Reaganomics Proven False in Practice

The middle class only happens by intelligent design through human ingenuity.

The world is too complex and random for Reaganomics to work.  9/11, Irene, Katrina, Sandy, Global Economics, and The Great Recession of 2007 are all examples of this randmoness and complexity at work.  

Most importantly, the whole idea is based on the idea that people are rational actors.  Neuroscience over the last four decades have shown that to be false.  People are not rational and they are even less rational in periods of stress and disaster.

In the meantime, corporate profits are at a record high.  The stock market is near a record high.  The tax rates are at record lows.  The gap in wealth between the top 1% and everyone else has not been this large since right before the Great Depression almost 100 years ago.

To be sure, there is no freedom without capitalism.  From top to bottom, people have a right to capitalize on their thoughts, ideas, energies, and labor.  That right stops at causing undo harm to other human beings.  That is where capitalism has to get off the bus and a government of the people, by the people gets on.

In short, capitalism is good for setting prices on goods and services.  It is excellent at balancing supply and demand, but it is woefully inadequate at determining right and wrong.  

For right and wrong, it is completely up to us to educate ourselves and govern ourselves in times of relative calm and peace to help guide us through times of randomness, uncertainty, and the resulting irrational behavior.

The bottom line is that if you value the middle class, the first thing you have to admit is that the middle class not happen by accident.  The middle class does not "trickle down."  

The middle class is a purposeful human creation.  The middle class is not the natural consequence of half-baked trickle-down economic theory based on a provably false basis of human rationality.

The middle class only happens by intelligent design through human ingenuity.

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Karl Frank Jr. November 07, 2012 at 01:07 AM
The key part of my argument here, besides: "Yet, we still have record high corporate profits, near record high stock prices, record high gap in wealth between top 1% and everyone else and record low tax rates." Is that the public sector is an essential part and only possibility of a vibrant middle class. We obviously disagree here, but I'll give you the last word. The public sector is not as susceptible to the whims of the market and they keep their salaries in the market. So there is a multiplier effect that overcomes the cost that you speak of. For instance, of Mehlville's $100 million budget, 80% of it is for salaries and benefits. 60% of that is local with a minimum of a 3x's multiplier. They shop at our grocery stores and gas stations and computer services etc. That money doesn't just disappear into a black hole. The teacher gets it, gives it to the gas station, who gives it to the grocery store, who give gives it to the guy who cuts grass, etc. and every time another transaction is made back to the government reaping back the investment for the people to keep the economy sustainable. Last word is yours.
PaulRevere November 08, 2012 at 07:23 PM
Thanks Karl: Whatever the Public sector earns is taken from the private sector. 10 ($50,000) Private sector earners =$500,000 spending.(Food ,shelter,education & clothing and transportation (All costs of living). Without any public sector tax, $500,000 is available to spend in our economy. Taking $100,000 TAX from that $500,000 to give to a public sector employee Makes only $400,000 available for the Private wage earner to spend. A public service class can only exist because of Private wages. (Teacher $'s just do not magically appear until TAXES are assessed.) If you cannot understand that ZERO "NEW" $spending comes from this $'s transfer, then your ideology is focused on the false notion that "creating more earners-workers" equate to more economic activity. That is not true. Ten private workers TAXED for the sole purpose to create 1 or more public wage earners could only "change the products desired" in our economy. The goal that a middle-class can be "Created" by Taxation is exactly why that middle-class (Defined as $100,000) are now in the 1% wage earners in Missouri. It is the TAXed valuation of public services without regard to the earnings of those paying the Tax that is creating a GAP in under $30,000 earners supporting your arbitrary $100,000 middle-class.
Karl Frank Jr. November 08, 2012 at 10:17 PM
Whew...my eyes glazed over a bit there. I will stop short of having an economics theory debate with you because we will likely not change each others mind. In my ideal society, we have classroom teachers and policemen and firefighters and marines and utility workers and engineers that all work on the public dime. In some of those positions, like engineers and teachers, intellectual quality and ability to teach matters. There is a market for good teachers. Good teachers cost money. There is a cost to paying teachers and there is a cost to not paying good teachers. It's the opportunity costs that you are not including in your eye-glazing calculations. For instance, for every tax dollar spent on early childhood education, an average of $12 tax dollars are saved in the future as a direct result. Either way, we are well off on a strawman branch of the general, overarching topic of this post and that is that there are record corporate profits, record stock market prices, record gap in wealth between the top 1% and everyone else and record LOW tax rates. Yet...still no trickle-down. I for one an thankful for teachers and firefighters and other public employees, besides for their service, because they are the ones calling me for tech support and paying their bills. Before you start talking about free phones, ranting anymore about classroom teachers, you might want to watch this: http://www.liveleak.com/view?i=4a2_1229470578
PaulRevere November 09, 2012 at 12:50 AM
Yes, I knew and heard Bush on CNN. He was not talking about "middle-class" employee definitions. Public Teachers DO have competition from the private industry. Their values are set by private Teachers, not by people's home values. THis is not about economics or what teachers add to society. That's baloney Public engineers Do have competition in private industry. They are paid by valuing what the private market engineers get. Sometimes less. Firemen serve/protect ALL of us.(Every day of our lives) You mention a "Good teacher Costs". So, does that mean a private school teacher is "way-underpaid"? Why not Tax for public "barbers". Haircuts, based on Home values. Should a public barber earn 3 times more than a private barber? Why should every child's parent pay different school support? An amount based on Home value, rather than equally. Karl: I can accept your valuing any Public worker into the "middle-class" defined at $100,000. BUT, you must acknowledge that No Professional private worker in America gets paid by TAXing for a service. Private earned $'s is NOT the same as TAXing for value. You can disagree and try to Justify values based on economics, but I base it on FACTS. Those facts show a Missourian earning W-2 $100,000 per year is in fact in the upper 1% of all Missourian wage earners. That sir: IS NOT MIDDLE-CLASS in Missouri. No such thing as "poor-middle-class" One day I will educate you on how corporate profits expand America's workers. TheEnd
Karl Frank Jr. November 09, 2012 at 02:52 AM
Ok. So, just to be clear. 1. Corporate Profits are at record highs 2. Stock market is near record highs 3. Gap in wealth between top 1% and everyone else is at record highs 4. Tax Rates are a record lows. Yet, the middle-class is disintegrating, and has been, as your numbers show, steadily since 1980. So you are saying there is a 5th piece missing for trickle-down economics/Reagonomics/Supply-Side economics to work. 5. Eliminate or privatize public sector workers. (Teachers, police officers, firefighters, marines, army, air force, sewer, water, Army Corps of Engineers, highway departments, roads departments, etc.) Is that correct? If we eliminated those things then the wealth would flow down? The $32 trillion held overseas in tax shelters would come back to the states?


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