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February 6, 2018


I note with interest that Trump highlights what he calls the booming economy, the lowest unemployment levels ever, and the stratospheric Dow that have come about during his abbreviated tenure, as though his policies, tax cuts and reduced regulation of the market are responsible for such good fortune. He neglects to give us any context for such claims, some of which are false, as with unemployment. Our lowest unemployment numbers ever were during WW II, and the “booming economy” he refers to is booming for whom, Wall Street or ordinary Americans who remain grossly underpaid as continuing victims of wage inequality for nearly four decades?

Trump talks of increases in wages but he again neglects to tell us that such chump change increases started from a slave wage base. Thus if I am making the minimum federal wage of $7.25 an hour and get a raise to $7.50 an hour I am still making slave wages and not living wages, as suggested by the lady who wrote recently that the new tax law which gave her a $1.50 increase in her weekly paycheck would pay for her Costco dues. That observation may be true, depending upon where she lives. Truth be told, tens of millions of Americans who live in high tax states will suffer a loss in net pay since Trump’s tax bill for the rich and corporate class removed a substantial portion of deductible state and local taxes on their 1040s, among other reductions in their formerly deductible expenses. Thus the few in the rich and corporate class received 83% of the goodies and the rest of us received the remaining 17% (subject to reduced deductibles on our federal returns). In words of the street, the rest of us got the shaft.

The American economy is like a giant supertanker that takes miles to turn around. Thus Obama’s first few years in our economy were really those of Bush, and Trump’s first few years are those of Obama. Trump can cut taxes and regulations on the rich and corporate class all he pleases, but this year and next are largely Obama years because no supertanker can be turned around on a dime. The difference is that Bush left Obama with the Great Recession and Obama left Trump with an economy on the upswing. Trump deserves no credit; the economy would be improved if Mickey Mouse were president. The current precipitous drop in the Dow I attribute to neither Obama nor Trump – think business cycle.

As I have repeatedly blogged, the Dow has little to nothing to do with economic growth in any event. Economic growth is the result of aggregate demand, and such demand is stimulated by the ability of consumers to buy. Thus while tax cuts and reduction of regulation of banks and corporations may make for jumps in the Dow, the Dow is not a measure of economic growth but a mere speculative estimate of arbitragers and moneychangers on the value of stocks and bonds.

If we want economic growth, as everybody claims to desire, then we should invest not in tax cuts and less regulation of the rich and corporate class but rather in substantial wage raises to American workers so that they have the wherewithal to go to market and enhance demand, just as we did in the halcyon years of economic growth following WW II when wages rose in tandem with the Dow up until about four decades ago, when the cancer of wage inequality began to take hold, and still has ordinary Americans in a bind. If economic growth rather than private profit is really a public goal, then the solution is simple: massively increase wages and thus aggregate demand and economic growth so that all of us (including the rich and corporate class) prosper.

When speaking about the economy, Trump should give us context and speak to all of the factors involved in our economic success or failure and not just select the few that make him look good but which tell us nothing of the impact of low interest rates, tepid demand, wage inequality, the business cycle etc. The election is over; Donald. Get off your soap box and govern.      GERALD       E


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