to increase their wealth. The flow of manufacturing jobs and industry to India, Mexico and especially China reveals that to a pretty bad assumption.

I know how the free market is supposed to work. I took economics years ago. I know how Reaganomics is supposed to work.

But the market doesn't work that way. It's predatory, and by the time supply and demand correct things like overreliance on fossil fuels for our transportation needs, it's too late. Gas has passed $3 a gallon in most of the country and is climbing higher, and our government officials feel like congratulating themselves on tough new mileage requirements that are weaker than any major market elsewhere in the world already requires at a minimum.

The Constitution set up government to protect us from tyrrany. I say that includes the tyranny of corporate America as much as from tyranny of government, or any other form of tyranny that can exist.

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