When you read the New York Times article – it reads something like a story that you would have read in the middle 20th century in the UK. Doctors in opposition to the NHS, but this isn’t, it is America today waiting for the Obama administration to submit its budget to Congress.
While I see that as ironic, I know that others won’t. America, and Obama specifically, are championed as the way forward we see in Europe that things such as the NHS are a part of the very fabric of society. The Conservatives and “new” Labour are not fighting each other just on the paper thin policy gap but also the claim that they are the most Obamaish – and that leads to the new influx of blogging and extracted email harvesting that has never seen before, but that in itself is a completely different blog post.
What you also see in the NYT article is the realisation that Reagan’s ideas, and by default Thatcher’s, were not as fiscally conservative as once thought.
The Republican’s and the Tories are of the same ilk – they only think in the terms of lowering taxes – predominantly for those who are at the top end of the scale. This, over the last 30 years has shown no real effect on the UK or US economy other than bringing us to where we are today. In the midst of a financial crisis that only Libertarians can be singing with glee at the prospect of saying “Let it fail – it will be good if it fails”. Even if you join the dots at this point you will, ultimately, realise that both Thatcher and Reagan were of the Libertarian creed – their policy has failed.
He [Obama] sought to eliminate some corporate subsidies, for health insurers, banks and agricultural companies, that economists have long criticized.
And we have to look at how that criticism was justified. Subsidies were paid to companies just because they were companies irrespective of if they needed such – which by the profits they were posting showed that they didn’t – this can be said for numerous companies within the EU, especially agricultural companies. I think it would have been noted a long time before now if banks and insurance conglomerates were subsidised by the UK government and baulked at by the tax payer – yet this was over the term of Reaganomic and Thatcherite policy acceptable. We see that Libertarian policy is still a manufactured policy of making money from nothing and making the ‘market’ accept that this is a norm rather than an abomination. Obama is, by the look of his budget, trying to reverse that.
The history of the United States economy over the last 70 years can be roughly divided into two periods: the decades immediately after World War II, when inequality plummeted, and the past three decades, when global economic forces and government policies caused it to soar. Mr. Obama is setting out to begin a third period that looks more like the first than the second.
We now see that inequality in take home pay has stretched the elastic band almost to breaking point. You have bankers who have almost crippled a bank getting a pension of £693,000 per year and not only that claiming that this is a matter of contract and should be honoured.
The clamour from the public, both working and middle-class, to move in a more left-leaning direction and against Tory and “new” Labour policy is the end product of Thatcherite and Reagan policy 30 years ago which has led us to where we are today.
As a result, the average post-tax income of the top 1 percent of households has jumped by roughly $1 million since 1979, adjusted for inflation, to $1.4 million. Pay for most families has risen only slightly faster than inflation.
In my opinion it is that inequality of disposable income that has, as a symptom, led us to where we are now. The classic rich/wealthy do not spend the same way as those who are on hourly/salaried incomes, that seems, again to me, to be obvious – and as Thatcher and Reagan believed that there is this impossible trickle down effect why would that change?
For an economy such as ours to be effective you need people to spend money, yet with their idiotic ideas of simply being paid more for doing less – this will not and never happen.
If you want an economy to flourish you need those who are going to spend to have more to spend – in real cash terms, not a matter of having a portfolio that says you have a certain imaginary cash sum.
Before becoming Mr. Obama’s top economic adviser, Lawrence H. Summers liked to tell a hypothetical story to distill the trend. The increase in inequality, Mr. Summers would say, meant that each family in the bottom 80 percent of the income distribution was effectively sending a $10,000 check, every year, to the top 1 percent of earners.
That is a redistribution of wealth, yet not one pound or dollar found its way back into the economy.