I remember riding on the bus to work back in late 1980. The bus driver was enthusiastic about the election of Ronald Reagan. “The Gipper”, as appropriate for an actor out of Hollywood, had great charisma and could sell a box of gravel to people and convince them it was a box of diamonds. He wasn’t a con person like recent folks but he would have made a great used car salesperson.
Ronald Reagan was the consummate charismatic presenter
Sometimes Ronald Reagan was called “the first Teflon President” because nothing ever seemed to stick to him. His terms had a bit higher than average numbers of scandals and problems — but nothing close to current times. He just smiled and waved his hand and everyone just said “gee, what a great guy”. You couldn’t always remember just what he said but, golddarn it, he said it so WELL.
Gary Trudeau would write Doonesbury comics referring to Reagan by “rose-colored glasses”. The world looked so simple and nice through his vision and words.
It’s impossible for me to know, and possibly difficult for anyone to be certain about, just how much Ronald Reagan was involved in the creation of various policies and ideas — but he was the spokesperson and he made people (in general) happy about them.
Reversal of the New Deal on the road back to a “Gilded Age”
This was the start of the reversal of the “New Deal” which was instigated to protect the general populace against the greed and carelessness of the rich and large corporations. It’s been a long process but it has continued along for the past 40 years to where we are. Huge income inequality, virtually non-existent taxes for many large corporations, purchased legislators, and ratios of income between CEOs and workers that are dealing with close to astronomical numbers. This situation is quite similar to what existed before the Great Depression happened. Hopefully, we will not need to enter into another Great Depression before restoring sanity to the economy. The ramifications of the AI shift and automation within the labor pool will require something more than the policy changes of the New Deal.
Trickle down and Splash over
The primary economic policy injected into the US economy during the Reagan administrations was called “trickle down”. The idea, sold by President Reagan, was that if taxes were decreased for large businesses and the rich then the additional money they retained would then “trickle down” and increase the general wealth of the rest of the population. It was balderdash then and it has been close to universally agreed to by economists that it is still balderdash.
The “trickle down” never manifested. With those increased pools of money that were retained by the rich and large corporations, they invested in various things that would bring them even more money. They DID pass along money to others but it was in a way that I call “splash over” — because that money was distributed to the lowest income earners that provided services for them. The pools filled up and the water splashed over to reach the ground. Some bounced back up to minor business owners but most was reserved for services and labor.
Bubble Up is not just a carbonated drink
If trickle down and splash over don’t provide an equitable, vibrant, economy then what would one call the economy that resulted from the New Deal? I call it “bubble up” in contrast with the misnomer of “trickle down”. Within bubble up, we have a large, thriving, middle class that can save, educate and take care of their families, and look forward to a decent retirement after having worked hard for a number of years.
We also have a group of lower income folks that work hard for a living wage. They don’t have a lot extra but, without potential health care disasters looming over their heads like a guillotine, they are able to live life without being in a state of panic when an accident, or injury, occurs.
Unlike the folks being resurrected by the original New Deal, currently our dysfunctional Congress has no plans for what to do with the remainder of the populace who are willing, and able, to work but for whom there is no job. I will expand upon the topic in a newsletter to come but, with AI and automation displacing workers, we will soon (if not already there) end up with more people able and willing to work but with no open positions existing.
Bubbling
Besides the contrast to the theory of trickle up, why do I call it bubble up? All of these middle and lower income people are working, producing, and earning. They have the resources to spend and, while spending, they generate profits for other businesses. These profits indeed bubble up to owners and stockholders. Rather than some erroneous idea that the wealthy will actively take care of everyone else, it relies on the structure of capitalism to produce wealth that is distributed according to effort and ability with profits accumulated by the owners of capital. Trickle down squeezes the middle and lower class like sponges to drain them. Bubble up encourages them to thrive and keep resources, and money, flowing through a healthy ecosystem.
So, if it is so beneficial to the economy and society, why isn’t the concept embraced by everyone? Unlike other economic “isms”, capitalism doesn’t require perfect people to make it work but, by itself, it still allows greed, selfishness, and obscene accumulation to occur. And once an oligarchy is allowed to settle in it requires a consensus in others to stop it. Or a Great Depression.
I prefer the peaceful consensus and resurrection of the Renewed Deal. How about you?
