11-03-2019, 09:08 AM
(07-09-2019, 02:01 PM)Warren Dew Wrote:(07-08-2019, 10:10 PM)Eric the Green Wrote: So what accounts for you having been brainwashed into trickle-down, free-market economics?
I wasn't. In fact, I used to think that stuff was voodoo economics and I voted for Anderson and against Reagan in 1980. I even wrote Reagan a letter saying "raise my taxes" in 200 point type.
Then the 1980s proved that supply side economics worked. And Bush then proved that his nonvoodoo economics didn't work.
With the evidence hitting me in the face, I accepted the truth that supply side free market economics was the best way to go.
Of course, to get free market economics, you have to do something about excessive concentration of wealth to the point of oligopoly. That's why I'm glad to see the Justice Department starting to probe today's tech oligopolists.
You weren't the only person brainwashed by supply-side economics. Most people believe that Reaganomics worked because 1. inflation went away, 2. The recession ended and we got a long expansion, 3. the stock market boomed. IN some ways it was a smaller-scale replica of the 1960's boom, except wages did not rise.
But it wasn't the Reagan revolution that made all three of these things happen. Point No. 1 and the lack of wage growth was the product of the "Volcker Revolution". The long expansion DID come from Reaganomics, and the stock boom was the product of both. So the 1980's is more properly described as the Reagan-Volcker Revolution.
Before 1979, the Fed did not use interest rates to control inflation. Inflation control was achieved through fiscal means. Inflation is bad for the investor class, whom the Republican party represents. Thus, for their entire history up to 1981, they were fiscal conservatives, that is they sought to prevent peacetime deficits and were willing to RAISE taxes, by a lot (e.g. in 1932 they raised the top rate from 24% to 63%, Nixon criticized the Kennedy's tax cut proposal in 1960)), to fight deficits.
Republican president Eisenhower kept top tax rates at the war-level rate of 91% because his peacetime military spending was at wartime levels. Kennedy was no fiscal conservation. He and his Veep opted for a tax cut and a war of choice (just what Dubya did 40 years later). They ignored the flow of gold out of Fort Knox during that decade.
Eventually inflation broke out, and Carter appointed Volcker who vowed to employ interest rate control to crush inflation. Interest rate control works by preventing real wage growth. People can't pay higher prices if they don't have the money, and that prevents inflation no matter how high deficits go.
The Reagan revolution was to take advantage of this by running deficits to fund tax cuts. Big deficits can act as stimulus do this likely lengthened the 1980's expansion. Both the lower taxes and falling inflation drove the bull market.