The Catskill Chronicle

By Mort Malkin

Do not tax the rich, or their off-shore accounts, say the corporate elite. In fact, a few more corporate subsidies would be nice. Their riches will trickle down to the working classes and the unemployed … eventually. Do not check Google to confirm your recollection that GHW Bush called such economic theory Voodoo Economics. When the too big banks try to shed the ancient image of the dour, conservative banker by trading in high risk go-go investments such as derivatives and sub-prime mortgage packages, the government must rescue them. It won’t cost the taxpayer more than a few trillion dollars. You can rely on the big bankers to exercise wise judgment in using those TARP dollars — no record keeping will be necessary to account for what they do with the money.

As the tide of money rises higher under the yachts moored out in the harbor, it will eventually cover the tide flats and our row boats will be set afloat. Or, so goes the ring-a-levio theory of economics. A member of the Gadfly Revelry & Research gang (GRR) who spends his leisure time plying a kayak wonders which is worse — being stranded high and dry or paddling against a riptide.

Actually, we’re up to our ears in this economic theory of tax cuts for the 1%. We have already seen the early results. The big banks last reported handsome profits and the retention of $1.7 trillion (that’s $1,700 billion) in cash. Corporations have even more — $2.0 trillion — as a consequence of sending jobs abroad where they don’t have to deal with labor rights or protect the environment. In theory, all that money should be trickling down into more jobs, more state  revenue, more goods and services — a real economic recovery that the 99% may join. Why isn’t it happening?

Let’s see what the big banks and corporations are doing with all those profits? Partly it’s going to: higher CEO salaries, bigger bonuses, mergers & acquisitions, and gambling in the $600 trillion derivatives market. [$600 trillion is not a misprint.] The rest of the money is just waiting for a new bubble to appear. What it’s not going into is: new plants & equipment, jobs at a livable wage, renegotiating underwater mortgages, student loan relief, and the infrastructure of the nation. We must beat the drums louder to wake the Voodoo spirits. The ghost of Ronald Reagan suggests we delete the last remaining regulations that are restraining the big banks, and don’t even think about reinstating the Glass Steagall Act. Declare an amnesty for those rich enough to have off-shore accounts in the Caribbean and let them repatriate the $3 or $4 trillion that has been keeping the Cayman Islands afloat. All that money coming back home to the US without tax will surely help the economy … of the 1%. Double down on the tax rate for corporations so they can be more sure of their profits. Then, they surely will create jobs.

Will such free-for-all capitalism work? The political right (wrong?) says that without the chance to become obscenely rich, capitalists will not have the incentive to invent and innovate. But, the only creativity Wall Street has shown is to invent new derivatives of derivatives to sell in Ponziland. Albert Einstein had it right when he said, “The definition of insanity is: doing the same thing over and over again and expecting different results.”

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There is another theory of economics called the bubble up theory. It is so well assured that it’s practically a law. Here’s how it works. Raise all salaries of all public employees … except for members of Congress. Create more jobs in the public sector: the Park Service, a Family Farm Corps, art & music teachers and poets-in-residence for all the public schools, a Master Teacher Corps, more librarians to allow for increased library hours and special programs, ombuds-wo/men for the State, Defense, and Energy Departments equipped with loud whistles to blow, SEC inspectors with magnifying glasses and scanners to examine derivative trading by the big banks, a Peace Academy and a Peace College to teach statecraft, diplomacy, and negotiating arts, with a requirement of 225 hours of classwork plus term papers & exams to qualify for appointment as an ambassador. For workers in the private sector, raise the minimum wage so that low-skill workers will earn enough to pay their rent and buy food.

Then, give the states enough money to hire employees to repair the roads with separate bike lanes, build walking paths and trails, put in sidewalks for all suburban communities, fix the sewer systems, and install solar panels on all municipal buildings. Set aside vacant land for urban gardens that senior citizens and the remaining few unemployed can tend and which can supply food free of pesticides for school lunch programs, flowers to cheer up hospital patients, and real tomatoes for home made pizza. Hire more police officers, not for swat teams but for community police — beat cops — who will relate positively to the community.

The private sector will get the idea and start hiring before they have to pay big bonuses to lure employees away from their jobs working for the public. All these people will be gainfully employed and will be able to buy healthful foods, proper clothing, and an occasional superfluosity. Overall consumer demand will rise — the 99% represent a couple of hundred million people. By contrast, the 1%, even spending money on extravagant items (mostly imported), cannot match the purchasing power of the working class with money in their pockets. The economy will humm, and the government will collect more fees and taxes. Even the rich will benefit as the corporations will be busy producing more goods and services. The government will be able to establish a surplus and pay off the national debt. This new bubble up economy of the United States can be a model for all those European socialist democracies to follow.