We have seen the stock take a bit of a tumble over the last three trading days. Today, it seems to be balancing off a bit and there is hope the “panic” won’t hit. But, there are no promises on that front either. The Stock Market is probably the most fickle thing there is. It is almost hard to believe we are at its mercy.
Experts are giving a whole lot of reasons for the sudden downturn last week. There is the Chinese Market which has been sinking for a while. There is the strength of the U.S. dollar compared to others. There is the “threat” as some call it, that the Fed will raise interest rates.
So, we have a number of things that are affecting the market in negative ways. There are those who claim we are on the verge of a total world-wide economic collapse. Those are mostly the people who sell gold and other precious metals. And of course, these downturns suddenly spike the price of those medals.
However, I saw a quote from a “Wall Street Expert” who has a slightly different view of what is going on. It is just one more theory of why we have seen this “correction” as Wall Street likes to call them. His view was put simply: “We have too much stuff, and people don’t have enough money to buy it.”
He was referring to the lower than expected profits a lot of companies are projecting. Meaning, they are making products, but people aren’t buying them because those people don’t have enough money.
In 1980, Ronald Reagan ran for President on the mistaken principle of “trickle-down economics.” It was eventually called “supply side economics” because “trickle-down” didn’t sound too appeasing to the working class.
In the “supply side” economics of St. Reagan, if you make enough products, the people will buy them. If regulations were removed and the so-called “free market” was allowed to run amuck, the economy would improve. Add tax cuts for the wealthy to the mix, and everything would be smooth sailing. Because, according to Reagan, those rich, greedy, bastards would re-invest their tax savings in companies.
It didn’t work. His “voodoo economics” as other experts called it resulted in a bloated federal deficit, lost jobs, and a huge recession. Seems those rich guys did not invest their “tax savings” into companies. As a result, there was no significant expansion of manufacturing in the U.S. It was all shipped overseas.
Since then, the Republican Party has stuck with this failed economic plan. They insist that if we just let it go a little longer, it will prove to be the right course. The last 35 years of failure shouldn’t be looked at, because they are right.
Another huge factor in Reagan’s “supply side” economics was a bitter attack on the working people of the country. The Republicans waged open warfare against unions, and they still are, in order to keep labor from gaining any gains in income. The Republicans have said over-and-over that “companies should determine wages and not the government.” Of course that is in reference to the minimum wage which is below the poverty line today.
Over the last 40 years, the income of the working class people in America has stagnated. It has gotten so bad, that in terms of real buying power, you make less today than your fathers did in 1968. On the other hand, the earnings for the top 1% of this country has grown by over 500%.
Republicans are always crying that wage increases cost jobs. The fact is just the opposite. Higher wages means people have more disposable income, meaning they will spend more money on products, thus increasing demand and thereby increasing job growth to meet the demand.
In areas of the country where the minimum wage was increased, there is far more job growth than in areas that refused to raise the minimum wage. That is especially visible in areas where one part raised the minimum wage and another did not. The part with the higher minimum wage is experiencing better growth than the other part.
Hell, even people like the Koch Brothers are expressing concern over the growing income inequality in this country. If the greedy like them are worried, maybe our politicians should be worried as well. But, the Republicans are still anti-worker. They don’t like the idea that you earn a livable wage for an honest day’s work. They don’t like the idea that you should receive overtime for working overtime. As Bush said: “The way to grow the economy is for Americans to work more.” He never said you should be paid more for that extra work.
We have been experiencing a growth in our economy. The problem is that people are still not buying as much as they did before the melt-down in 2008. The biggest reason they are not spending as much is because they don’t have as much money to spend as they did. Their income is decreasing while the wealthiest’s income is growing.
There are a lot of reasons that Wall Street took a hit last week. There are a lot of reasons why it will take hits in the future. The only question that remains is how big of a hit will it take? And, if that hit is so big it will ruin the economy again?
We live in a global market. What happens in places like China and Europe have a direct effect on us. However, I believe it is possible to lessen that impact as long as we have a strong internal economy. The only way to have a strong internal economy is to have a population that can afford to live in it. Which means something needs to be done about income levels for the working people in this country.
As that expert said: “We have too much stuff, and people don’t have enough money to buy it.” Since capitalism is supposed to be based on “supply and demand,” that one sentence makes perfect sense.