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Wednesday, 29 September 2010

Trickle Down Economy?

We're facing State Govenor and Senatorial elections in November, and a bunch of others I can't remember, so campaigning is rife. I don't get to vote as I'm not a citizen, but I can watch and wonder what is going to happen.

Obama and the Democrats are facing what has been called The Enthusiasm Gap. As I recall, what Obama promised in his campaigning and post-election speeches was a long, hard haul to get out of the economic recession, and that it would take years, probably longer than his longest possible 8-year period of office. Somehow people took this to mean a short, easy haul, and as we're still in the recession two years on they are losing enthusiasm. To be dreadfully generalistic, Americans are very much about instant gratification, and if they can't have it NOW with chocolate sprinkles on top then it isn't worth waiting and someone needs to be blamed.

For two years the Republicans have been on a platform of just saying no to every Democratic effort, but they've realised that you have to actually have some policies of your own for an election, so they are now campaigning on a platform of tax cuts for the rich, and reducing "Big Government".

The idea of the former is that richer rich people will create jobs for everyone else, so the more money they have the better for everyone (eventually). The tax cuts would result in a budget deficit of $70,000,000,000 (that's $70 billion) over ten years, so naturally that can only be balanced by a reduction of "Big Government" which translates in reversing the new health system initiatives that for me are key to a better America.

The problem with the Republican plans are that they've already been tried, and failed. Bush already intiated tax cuts for the super rich, and it didn't stimulate the Economy. The question now is whether they are allowed to continue, or we go back to higher rate taxes for the rich. What the economy needs is money in the hands of people who spend it on goods and services within the country, and that is the middle and lower income families.

"Big Government" is not something that Obama invented or created, but something that has been developing for decades. The idea is that the Government has grown too big and pries too much into private affairs, thus spending tax dollars on matters in which it should not be involved. I'm all for reducing Government spending, but not at the cost of a 100% privatised medical system. I know people who have been financially wiped out by a single medical bill, and I see a lot of people who are not getting the treatment they need because they can't afford it and haven't got the insurance to pay for it.

What I'm really hoping is that as the country climbs out of recession (and it might take another ten years), regardless of who is in charge, that the average American has learnt that living on credit is a bad idea. If you haven't got the money for it, don't buy it. Save up for it and then buy it. Chances are by the time you've saved for it, you won't want it anymore. I'm also hoping that the changes to the medical system are allowed to come to fruition, and people see that they are an improvement on the "I'm all right Jack" era.

The problem is that people like to have lots of nice things around them, even if they are paying through the nose. They want a big car, even if they can barely pay for the gasoline. They want a big house, even if they can only just manage the monthly mortgage payments. They want their own skis, a kayak, a quadbike, a kitchen full of gadgets, you name it, they want it and NOW.

1 comment:

  1. Trickle-down was a interestingly ridiculous notion to make the wealthiest feel slightly better about themselves. Has there ever been an economy in world history where shaping the rules to keep the richest richest improved the lot of the average chump below the target line?

    The reason we can get away with that sort of thing here, is that the system--from a social point of view--is relatively rank-free. So, you can always envision yourself as someone who's going to "make it." Hence, you can convince all these "future lottery winners" that they don't want to compromise their bright futures by voting in rules that would limit such to-the-stars dreams.