David Leonhardt asked in a recent column—Why Are Republicans So Bad for the Economy? The answer Leonhardt gives is that Republicans espouse theories “they want to believe—like the supposedly magical power of tax cuts and deregulation…” while “…Democrats have been more willing to heed economic and historical lessons about what policies actually strengthen the economy.”
John Maynard Keynes authored the pragmatic theory Democrats have followed since the Depression—in an economic downturn, the government must step in to bolster demand by creating more jobs that give consumers more money to spend. Keynes’ theory turned out to be not only good for the economy, but also provided a good reason for workers to vote Democratic.
The Republicans also had their own economic champion—Milton Friedman. Friedman’s message was a very clear one. Here is how he summarized it:
“In a free enterprise, private party system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society….”
That soon initiated the era of “trickledown economics”; whatever is good for Wall Street is good for the nation. The corporation’s sole goal is to create profits for its shareholders.
I am struck by two unfortunate consequences of Friedman’s theory. First, it sees no role for Americans who don’t own shares of stock. They are bystanders at best—citizens with no stake in the enterprise. Friedman also believed that the best way to bolster the economy was not by creating jobs, but by cutting taxes on corporations and the wealthy. This results in a loss of government revenue that could have better been spent on creating jobs that stimulate demand.
The sad fact is that corporations responded to the tax cuts, not by purchasing more machines or hiring more workers, but by using the money saved to buy back shares of their company’s stock, thereby increasing demand for the stock and raising its market value. This worked well for the shareholders but left the rest of us out in the cold.
If all of this seems a little abstract, take a look at my post from last November Democracy or Plutocracy to see how these abstract theories work out in the real world. The top 10% of taxpayers now own 70% of our wealth while the bottom half owns almost nothing! Is it healthy for a democracy to increase the wealth of the few at the expense of many?
I think a speech by the Republican candidate for President in 2012, Mitt Romney, tells us why the Republicans show so little concern for the little people. Romney gave a talk to a group of wealthy supporters in which he articulated the role he saw the “bottom 47%” played in our economy. What he did not know was that somebody was recording his talk. So, we now can hear how Republicans talk about the poor when they think no one is listening:
The “47 percent,” Romney said, are people “who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it.”
In short, the poor only want to live off the hard work of more productive citizens, people like Romney’s audience. He never seems to consider the possibility that these fellow Americans might be poor because of a lack of jobs and/or a lack of programs to train workers for the jobs which are available. He suggests no government programs to increase workers’ productivity; Romney doesn’t “worry” about them at all. Instead, he would spend his presidency attending to the welfare of productive members of society like his audience, perhaps by more tax cuts for the rich.
I think this same attitude toward the poor continues today in the Republican party. Just a month or two ago, President Biden’s Build Back Better legislation was voted on in the Senate. The legislation was loaded with ideas like expanding pre-kindergarten education for poor kids and authorizing large expenditures to combat climate change. The early education would better prepare poor kids for employment and the climate change bill would create new jobs as well as respond to a national crisis corporations have ignored. You probably remember that Biden’s proposed legislation was defeated, but you may have forgotten that it was defeated because not one Republican Senator would vote for it. Senator Romney cast one of the those “no” votes.
Why would an intelligent man like Mitt Romney believe that the poor are doomed to be surly victims? Did it not occur to him that they might just need help, just as he as a young man needed and received help from his wealthy family? Why shouldn’t he want to give the bottom 47% a chance to live a good life, to change their circumstances in a way that would benefit us all?
The simple truth Romney misses is that all Americans, rich, poor and in between, sometimes need and deserve help from their government.
Supporting Materials:
https://www.nytimes.com/2021/02/02/opinion/sunday/democrats-economy.html
https://www.nytimes.com/2012/09/19/opinion/mitt-romney-class-warrior.html
(This work is licensed under CC BY-SA 4.0)
A great analysis. What's perplexing is why a significant portion of the traditional core of the Democratic party -- working people -- seem to believe that Republicans better represent their interests, and deserve their votes.
In a democracy, it is not enough to think right thoughts; you have to be voted into office, so you can do right things. For at least the past eight years, Democrats have been fixated on a long list of divisive litmus tests to measure ideological purity, while Republicans have focused on winning elections.
It's sad to say, but three's a lot of truth in what you say. Of course, I would phrase it differently.. The Democrats are talking principle, the Republicans prejudice; That's never a fair fight. But I agree with you--fighting is not enough, only winning wins!
.