Robert Reich (January 18, 2015) on Compassionate Conservatism and Trickle-Down Economics:
The Republican establishment’s leading presidential hopefuls [Jeb Bush and Mitt Romney] know the current upbeat economy isn’t trickling down to most Americans. But they’ve got a whopping credibility problem, starting with trickle-down economics.
The lion’s share of economic gains over the past thirty-five years has gone to the top, regardless of whether Democrats or Republicans inhabit the White House. The most recent recovery has been particularly lopsided.
Since Reagan, Republican policies have nudged [the economy] toward big gains at the top and stagnation for everyone else. The last Republican president to deliver broad-based prosperity was Dwight D. Eisenhower, in the 1950s ... When Eisenhower was president, over a third of all private sector workers were unionized. Ike can’t be credited for this, but at least he didn’t try to stop it — or legitimize firing striking workers, as did Ronald Reagan.
Under Reagan, Republican policy lurched in the opposite direction: Lower taxes on top incomes and big wealth, less public investment, and efforts to destroy labor unions. Not surprisingly, that’s when America took its big U-turn toward inequality. These Reaganomic principles are by now so deeply embedded in the modern Republican Party they’ve come to define it.
When Jeb Bush admits that the income gap is real but that “only conservative principles can solve it,” one has to wonder what principles he’s talking about.
Paul Krugman (January 18, 2015) Hating Good Government:
Sam Brownback, the state’s right-wing governor, went all in on supply-side economics: He drastically cut taxes, assuring everyone that the resulting boom would make up for the initial loss in revenues. Unfortunately for his constituents, his experiment has been a resounding failure. The economy of Kansas, far from booming, has lagged the economies of neighboring states, and Kansas is now in fiscal crisis ... Claims about the magical powers of tax cuts are often little more than a mask for the real agenda of crippling government by starving it of revenue ... Why this hatred of government in the public interest? Well, the political scientist Corey Robin argues that most self-proclaimed conservatives are actually reactionaries. That is, they’re defenders of traditional hierarchy — the kind of hierarchy that is threatened by any expansion of government, even (or perhaps especially) when that expansion makes the lives of ordinary citizens better and more secure..."
...like Social Security. As people came to understand that occasional unemployment had become an ordinary and blameless condition of modern life — and that increasingly, so had survival into an old age in which one would need to retire from labor — FDR urged policies to insure against poverty which resulted from either of these unavoidable eventualities. The Social Security Act provided for protection against unemployment and old-age, as well as disability and other mishaps. The bulk of its benefits are NOT best characterized as welfare, but as insurance (just as Roosevelt had said). Like all insurance, it is a bulwark against bad times, and something to lessen the hardship of economic misfortune."
* My note: But the Republicans call these insurance benefits "government hand-outs for people who are lazy, dishonest and shifty." Read: History of the GOP's War on Social Security and Why do Republicans Hate Social Security?
Naked Capitalism: A Paper Exposing Manipulation of Electricity Prices is Stymied by Editor with Private Equity Ties
"The Prentis paper demonstrates that the economic theory of “free market” competition naturally delivering lower electricity prices in restructured electric utility states is incorrect. Private equity firms make money on electric utility restructurings and thus have an interest in keeping unfavorable information our of the public domain. Along with food, electricity is an essential purchase for American consumers and higher prices hit their budgets. The allies of Wall Street’s private equity firms appear to use obstruction and delaying tactics when research threatens to expose how they prey on citizens and communities."
* Also see this at Al Jazeera: Enron-style price gouging is making a comeback (by David Cay Johnston) "The price of electricity would soar under a scheme by Wall Street financial engineers to game the electricity markets." Also see this at Al Jazeera (also by David Cay Johnson) US electricity markets are anti-consumer (Thanks to the oligarchs, plutocrats and banksters that the Republicans always favor.)
Also, From ExxonMobil’s report: The Outlook for Energy: A View to 2040 -- "Over the next few decades, population and income growth—and an unprecedented expansion of the global middle class—are expected to create new demands for energy."
The Nation writes, "The report estimates the world will need 35 percent more energy in 2040 than it does today ... If there is one overarching theme to the new Exxon ethos, it is that we are witnessing the emergence of a new global middle class with glittering possibilities — and that this expanding multitude, constituting perhaps one-half of the world’s population by 2040, will require ever greater quantities of oil, coal and natural gas ... China and India will be the two countries adding most substantially to the global middle class, with each acquiring hundreds of millions of newly affluent citizens ... According to [ExxonMobil’s report], virtually none of the expected increase in global energy demand will come from the older industrialized countries ... The new global middle class will want more computers, flat-screen TVs, air-conditioners and other appliances, stoking a soaring demand for electricity." (Here's how those global middle-classes came to be.)
"When we break out the volume of mortgage origination from 2002 to 2006 by income deciles across the US population, we see that the distribution of mortgage debt is concentrated in middle and high income borrowers, not the poor. Middle and high income borrowers also contributed most significantly to the increase in defaults after 2007."
That is from the new NBER working paper. In other words, poor people (or various ethnic groups, in some accounts) were not primarily at fault for the wave of mortgage defaults precipitating the financial crisis. The biggest problems came in zip codes where home prices were having large run-ups.
Next New Deal: Soaring CEO Pay: A Debate We Need to Have -- "Taxpayers are subsidizing ever-larger executive pay packages while their own wages stagnate. For the middle class to prosper, that needs to change." -- Also from Zero Hedge: The Richest 1% Are About To Own Over Half Of Global Wealth -- Also from Next New Deal: A Battle Map for the Republican War Against Dodd-Frank (The Republicans are always working for the oligarchs, plutocrats and banksters.)