The American economy is creating trillions of dollars in new wealth and yet for most Americans that wealth means nothing. They enjoy little if any of it. But someone might tell you that those people did not create the wealth. We are so confused by the rhetoric of the so-called “job creators” that we seem to think that the people who own and finance business create wealth. This is a myth that has been exposed as a greedy and dangerous lie for decades. Unfortunately, many of us still embrace it.
Economies, not people, create jobs. Middle- and lower-income individuals and families are a key part of a job-creating economy. If demand does not exist in the economy, not even the most economically naive “job creator” will build a widget factory to sell things people don’t want or cannot buy.
Things like tax breaks and other incentives only work if that break will give a meaningful advantage in an otherwise equally competitive market. However in the best of cases, incentives are offered as an act of desperation or in response to economic extortion. In worst case — and more typically — these breaks are given as a matter of ideological preference, regardless of how misguided.
While the lion’s share of this poor policy comes from the poor leadership and policies of America’s Republican party, a wing of the well-to-do Democratic elite (sometimes mistakenly called center-left Democrats) push for these asset hoarding policies. These are dangerously destructive political decisions that are causing deep and extended damage to our economy and our social order.
In the prosperous past, the United States had redistributive tools to allocate more evenly the tremendous wealth our economy generated. Yes, that’s right, they’re primarily known as taxes. The result of this redistribution was a stronger working class and middle class in the United States and the result of that was a more prosperity for all, rich and not-so-rich alike.
People on the right, but also some democrats, warn that programs like Medicare and Social Security are going broke and threatened the financial security of our government. At best, that’s ignorance talking. At it’s worst it is a lie.
We could easily secure the financial integrity of our social programs, but we do not have the political will or the common sense to do it. Even as every measure points to growing inequality and the long-term harm that inequality creates, we choose to look the other way.
Political leaders and some economists warn that something like a wealth tax or even more balanced tax policy generally (e.g., cut the loop holes for high earners) would be risky in the current economy. It would create a “shock wave” and discourage saving and investment. If this were true, it is a “shock” we need to endure, much like a shock delivered to save a stopped heart.
The changing global economy and advances in productivity and technology already work against the prospects of the American labor force and our past competitive advantages. In the past, rising productivity and economic growth did result in business growth as well, but those days appear to be behind us. Developing economies are picking up that role (largely funded by the migration of wealth from developed countries under the control of multinational business and finance).
Holding on to old models, especially as they fail right before our eyes, is not a good solution. Instead, redefining a prosperous and wealthy economy for all, not the few who cling to the past, is a solution our leaders need to pursue. Unfortunately, the political leadership for those smart decisions do not exist.