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The Forgotten Truth That Conservatives Created The Welfare State
The conservatives have been trumpeting this theory that tax breaks for the wealthy will raise the middle class standard of living. The disparity of income in this country has increased because of this backwards theory of economics.
Wages have been kept down because corporate executives are withdrawing larger and larger salaries as the economy expanded, rather than increasing the pay and benefits of their employees. As the economy grew over the last thirty years the capital growth was not seen by the average middle class family, it was consolidated by the top 2%.
This does not promote a healthy economy. A top heavy economy will topple. Too few people controlling an overwhelming majority of the capital has too much control of the economy.
In a recent report by CNBC titled:
Welfare State: Handouts Make Up One-Third of U.S. Wages
”Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.” said Madeline Schnapp, director of Macroeconomic Research at TrimTabs
The economist gives the country two stark choices. In order to get welfare back to its pre-recession ratio of 26 percent of pay, “either wages and salaries would have to increase $2.3 trillion, or 35 percent, to $8.8 trillion, or social welfare benefits would have to decline $500 billion, or 23 percent, to $1.7 trillion,” she said.
My favorite quote is “consumption supported by wages and salaries is a much higher foundation for economic growth….”
Unfortunately, the conservatives have not pushed for the very thing Ms. Schnapp stated, but progressives have. We have been the last bastion of hope for the working class and a living wage in this country.
The need for a “welfare state” was created by conservatives and their corporate donors. They kept wages low and increased their own salaries instead.
What this country needs to do is increase taxes on the very wealthy, like CEOs, thereby creating a financial incentive to leave profits in the business and raise wages or re-invest rather than withdrawing the profit as salary. When the conservatives lowered taxes on the wealthy it created an incentive to take a larger salary, thus leaving little behind for employee wage increases, better benefits or expansion.
As the wages remained flat for middle class families, the need for social programs increased. Healthcare costs continue to rise along with housing and food, but the median pay of the workers have been stagnant.
Time for a new outlook, time for a progressive outlook! We tried the conservative way. It failed, at least for 98% of us, it worked for the top 2%.
Image: Upstarter.com
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5 Responses to The Forgotten Truth That Conservatives Created The Welfare State
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Reynardine
Mar. 9th, 2011 at 2:34 pm
Now, everyone knows what happens if you rip stones out of a building’s foundation to build a penthouse on top… except the plutonomists and their dissocialist politicians. Maybe, though, they think they have someplace else to go and some quick, efficient way of getting there. If so, I’m sure we’d all like to know what it is.
chefbob50
Mar. 9th, 2011 at 2:38 pm
As long as Greed is the first corporate commandment a fair division of profits will never happen as is being shown by the outsourcing of good paying jobs overseas for cheap labor. As Ross Perot once said “If you raise the pay in Mexico to $7 an hour invariably America’s pay will fall to that level in order to compete with cheap labor abroad” And guess what Mr. giant sucking sound was right…
jlt
Mar. 9th, 2011 at 2:54 pm
Schummer just countered the budget cuts..GOP seems stunned! @ Digby!
Do send it out!
jlt
Mar. 9th, 2011 at 3:00 pm
Forgot the link….digbysblog.blogspot.com/
Steve a Progressive Texan
Mar. 25th, 2011 at 5:22 pm
We need to stop using the term “living wage” because it gives the image of undeserved compensation. What we need to push for is fair-value labor compensation standards (FVLCS). To the author’s point, the reason we spend so much on social support systems is that the plutocrats have excessively exploited the workers, customers, investors, the government, and/or the environment. And they are pushing to exploit us even more… This level of exploitation is usurious. In particular, the workers contribute their labor to a common cause, from which the employers derive value. We all agree that the employer will derive more value than they compensate the employee, the question is how much more. As profits rise, as they have, so should compensation. When they don’t (aka sticky wages) we see a polarization of wealth. Left unabated, the polarization leads to an increase in personal debt levels as inflation increase (often the source of the profits), while banks like the increase in debt levels this destabilizes the economy, and this additional risk results eventually in the need for social programs. It is this vicious cycle that establishing guidelines/standards will resolve.
One plan is to tie corporate taxes to the relative ratio of executive compensation and employees. Also, we can tie our progressive income tax rates to the relative distribution of wealth (GINI). Using these strategies we will reduce the need for social programs and increase quality of life for the majority. In addition, we could set trigger points for taxes like instate the estate tax when GINI goes above .6, or have a flat-tax when the GINI goes below .45, or revoke tax abatements when compensation levels are above 20x higher for execs than employees. These are suggestions of course, but overall FVLCS would provide the incentive needed to stabilize our economy.
Debt is the cancer, avarice is the carcinogen… Sadly, our monetary system is based/back by debt.