Why the US Economy is Tanking (OT)

It's well known by experts in the field that without the stimulus by the gov't--begun under Bush but broadly expanded by Obama--we would in all likelihood have collapsed into a second Great Depression. Pretty much everyone of note agrees on this. The stimulus stabilized our economy, at least for awhile, but it cannot create jobs out of thin air. That's up to the private sector. What pulled us out of the Great Depression, however, was the massive public works program called WWII. We went into wartime production and we put all of our young men to work fighting the Nazis and many young women worked back home on the war effort in some capacity. After the war our economy boomed, in part because we had the upper hand after the European economy (our only real competition before the war) was devastated by the war itself and in part because we more-or-less transitioned easily out of wartime production mode into private production mode. We had mastered industry, but we had had to learn quickly due to the war.

Now we are in trouble, because we have a handful of huge corporate conglomerates who make everything for the wars we're fighting at the moment, and who do not have to mass produce as much. Weapons used by the modern military are smaller, deadlier and more expensive to produce, and require far less (but more technically trained) people to make them. So the modern wars aren't much contributing to our economy. They're really draining money away from the US. Meanwhile, the banks are still in Wild West frontier state, and have been ever since Glass-Steagall, which effectively separated the lending banks from the investment banks, was repealed in 1999 (by a largely Republican Congress, I might add.) It was this repeal that opened up traders to playing iffy games with the money of investors, which is ultimately what led to the housing bubble and collapse in the first place. That's what deregulation gets you.

Now we have people who do not understand the intricacies of the economy basically arguing for even more deregulation. The think the bad economy is attributable to a president who's been in office for less than two years. Our current troubles did not begin under Obama. They didn't even begin under Bush. They started (at least) with the Republican-controlled Congress during the Clinton administration, although the deregulatory mindset of the neo-cons can really be traced back to Reagan.

There's one simple reason why wealthy people tend not to benefit a failing economy--if they already have enough money, they tend to save excess rather than spend it. The very rich are saving their money, not spending it. Whereas if the very poor receive money, odds are they're going to spend it. Thus, corporate welfare is likely harmful to the gov't, whereas welfare for poor private citizens helps to stimulate our economy, because the poor are certainly going to spend their money to survive. This is, according to noted economist Paul Krugman, why the Republicans fucked up by failing to vote for the unemployment extension. They argued against the extension on the grounds of tightening the belt, but it was A) a fraction of a percent of our overall spending and wouldn't even have put a dent in it and B) in fact, counterproductive. Asking poor people to cut back even more than they already are while the banks get free rein to do as they like is absolutely disturbing. This is why I despise the small government mindset; it often accompanies small-mindedness and small-heartedness.