The three biggest economic dislocations in US history were preceded by what has become the Republican’s go-to economic policy: deregulation, tax cuts for the rich, and benefit cuts for the poor and middle class. Oh, and deficits. Yes, that’s right. The party that shuts down government over debt and deficits and screams about the need for austerity budgets during Democratic administrations holds an unbroken record of creating record breaking deficits when they’re in power.
Now, true to form, faux populist fat cat Donald Trump—a man who was handed more than $400 million from his daddy; a man who was born on third base and ended up on second—is hell bent on ushering in another recession.
But back to those three big economic downturns.
The first was the panic of 1893, which hurt every sector of the economy, lasted five years, and resulted in widespread unemployment. While there are many causes cited, it’s worth noting that it was preceded by two decades of laissez-faire economic policy, huge income inequality (it was, after all in the midst of the Glided Age), and a hands-off regulatory approach to banks and corporations.
The next economic catastrophe was the Great Depression, which lasted throughout the 1930’s and was reversed only by the New Deal and World War II. And here again, it was preceded by a decade of laissez-faire economic policy, grotesque economic inequality, and a commitment to deregulation and small government.
Then came 2008-2009, the Great Recession, and the second biggest economic crisis in our country’s history. And guess what? It, too, was preceded by decades of laissez-faire economic policy, near record breaking income inequality, and yes, a hands-off approach to Wall Street, big banks, and corporations. Even during the Clinton years, the "era of big government" was declared dead, although there was a slight nudge toward greater income equality. But Bush soon restored the Republican orthodoxy, assuring the inevitable recession that follows such policies.
The panic of 1893 and the Great Depression were followed by more progressive policies, and a reversal in income inequality. The 2008-2009 Great Recession was not, and income inequality continued to go up.
In general Democrats had more rational tax policies, but they, too, subscribed to less regulation, and corporate coddling. Obama’s bailout and stimulus budgets, for example, probably averted a full-on depression, but that could have been accomplished by making homeowners whole, not just showering the banksters with tens of trillions in no and low interest loans.
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But the point here, is that each of these tragedies were preceded by huge income inequalities. While it’s true that correlation is not causation, there’s clearly something going on here. Economic historians like to identify the “triggers” that caused each of these dislocations, but in reality, the root cause for all of them was income inequality. It seems simple to say it, but if the majority of consumers don’t have enough money to consume, or, alternatively, if the majority of the money is in the hands of the ultra-rich who simple can’t spend it, then a consumer economy will crash. Inevitably, inexorably, inescapably.
The “triggers” economic historians like to cite are simply that last feather landing gently on a balance scale that was already about to tip.
And now we have another probable “trigger”—Trumps’ bumbling trade war and his tariffs, creating uncertainty, disrupting the international trading regime, laying waste our farms and factories, and increasing prices here at home. If you want to know just how ignorant the tweeter in chief is, just look at one of his favorite tweets—the notion that China is paying the tariffs. Talk about clueless.
Yes, our trade policies are broken, and they were broken before Trump was elected, and it was a bipartisan effort, as each party tripped over itself to give corporations everything they wanted, from low wages to escaping environmental and worker safety rules.
Trump won because he promised to do something about it, but asking Donald Trump to fix our international trade policy is about as sane as asking your six-year old to perform brain surgery. Both Elizabeth Warren and Bernie Sanders have proposed trade policies which would actually benefit people and the planet. Biden is pushing the same ol same ol corporate friendly stuff that hurt the American worker, and shrank the Democratic Party.
Meanwhile, Trump—despite populist rhetoric—did the usual Republican scam, cutting taxes for the rich and corporations, exacerbating both the deficit and income inequality, and assuring that a recession is increasingly likely. If tariffs and an ADD economic policy don’t trigger it, something else will. It’s an economy out of balance just waiting for the feather which will send it over the deep end.
The scariest thing I can imagine, is if the recession doesn’t hit until after the election, and Trump wins. And running Biden just about assures he will. Can you imagine what this bumbling fool—a man who never reads briefing books; a man who appoints folks like Larry Kudlow as his chief economic advisor; a man who shoots from the hip with no knowledge, no wisdom who doesn’t even know he lacks it—would do with a faltering economy?