Sunday, March 12, 2006

The Legacy of Voodoo Economics

We are twenty five years beyond Reagonomics, labeled as "voodoo economics" by Daddy Bu$h before "The Gipper" brought him on board to satiate the old establishment Right. "Laffer Days are here Again!" is how the National Review's subtitled his recent Riding the Right Curve piece where the right is still loving tax cuts and profits. This weekend's Southern Republican Leadership Conference in Memphis had Arkansas Governor Mike Huckabee contrasting Carter's "Malaise" and Kerry's "Misery Index" with the optimism of Reagan's "Morning in America". Huckabee, who admittedly is a favorite of the Captain for his health initiatives in Arkansas, thinks the American public rewards the GOP for this optimism and idealism.

I'd however think the Republicans want the American people to be distracted from the realities of our modern economy. The WaPo editorial board begins a series today with "A Rising Tide?" where they cite the statistics demonstrating inequality that marks the period since Reagan entered office. Twisting Reagan's slogan to "Are you better off now than twenty six years ago?" I'd suggest that we, and that doesn't include those Big Mules at the top of the food chain, are barely better off and perhaps stagnant. Here are portions of the WaPo piece,
A few numbers show why. In the 25 years from 1980 to 2004, a period during which U.S. gross domestic product per person grew by almost two-thirds, the wages of the typical worker actually fell slightly after accounting for inflation. So, too, did wages for the 50 percent of the work force that earned less than the typical, or median, employee. The rising tide helped only workers at the top. Wages for workers in the 90th percentile -- that is, workers who earned more than 90 percent of their peers - jumped by more than a quarter. ...
Between 1980 and 2003, total after-tax income for the bottom fifth of households rose 8 percent, and the second-bottom fifth gained 17 percent; in other words, all boats did rise, albeit by less than 1 percent per year. But it's hard to celebrate such modest gains when the top fifth advanced 59 percent over the 24-year period. Depending on which statistics you choose, the tide is either not lifting most boats or lifting many of them modestly. At times over the past quarter-century, commentators have hoped that this disappointing performance was temporary. Perhaps it was ...
The rich are entitled to the fruits of their labor: These reflect talent, hard work, risk-taking and innovation, and only an economy that rewards such things can be dynamic. This is true up to a point. But when big rewards for high achievers don't produce an economy that helps ordinary folk, the case for big rewards loses some of its appeal. Moreover, Americans have tolerated divides between rich and poor because they believed that anyone could get ahead, given enough talent and determination. But the truth is that rags-to-riches stories have never been the norm: One study of people reaching adulthood between 1968 and 1998 found that 42 percent of those born into the poorest fifth ended up there also. As the distance between the top and bottom grows wider, it becomes harder to traverse the gulf.
Progressivism is based on progress of course. And unless you are drinking lots of the Kool-Aide it seems clear that our progress as a whole society is very limited. We see the widening gap of the have and have nots accepted by anybody with a clue including our new Federal Reserve Chairperson Bernard Bernarke who recently said, ... (the) widening income inequality was a problem, but he said it had been occurring for a quarter-century and as did Greenspan, he said the best way to deal with the problem was through education and job retraining." Quarter of a century indeed. Clinton worked through gridlock and the political realities he faced by trying Republican Lite so even his eight years hardly retreated from "voodoo" economics. Peace ... or War!

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