Since Bush decided to make a Rose Garden appearance to tout the great-but-not-so-great jobs numbers, the economy became a sorta hot topic. I know it came up on This Week where Robert Reich made and appearance, and now the king of all Economists and my dream Fed Head, Paul Krugman puts the discussion where it belongs. Since I don't care much for copywright law, and care even less for the NYTimes subscription for the good stuff policy here are the only paragraphs that matter:
(there are many ways to get around the Times thing, use google)
Behind the disconnect between economic growth and family incomes lies the extremely lopsided nature of the economic recovery that officially began in late 2001. The growth in corporate profits has, as I said, been spectacular. Even after adjusting for inflation, profits have risen more than 50 percent since the last quarter of 2001. But real wage and salary income is up less than 7 percent.
There are some wealthy Americans who derive a large share of their income from dividends and capital gains on stocks, and therefore benefit more or less directly from soaring profits. But these people constitute a small minority. For everyone else the sluggish growth in wages is the real story. And much of the wage and salary growth that did take place happened at the high end, in the form of rising payments to executives and other elite employees. Average hourly earnings of nonsupervisory workers, adjusted for inflation, are lower now than when the recovery began.
So there you have it. Americans don't feel good about the economy because it hasn't been good for them. Never mind the G.D.P. numbers: most people are falling behind.
This is the second time around this trickle-down wagon wheel (as Atrios aptly describes) in recent history. Reagan did this trickle down thing well, but good God did Bush kick the Gipper's ass in terms of implementation of the reverse Robin Hood effect. Bush and his Congressional Compatriots have created a society where the rich really do get richer and the middle class and poor are simply left behind. They don't get any trickle down effect from any of this economic booming that's been going on. The fact that inflation has not really gone up despite rising fuel costs is even stranger to me. Seems like profits are so hugemongous, that corporations can use some of them to dampen inflation and still report record quarters to asuage Wall Street analysts from downgrading any stocks. I of course and no economist and that last part was simply conjecture but I am almost positive that I can find data to back it up.
However, we live in an America that if you are a CEO, even your corporation's bankruptcy does not harm your personal financial situation (Enron) because there are many many loopholes that you and your rich people's accountant can help make your money disappear from the IRS (yet not really from your net worth).
This has all been proven before when Reagan thought it could work. It doesn't and the numbers Krugman cites demonstrate how it doesn't work, but it doesn't really address why. The reason trickle down economics doesn't work is simple. GREED. Greed is the engine of capitalism, and due to that simple reason is why "Bushanomics" is untenable. Couple that with the fact that the American economy in its current state is based on borrowed money with no end to the borrowing in site and you have an untennable economic theory, which becomes unsustainable.
I wouldn't get all "house of cards" on this thing just yet, because I simply do not believe that capitalism can collapse. However, there are winners and loosers in this great game and when the loosers become the majority, there is supposed to be this mechanism called Democracy to set the balance straight. One can only hope that it works.
Perhaps the best thing that can come of the Bush era is the idea that trickle down economics works only in the spotless minds of economists who forget to factor greed into their equations. The stuff Krugman said in his column today should beyelled loudly and proudly by future candidates wanting to unseat the criminals who have implemented this system.