The world has been an economic depression for five years (it started officially in the fall of 2007, a year before the Wall Street banking collapse). There is an easy solution to solving this, but it's going to be hard to implement it because the new conventional economic wisdom is wrong.
The reason why economies are flat around the world is because of a lack of demand. That means that there aren't enough people spending enough money. But people aren't spending like they used to because, for example, a large portion of people, certainly here in the U.S., are underwater with their mortgages. People are unemployed. Because demand is down factories aren't working at full capacity. Building has slowed to a crawl. Each one of these things is slowing up the economy further.
What's worse is that the economic philosophy in vogue among the elite, "the Chicago School" as it's been known (but has a much wider gyre these days), is proposing the opposite policies of what needs to be done. As bad as things are in the U.S. Europe is in worse shape if they follow their current plans will probably destroy the Euro and crash the world into another Great Depression.
What are the Chicago School recommending? They are recommending cutting taxes on the rich and cutting government spending. Cutting government spending at state and local levels has further deepened the recession. You can argue about teachers salaries and pensions (and many on the right do) but teachers are also consumers. When they lose jobs they don't contribute to the economy. The same with cops, firemen, and government clerks. That means fewer paychecks spent in stores, which means more layoffs and more store closings.
Often public employees are used as scapegoats for the bad economics. While one can reasonably argue about pensions and salaries in relationship to various kinds of work it doesn't mean that they caused the current problems. Unions often are the target when trying to find blame for the current state of things. But looking at history, when union membership was high the middle class was much off than it is presently.
While not the immediate problem in this depression, one problem with our economy is the increasing disparity of wealth. If you recall, the Reagan Administration promised a "trickle down" of wealth with tax cuts to the wealthy. It hasn't happened, and each subsequent tax cut for the wealthy and for corporations increases the disparity. The top 1% have quadrupled their relative wealth in the last thirty years while the bottom 99%'s wealth has remained relatively flat (based on inflation). At the very least we now know that wealth does not trickle down. Rather, it tends to concentrate, more so under current conditions in our economy.
If the middle class had more money they would buy more. Capitalism, as it's existed in the U.S. for the last century, has depended on the middle class buying things to keep business going. Thus, the workers are also the consumers who drive this economy, so the problem with too much wealth at the top isn't immoral (at least in economic terms) as much as anti-capitalist. If you imagine the world as a monopoly game, once someone "wins" everyone else loses. No one builds houses and hotels, no one owns anything, everything shuts down. That's essentially what's been happening to our economy.
How do you get the economy going when no one wants to spend money? Someone needs to spend money.
(More later.)
You lost me, friend. I mean, I imagine I get what youre expressing. I understand what you are saying, but you just appear to have overlooked that you can find some other persons within the world who view this matter for what it truly is and may possibly not agree with you. You may possibly be turning away a decent amount of individuals who may have been fans of your weblog.
Posted by: prom dresses jcpenney | 05/21/2013 at 01:19 AM