Desperation In The US Economy

In the decades after World War II, the American economy was the envy of the world. It was an age of remarkable prosperity. Unfortunately, it didn’t last.

The 1970’s were a turning point. Oil producers raised energy prices. Industries shipped production overseas. Inflation spiraled out of control. Labor unions saw their influence weakened. Two-income households became the norm.

At the start of the 1980’s, a promise was made. “Let’s Make America Great Again!” Does that sound familiar?

“We can return to prosperity,” the promise continued, “but we’ll need to cut regulations and lower taxes.”

It sounded reasonable, but was it? In 1953, as the post-war boom was surging, the top tax rate was an incredibly high 92 percent. High taxes did not slow down the economy in the 1950s and 60s. Quite the contrary! 

When taxes are low, wealthy business owners take money out of their companies to enrich their personal fortunes. When taxes are high, their incentive is to leave the money invested in their companies instead of losing most of it to taxes.

High taxes encourage investment. Low taxes encourage profit-taking. Tax cuts on the wealthiest individuals do NOT increase productivity or the economic fortunes of the nation.

During the post-war economy, American companies were well-funded. The tax cuts of the 1980s did not recreate that level of economic prosperity, and neither would a relaxation of regulations.

But regulations were indeed cut, and the negative impact was almost immediate. High-risk trading destabilized the bond market. The stock market crashed in October of 1987. That same year, the Federal Savings and Loan Insurance Corporation became insolvent. By 1989, the Saving and Loan scandal had cost American taxpayers $135 billion.

Despite these failures, greed continues to be a powerful force in American politics. Income disparity has increased steadily. Workers have limited protections in “right to work” states and within the emerging “gig economy.” The situation for labor continues to worsen with each passing year, while financial influence on the political process becomes more entrenched. There is no light at the end of the tunnel, only rewards for those with the means to fly over the mountain.