Economics 101 For Conservatives

The most basic concept in economics involves three components: Demand, Supply, and Price. Supply is created by businesses and corporations who are producing goods and services to sell to consumers at a profit. Demand is created by consumers who not only want and need the goods and services, but also have the money to purchase them. Price is the variable that supposedly changes in response to the amount of Demand and Supply that exists. Bigger Demand and smaller Supply result in higher prices while bigger Supply and smaller Demand results in lower prices.

Of course, nothing is that simple and there are thousand of other variables involved, including the fact that the two sides of the equation, Supply and Demand, are not that separate and distinct from each other. For example, in creating Supply for sale to consumers, producers hire individuals which gives those individuals more money to spend, thus increasing Demand.

In American politics, the question becomes what role the government should play in stimulating and maintaining a healthy relationship between Supply and Demand, and thus maintaining a strong and healthy economy. Those who try and tell you that the government should NOT play any role, and that the “Invisible Hand” of a free market will take care of everything probably also still think the world is flat.

The fact of the matter is that, without government regulation of the process, preventing monopolies, unfair business practices, and business practices that defraud and even endanger consumers, there will be no economy – only a very few who have everything and the rest of the masses who have nothing.

In addition to regulating the process to prevent collapse, the government must also take actions designed to stimulate the economy and help it grow. And it is in this area that the argument between Democrats and Republicans has raged for decades. Republicans would have us believe that the only way to stimulate the economy and keep it growing to to give more tax cuts to the wealthy and tax loop holes to huge corporations. They call these folks the “Job Makers,” and tell us these people need the money in order to invest in increased production and added jobs. The added jobs will provide more spending power to consumers and thus the economy will grow. This is Supply-Side Economics, and they call it “Trickle-Down” economics.

This may all sound good in theory, but there is a fatal flaw in this reasoning. The first problem is that, in order to pay for all these tax cuts to the wealthy, Republicans keep trying to cut funding for social programs and assistance to the poor. These programs put money directly into the hands of those Americans who need it the most, and thus are most likely to spend it. And THAT is a direct boost into the Demand side of the equation. The second big problem with Supply-Side Economics is that Supply and Demand are two completely different animals. There is another complete section of the economy, called the banking industry, whose primary purpose in life is to loan money to businesses and corporations so that they can grow their businesses, increase production, and increase jobs. The primary requirement for getting these loans is the existence of a high consumer demand for their products and services. There is no equivalent part of the economy on the Demand side of the equation that is ready to give money to broke consumers so that they can spend it.

So, Trickle-Down Economics is nothing but a big scam. Giving more money to the wealthy and corporations, at the expense of consumer spending power, does nothing except fatten up the bank accounts of those corporations and wealthy individuals. No businessman in his or her right mind will increase production and add jobs if his or her customers have no money to spend on the products and services being provided. On the other hand, if your customers have a lot of money to spend, and the demand for your products is high, but you have no cash in your bank account, your local bank will be more than happy to give you a business loan so that you can increase your production and add jobs. We call that “Bubble-Up” economics.

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February Letter To The Editor

Capitalism is good and socialism is bad, right?  Not so fast.  Whether you think of these terms as philosophies or economic policies, they do not operate like the traditional light switch – on or off – all or nothing.  They are more like dimmer switches with an infinite number of levels, and yes, they can even coexist.  In fact, extreme capitalism, especially unregulated capitalism, is at least as bad as extreme socialism.  Unregulated capitalism would be like a large brawl, where a very few, come out ahead, and everyone else is dead in the water.

Money is power, and as we can see from today’s inequality gap, that power can be, and is, used to “game the system” and make it impossible for anyone else to climb out of their economic situation.  For a strong, affluent society, human accomplishment must be maximized, and the potential for accomplishment is not limited to any demographic, not even affluence.  And yes, the motivation provided by some level of capitalism is important, but so is the opportunity and lack of hardship provided by some level of socialism.

But years of propaganda and indoctrination, orchestrated by the 1%, has stigmatized the term “socialism,” and turned “capitalism” into some sort of God to be worshiped.  The question is, can you readers and the rest of the voters in this country, set aside your hate, fear, and anger long enough to actually use your brain and not cower in abject fear when you hear the term “socialism?”

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Simple Truths Number Two

A series of simple statements, each on a graphic.

Feel free to download and/or share!

Trickle

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American Political Myths – Trickle-Down Economics

This one should be a no-brainer.  Just think about it.  What will stimulate the economy more, giving a million dollars to 100 people who already have millions, or giving a hundred dollars to a million people who have very little?  Which group of people would be more likely to spend the money and thus stimulate the economy?

Even if the millionaires do spend the money, their impact on the economy is aptly described by the word “trickle.”  Limited, slow, and short-lived.  Which spending do you think would stimulate the economy faster and more completely, a hundred millionaires buying a new yacht, or a million people buying a new toaster and coffee maker?

Yes, this is a little simplistic, and there are other ways that the wealthy stimulate the economy.  They invest, own businesses,  and buy big-ticket items.  But the real strength and health of the economy comes from small businesses and consumer spending.  Republican politicians, and the big-business and wealthy conservatives that back and control them, are hell-bent on increasing their wealth with tax cuts and deregulation, and they want to pay for it by cutting entitlement programs and not cutting taxes for the middle class and the poor.  This is the opposite of what will actually work.  And the sad thing is that this only helps big business and the wealthy in the short-run.  In the long-run, a bad economy is bad for all Americans, including big business and the wealthy.

The selling of trickle-down economics has been a textbook example of masterful deception and political spin.  The Republicans are very good at deception, but their success in deceiving the American people has only been possible with the help of mass media.  As long as they are allowed to tell complete lies via the mass media without having the truth pointed out in rebuttal, the American people are put into the position of having to to the media’s job of fact-checking, or they end up being deceived and voting against their own best interests.

Don’t be deceived!  Trickle-Down Economics only helps big business and the wealthy.  For everyone else, Bubble-Up Economics is what the economy really needs!

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