Invest in people and don’t cut social programs for the middle class
Editor:
I have explained why: 1) Trump’s proposal to increase tariffs across the board is the same folly we saw the Smoot-Hawley Tariffs Act which increased prices brought down our small economy and created a world-wide cascade leading to the great depression.
2) The Republicans (not Democrats – 2024 excepted) have fueled the deficit for over 40 years and brought on inflation.
I now address how the proposed cuts in social programs and disproportionately leaving the middle class behind is economically unsound.
Our inflationary deficits and trade deals – neither Reps and Dems adequately anticipated how much investors and corporations could and would move high tech and skilled jobs overseas – also added to the situation lowering middle class income and increasing the disparity which creates fall of Rome-type economic problems.
Simply put our economy in total now depends too much on investment rather than labor productivity. Roosevelt built the middle class with investment in infrastructure and jobs.
Neglecting the middle class economically causes: 1) Investment bubbles – think of the dot com investment bust, 2) over lending and overextended borrowing – think of the 2008 housing bust, 3) an imbalance between domestic long-term investments and domestic long-term productivity – this hurts domestic jobs and job growth, 4) lost sales due to lack of consumer spending to keep plant doors open – an easy example is deflation which can lead to financial collapse; Japan is now and great place to borrow funds in 0 to negative interest rates to avoid collapse. Having a huge and well paid middle class to buy things floats any modern economy.
It is true that investment can lead to new industries. But unlike government investment in infrastructure (Biden) and investment to assist the middle class with real tax cuts and child care credits, private investment does not keep jobs here. Public investment in our middle class does.
True the Trump cuts for the rich and big corporations will be allowed to expire and pay for this investment in us, the US. (Personally I also think will see a renewed push to have an international corporate minimum tax rate so no multinational park profits in a tax free or low tax countries. This is a big reason you can not rely on increases in any given multi billionaires wealth.)
As a last note regarding price gouging regulation. Most states already have laws against price gouging but gouging on a national scale needs a national response. It is not socialism.
People forget that the only truly unregulated market is the criminal black market. Broken knee caps and gang wars are no way to run a country. So looking at companies with soaring prices far in excess of the cost of materials, labor, plant and distribution is logical and little different than anti-trust regulation which stops unfair predatory practices which also lead to market domination and price gouging.
So there you have it. Biden-Harris is using proven tools to rebalance growth through investment and growth due to labor. We have lost ground the last 40 years due to “Voodoo” economics. But, with an economy 20 times the size of Russia and California being the 4th largest economy in the world, if we are smart we have plenty of capacity to get back on track.
Respectfully,
Conrad F. Cropsey
Albion
