Thursday, March 10, 2011

Fixing the Economy: Enrich the wealthy? Or end poverty?

Okay, which economic class is more beneficial to the economy:
  • The top earners?
  • The middle class?
  • The people who live in poverty?
Most people have an opinion about this matter, but what are the facts? What are the economic effects of spending by people who make a million dollars a year? Fifty thousand dollars? Fifteen thousand dollars? How does capitalism really work? Is socialism good or bad for the economy? What is the real economic impact of continuing to allow people to depend on welfare or unemployment insurance payments, along with other public and private charity benefits?

Several studies have been done to clarify this issue. The numbers generally agree and fall within predictable ranges, so I won’t bore you with statistics here. The important lesson is not the numbers extrapolated from the studies but the principles demonstrated by those numbers. It should come as no surprise that the numbers support the practice of more humanitarian principles than current policies that favor the rich and place undue burdens on poor people.

To put it bluntly, the real cause of the failure of our economic system is greed. More to the point, a society that caters to demands of the wealthy by penalizing poor and middle-income citizens and accepts unemployment and poverty as standard economic policy is doomed to eventual failure. That conclusion runs counter to the commonly held belief that economic success depends on perpetuating the super-wealthy lifestyle of a small percentage of the population.

During recent banking disasters when taxpayers shored up failing financial institutions, top executives continued to receive hideously huge salaries and bonuses. The mantra, according to corporations and economists alike, was that companies have to pay big bucks for the big brains. The apologists totally ignored the fact that these “geniuses” were the same ones who brought their companies, and the world economy, to the brink of disaster. With brains like that, we’d have been better off with Mickey Mouse, Goofy, and Pluto running the Wall Street circus.

Meanwhile, whenever anyone suggests raising taxes for the wealthiest among us, loud voices shout down the idea by claiming the economy depends on making sure the already filthy rich keep on getting richer. The unspoken opposite side of that policy requires ripping as much money and as many rights as possible away from the most down-trodden in society.

Never mind the morality, or lack of it, with this policy. People who favor the rich certainly don’t. In my next postings, I’ll take a good look at the economic effects of continuing to steal from the poor and middle class in order to support people who don’t really need any help. In fact, later in this series, I’ll discuss how capitalism works, or should work when it’s done right. Watch this space for these articles in the next few days.

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