How The Republicans Destroyed The Economy

Commentary By Ron Beasley

In the 50s 60s and early 70s the US had two things, a strong and growing economy and a strong and growing middle class.  It is no coincidence that when Ronald Reagan and the Republicans set out to destroy the middle class they also destroyed the economy for most Americans.  The income of the middle class continued to decline but US business still needed for them to spend even though they had less income.  To keep the economy going Alan Greenspan flooded the economy with credit which lead to the current economic crisis.  The Republicans continue to push policies that will reduce wages.  In a column today Thom Hartmann brings us this.

Reagan also put into the chairmanship of the Fed Alan Greenspan, who
openly declared that his most important job as chairman of the Fed was
to prevent �wage inflation� � a term which he exclusively applied to
working-class people. Greenspan is still preaching that now-discredited
and anti-American philosophy he learned from Ayn Rand, in fact.


Having already largely wiped out the ability of a blue-collar
single-wage-earner family to have a middle class lifestyle over the
past 30 years, Greenspan now wants to go after white-collar workers by
eliminating limits on H1B visas for skilled workers ranging from
computer programmers to physicians to scientists. The investor class
would always be protected, in the Greenspan world, but the working
class � regardless of skill level � should always be the working poor.

In September of 2007, in an interview on C-SPAN for Book TV, Greenspan said:

�We pay the highest skilled labor wages in the world. If we would open
up our borders to skilled labor far more than we do, we would attract a
very substantial quantity of skilled labor which would suppress the
wage levels of the skilled, because the skilled are essentially being
subsidized by the government, meaning our competition is being kept
outside the country.�

Hartmann then explains that to repair the economy we need to do just the opposite - increase wages.  If the middle class has more income they will spend it stimulating the economy in the process,

One of the most powerful forms of stimulus we could apply to our
economy right now would be to lower the current Social Security
retirement age from the current 65-67 to 55, and increase the benefits
back to where they were in inflation-adjusted 1960s dollars by raising
them between 10 to 20 percent (so people could actually live, albeit
modestly, on Social Security).

The right-wing reaction to this, of course, will be to say
that with fewer people working and more people drawing benefits, it
would bankrupt Social Security and destroy the economy. But history
shows the exact reverse.


Instead, it would eliminate the problem of unemployment in
the United States. All those Boomers retiring would make room in the
labor market for all the recent high-school and college graduates who
are now finding it so hard to find a job.

If enough Boomers left the job market, it would even flip
the current dynamic of too-many-people-chasing-too-few-jobs upside
down, and create a tight labor markets. Tight labor markets drive up
wages.


And as wages go up, tax revenues � which are paying for Social Security (among other things) � would increase.


Additionally, these new-into-the-workforce people can then pay
off student loans, buy new houses and cars, and otherwise drive the
economy from the bottom up. Which will further increase tax revenues
further strengthening the Social Security system.