Monday, October 07, 2013

Why Government is Essential to Prosperity

For the past eighty years the Republicans have opposed nearly every significant effort to help people in poverty and establish a social safety net.  And while I don’t want to be too heavy on statistics they are often what you need to prove the case. I use Wikipedia whenever possible so I‘m consistent and am not picking and choosing my facts.  Poverty is often a reflection of the economic system you are using.
   Let’s start with a little background on economic systems.   Many tribal societies didn’t even use money.  Everyone shared or everyone fell on hard times.  When the Spanish conquered the Inca Empire in 1533 they brought something the empire had not know in over a hundred years, permanent poverty to a whole class of people.  Poverty was common in feudal societies and income inequality was high when we were a British colony since they were more concerned with their welfare than yours.  Laissez faire capitalism was an improvement in that it built a middle class and improved living conditions through technology, but still levels of income inequality and poverty were very high. Laissez Faire capitalism means a minimum amount of government intervention in the economy and that is what we had to a large degree until 1933.  There was some progress with labor demanding decent wages and working conditions in the 1880‘s with the Knights of labor and the American Federation of Labor.  Still, there was little in the way of legal remedies to protect workers from being fired, beaten or killed.  Until the Income Tax Amendment in 1913 the government had little money to spend on social programs.  Lincoln passed a temporary income tax to fund the Civil War.  However, there was little government did to alleviate poverty.  There was no minimum wage, no 40 hour work week, no overtime pay and child labor laws were late in coming.  Remarkably Republicans are continually trying to move our economy backward to the gilded age and the world of the robber barons.  The whole tea party and libertarian concept of  small government with a minimum of government restriction on what people could do is what we had until 1933.  They say that the definition of insanity is you keep doing the same thing and expect a different result.  Republicans say if we shrink government everything will be fine, but the problem is that for the first 140 years of our government 55 of those years produced economic recession or depression.  So, we tried that for a very long time and it finally took the Great Depression of 1929 for people to realize we had to try something different that would work for everyone not just the wealth few.
     The result was a new system of socialistic capitalism that established the modern social safety net that grew the middle class and lifted families out of poverty.  As much as Republicans railed against creeping socialism it also worked to create more wealthy people at the top.
   The reason I picked 80 years ago is because Franklin Delano Roosevelt took office in 1933 in the middle of the Great Depression, when it seemed like the country was falling apart.  I remember my mother telling me that everything was dirt cheap, but when you have no money you can‘t buy anything no matter how cheap it is.  Roosevelt transformed the Democratic Party and built the social safety net that Americans depend on today.  Roosevelt and the Democrats were responsible for Social Security, the minimum wage, the 40hour work week, Federal Deposit Insurance Corporation, unemployment compensation and protections for workers right to collective bargaining.  He used government to put over three million Americans back to work.  My father was one of them.  Harry Truman carried on those policies with the Fair Deal  and Lyndon Johnson solidified those policies with his Great Society programs that included Medicare.
   I have studied the patterns of  recession and prosperity that our country has gone through over the past 224 years since Washington took office in 1779.  Before 1929 there were long periods of economic recession.  The year after Washington took office there was a recession from 1790 -1794 and a six year recession from 1815 -1821.  U. S. Grant, the first Republican to follow Lincoln, had a recession of 5 years six months and was reelected.  Chester Arthur, another Republican, had one 3years and 7 months.  The federal government back then didn’t feel poverty was their problem to solve, despite the Constitution stating that the government should provide for the general welfare.  In this regard Democrats weren’t that much better than Republicans.  But all that changed with the election of Roosevelt.
   Republicans say they are the pro business and prosperity party, but the facts show that simply isn’t true.  After Roosevelt, if you add up all the time this country has been in recession under Democratic and Republican presidents you find that during the past 68 years the economy has been in recession under Democratic presidents one year and 11 months and under Republican presidents seven years and 6 months.  During the eight years of dynamic economic growth when Clinton was president his economic plan passed without one single Republican vote. John Kennedy and Lyndon Johnson didn’t have recessions and the six month recession under Carter was a result of the OPEC oil embargo.  Reagan was the one Republican not to have a recession although his deregulating the Savings and Loan industry caused a $50 billion government bailout.
    Ever since the early 1970s the gap between the very rich and the poor has grown dramatically. While inequality has grown in most developed countries in the United States it has grown the most.  Inequality is highest in Chile, Mexico, Turkey and the US.  Much of this is due to individual tax rates falling dramatically from 91% in 1950 to 35% in 2008,
   The federal poverty line is $15,510 a year for a full time minimum wage worker with one dependant.  46 million Americans live in poverty and over 1,500,000 are homeless.  Recently the Republican House voted 217 to 210 along party lines to cut $4 billion a year from food stamps for each of the next ten years.
   Other countries have lower rates of poverty than us.  In Canada it is 12.6%, Britain 9.7% , Germany 5.6% and Norway 5.2 because government works.  Republicans seem offended if you point out the fact that we have some very serious problems in this country related to income inequality.  Its not unpatriotic to admit that we are not the shining light of the world in every respect and that we might learn something valuable from other countries.
    We could not exist as an affluent society without government jobs and government programs.  Government should have a moral obligation to provide opportunity and security to its citizens.  That’s what they have done in other countries and lately we have failed to do here.  Private industry, which the Republicans call the engine of job growth, has no such obligation to our citizens.  As before 1933 their concern was to make as much money while paying workers as little as possible.  The only reason this has changed is because government has forced them to treat their workers more fairly and to be more responsible.  The magical hand of the free market is, like most magic; largely an illusion.  Historically it has proved to be inconsistent and unreliable without government intervention.

David Silva

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