A simple, rational, and thorough recitation of why financial conservatism is no more than a myth.
Over the years, we have heard obvious crap that should have been called out as crap by everybody who heard it as soon as they heard it. There have been a lot of it that has escaped nasal detection, but of all the bullshit I've heard in my lifetime I don't think any source of BS is as large, noxious, or dangerous as that line known as financial conservatism. More and more we hear that we cannot tax the 'job creators' because if you tax them they won't be able to create jobs. We hear that we can't regulate them because that increases expenses which decreases jobs. We keep hearing that we need to let the invisible hand of the free market do it's magic and work it's wonders and don't react at all when it begins to wave the invisible middle finger in our faces or poke us in the eye.
They keep saying we need to lower taxes because that will free up the revenue for them to expand, to create more jobs in America, to spread their wealth and revenue around and through that stimulate the economy. Here's my problem, we currently reside in the lowest tax rates and some of the weakest regulation we have seen in this country since The New Deal yet we remain fixed into one of the biggest financial messes in the nation in over 60 years. During the 1950s, we had one of the greatest economic boons of any nation in world history while the highest marginal tax rates were around 90%.
Since the 20th century we have seen several periods of economic boon and several periods of economic downturn. We had great economic success in the 20's when taxes were low and the Great Depression while taxes remained low and were kept low in an attempt to turn the economy around. It didn't work then just as it isn't working now. Following that the 40's were a time of rebuilding and followed by the 1950's, also known as The Golden Age of American Capitalism. Time of the single greatest economic surge forward in this nation's history and it was with a top marginal tax rate at or above 89%. In the 30 years before the Reagan Revolution we had economic growth that appears to average around 8% GDP growth per year with occasional spikes up into the mid to high teens with . In the 30 years since the re-birth of economic conservatism we have barely been able to hit 8% growth in our best years.
The truth is that the top marginal tax rate has somewhere between jack and shit to do with economic growth; just as a plant grows at the base and in the roots before it grows at the top. Just as buildings begin at the foundation before you can put on the third story, true and stable economic growth begins at the bottom; at the base level that holds up the rest of the structure. Otherwise it becomes top-heavy and more likely to collapse. The 20's and 80's had tremendous economic growth with relatively low taxes, the 50's and 90's saw tremendous economic growth with higher taxes. The 30's and 2000's saw poor growth with low taxes and the 70's saw poor economic growth with high taxes.
The growth of the 20's was thanks to the invention of the popularity of the automobile, increased mobility and an intelligent supply-side economic theory. The growth of the 50's was the result of the Interstate Highway System fueling the desire to explore and see the country. The 80's was the birth of personal electronics and the growth of the 90s owes much of its success to the expansion of the internet. The Great Depression, the recession of the late 80's, and the recession of today owe their origins to over-speculation in the financial securities markets and a lack of regulation and honesty among companies involved. They want to make money, if they are not forced to be honest brokers, these companies won't be. If they can find a loophole around honesty requirements, they will take it.
The justification for economic conservatism is often the 'trickle down' theory which is supposedly that rich people have more money, they spend it, and that stimulates the economy. Or that when rich people who own businesses have more money available they can afford to hire more employees; both of those concepts are total crap for a variety of reasons. The first explanation, the “trickle down, pissing on you' theory is easy to deal with. These are people already making a profit of at least a quarter million each year on their respective businesses excluding write-offs and deductions of course. That amounts to $685 per day, more than most of this country makes in a week. Simply put, they aren't sitting on their money, waiting for the government to get off their backs so they can finally buy that DVD player. The reason they don't spend is because they already have just about everything they need financially and can rather easily afford to pick up those few things they don't as it is.
Second theory is that when they have more money, they hire more people. Utter, disgusting, embarrassing BS. If you actually buy this concept as a workable, realistic premise then I have some secluded mountainside, ocean-view property in Iowa that I would like to sell you. A company that has a job that needs to be done will hire as many people as it takes to do the job. Too few people runs the risk of not getting the job done and alienating customers. Too many people wastes money and these folks did not get where they are today by throwing money away on costs they didn't need to accumulate. Tax rate high, tax rate low, they'll hire as many people as they need and only as many people as they need. Period.
Some claim that more money means they can acquire more assets quicker and expand faster, creating more jobs that way. This is a half truth. They expand but they don't create any new jobs, they usually just put another company out of business and steal their market share. Of course when bigger companies get bigger still they no longer just move jobs around within a town or state. They move jobs from one nation to another, with lower wages, fewer benefits, with poor customer service and sub-par product knowledge.
Another claim is that when taxes are lower, there is more incentive to invest. They get to keep more of their profits so it makes investing look like a more welcoming prospect. The problem with that is greed doesn't wait. Do you honestly think that someone who wishes to make money, and sees a money-making opportunity will actually sit on it? And risk somebody with the same vision stepping in before him, taking his spot, his potential revenue, and his possible market-share? If he doesn't take that opportunity, somebody else will. They aren't going to risk losing a golden opportunity to make money over a few percentage points.
Taxes are the lowest they've been since the 30's, and we have the highest unemployment we've seen since the 30's. This is more than just a coincidence. Lower tax rates do not stimulate the economy, provide benefits to anyone outside of the person getting the tax break, and often only results in lower standards of living for everybody else and increased government debt. And truth be told, those making over a million comfortably live the lifestyle that they want with the goods and services they wish to have already. Which basically means that the lower tax rates don't even benefit them all that much beyond letting them say that they have more money and stock-pile more wealth.
The most recent excuse I've heard for the high unemployment is that companies are scared. The president called them fat cats a couple years ago and they still haven't gotten over it. Honestly if the CEO's and branch managers are this cowardly, afraid to hire needed workers just because of a few tough words and threats that their tax breaks for corporate jets might end, they are too cowardly to be CEOs in the first place.
The true reason that unemployment remains high is fuck you. More specifically it comes down to supply and demand. When there is high demand and low supply, the value of a product goes up. When there is low demand and high supply, value goes down. Right now there are a lot of people looking for work with very few job openings, which means that this is a perfect opportunity for businesses to drive down wages. The only possible way to lower wages without dropping American salaries down to China, third-world levels is for the government to hire people or to force them to bring jobs back to America.
What I find the most interesting about all of this, is that every argument in favor of lower taxes on the wealthy and corporate interests has been cited since the beginning of time, often resulting in violent overthrow of the few and any complacent government entities. 18th century feudal Europe used these very same arguments to avoid taxing the nobles who truly ran their respective countries. The nobility, the upper class deserve their money. They stimulate the economy, they provide for the nation's protection, they get compensated according to the benefits they provide, and if we overtax or try to put too much pressure on them they may take their resources and loyalties elsewhere. Sound familiar?
In short, economic conservative policies are an attempt to return America to a simpler time, but not the 1950s as they seem to think. The 1950s had tax incredibly high taxes and a third of the American workforce was union. It wasn't a period of economic success because the government got out of people's way; it was a period of economic success because the government was involved and not yet completely bought out by corporate interests.
Lowering the top tax brackets don't make us more economically powerful or robust. All it does is move the government further from the people and more towards money. If we cut all programs for people and only spent tax money on roads and defense they would still say that taxes were too high and being spent on unnecessary investments. It is the nature of greed to want more money, to complain that they're spending too much. It is human nature to think that they coulds do a better job, and that's the only justification to say business is any smarter or more efficient than the government we have today. After all, the government of today is overrun with people with business experience and as they've gotten more involved, the problems that we've had for over a quarter of a century have only gotten worse.