A conservative leaning friend of mine, while railing about Government spending gave voice to the saying, ‘You can’t spend your way to prosperity!’ That got me to thinking and it brought up this question, How is that true if our prosperity and growth from the end of the WWII to 1980’s was driven by Government spending and personal economic growth thru supply and demand? There were a few recessions during this time but they were managed in the standard way with increased Government spending. The goal being to get the economy moving again till jobs come back and the spending of the people becomes the driving engine of the economy. Get money into the hands of those who must spend it, the middle class and poor, and that spending will create growth.
In the 1980s Republicans altered this equation. Oh, they still want the Government to put out money, just not to those who must spend it, the middle class and poor, but to those who will invest it, the already wealthy and Corporations. Those investments will create jobs and the wealth from those investments will trickle down to the rest of us at the bottom of the financial pyramid. Kinda makes you feel like a fire hydrant outside a Veterinarian’s office except they get more trickle.
How has that worked out? Trickle down somehow became trickle up. 1980 to 2020 saw Republicans pass several of these ‘tax cuts’. Each a 1.2 trillion dollar shift of money from the middle class and poor to the coffers of the wealthy and the profit margins of huge corporations and businesses. What happened to the middle class and poor? They ended up paying for the Government and experienced a flat line of wages that when adjusted for inflation have not risen during the entire period. This change in economic policy brought us several recessions and the Great Recession of 2007.
After the recession the Republicans did everything in their power to inhibit the recovery. They continue to push the notion that to recover we must still give money to the wealthy to invest and those investments will create jobs. The problem with that is investors are not going to invest until our economic situation improves and one of the first things they did after regaining power in 2016 was to pass another trillion plus tax cut for the wealthy but that money also will not be invested. There is not enough demand for Joe Smith’s widgets because people do not have enough extra money to buy Joe’s widgets. Not enough demand for Joe to build another factory and hire more people to make more widgets! All that money is sitting in some corporation’s bank account waiting for things to get better and people can buy what the corporations make.
It’s time to stop this foolishness, time to return to solid economic policy. We should end the austerity imposed by Republicans in a futile attempt to make the failed economic policy derisively known as ‘trickle down’ work, and return to what we know works! Increase the spending of the Federal Government. We should pass a Universal Basic Income and raise spending levels for unemployment, welfare, food stamps and other programs designed to get people productive. Increase the minimum wage. A man who works 40 hours a week should not need food stamps to make ends meet. As the spending power of the middle class improves the increased tax revenue pays off the increased Government spending. The increased spending of the poor also creates demand. That demand is then satisfied by investors, some taking advantage of Government programs, which create businesses, build factories and hire people to meet the new demand. Once the economy is humming along the extra tax revenue is used to pay off the debt created in getting the economy running.
We all get rich, not just a few! Our lives improve and the spending of the people and Government in improving lives and paying our bills keeps the economy rolling right along! That’s how you spend your way to prosperity!