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Economy

By Tyler Folsom - Sep 21st, 2008 at 6:47 pm EDT

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Remember how the Japanese economy had appeared unstoppable in the 80's? Then in 1990, the Japanese housing bubble burst. Japan entered a decade of economic stagnation [1]. I am afraid that the same thing is happening in the U.S.

McCain and his fellow Republicans are champions of deregulation, working hard to dismantle the safegards that were put in place after the 1929 collapse. Now they have discovered that an unregulated market acts like an unregulated market. They want to do something about it. We do need to take fast action. It would be a mistake for the Democrats to be stampeded into a quick fix. Bush has shown that he is not above using a crisis to further his own agenda, such as invading Iraq, a country that had no connection to 9/11 or terrorism and which the CIA reported was not an imminent threat to the U.S. [2].

I prefer "tax and spend" Democrats to "borrow and spend" Republicans [3,4]. Unless you are an anarchist, you probably agree that the government should spend money on defense, highways, airports and stabilizing financial markets. Services for the people should be paid by the people. It is immoral to stiff our children with the bill.

So who is going to pay the hundreds of billions to rescue mortage speculations? “The wealthiest 400 families in America saw an increase in their wealth of $670 billion since President Bush has been in office. They have seen extraordinary benefits under Bush’s reckless economic policies. The middle class, whose standard of living has declined, should not be paying for these bailouts. Rather, we need an emergency surtax on those at the very top in order to pay for any losses the federal government suffers as a result of necessary efforts to shore up the economy,”- Senator Bernie Sanders [5].

The ratio of worker to CEO pay is somewhere around 1:300 to 1:500 [6]. In Japan it is 1:20 and most European nations are in that range [7]. We can tame CEO salaries to a reasonable level. Bring back a progressive income tax. For instance, any income over $1,000,000 could be taxed at 95%.

References

[1] http://en.wikipedia.org/wiki/Real_estate_bubble
[2] Vincent Bugliosi, The Prosecution of George W. Bush for Murder, Vanguard, 2008.
[3] http://zfacts.com/p/318.html
[4] http://www.ctj.org/html/debt0603.htm
[5] http://www.sanders.senate.gov/news/record.cfm?id=303270
[6] http://money.cnn.com/2005/08/26/news/economy/ceo_pay/
[7] Thomas I. Palley, Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism, Princeton University Press, 2000.

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