MYTHS WE LIVE (AND GO BROKE) BY

Economists aren't known for humor, but the story of
the "Reagan revolution" is a real howler! Using the re-
ligious myth of all-seeing, all-knowing "market forces,"
the Reagan people sold the naive on deregulation and
"supply side economics." The latter had been correctly
labeled by Bush Sr. as "voo-doo economics." But when
he saw it was never-the-less popular, he went along
with the gag.

All religions have to contend with evil. Evils in the mar-
ket religion are taxes, regulation, and labor unions. The
latter are evil because they fight for a living wage. So
every effort is made by the market true believers to ba-
nish those curses from the land. Reagan ism openly and
proudly proclaimed unceasingly four major laws of their
weird economics: monetarism, supply-side economics
(including tax reduction to the max and deregulation),
balanced budgets, and free trade. It should come as no
surprise that Mr. Reagan, being a politician first and for-
most, openly and frequently violated all four of these
laws while continuing to proclaim his devotion to them.


Monetarism is the belief, now thoroughly discredited,
that a nation's money supply determines it's economic
health. Milton Friedman was its most ardent and influ-
ential advocate. But he came to minimize it late in his
life, admitting: "The use of quantity of money as a target
has not been a success . . . I'm not sure I would as of today
push it as hard as I once did." Economists have come to
understand it is interest rates (set by the Fed. Reserve)
that (along with consumer demand) drives the economy
more than money supply. Of course when the Feds drop
the interest rate to zero and nothing happens, that means
there is no economy left to drive.

Supply side is the belief that production of goods is what
brings prosperity. The more goods produced (supply),
the better the economy. The fatal flaw in this nonsense
is clearly seen in today's economic woes: if there are no
buyers (demand), production soon becomes over-produc-
tion and then stops. Car companies are going broke be-
cause broke people can't buy cars, and over-production
doesn't help! Instead of bailing out Wall Street, the govern-
ment should buy up the surplus new cars and raffle them
off, or give them away by lottery or something. Seriously!
Loaning money to car makers so they can continue to over-
produce isn't the answer. Insanity, you will recall, is repea-
ting the same behaviour and expecting a different result!

The Reaganites busted the unions as producers moved
their plants to anti-union states (these are mostly foreign
makers, by the way) or out of the country (to Canada and
Mexico mostly). Union membership today is less than
half what it was pre-Reagan. Families trying to make it on
low wages can't buy much beyond bare necessities. They
borrow on their homes to pay for health insurance or den-
tal work, and on their credit cards when all else fails. If
they are late on a payment, interest on their credit card
debt (which may already be at 19%) can go to 31 or 32%.
Health insurance for a family of four costs $12,000 a yr.
The number of people without health insurance is near-
ing 50 million! Most foreclosures are caused by
crushing health-related debts. That's the magic of the
free market at work when health services and insurance
are run for profit, making a few people very rich, and a
large part of the rest paupers. The CEOs of major HMOs
are paid $millions that come from the insureds premiums.
The premiums could be reduced if the inflated salaries
could be reduced. But you can't mess with the market: it's
sacred! The sky will fall if you interfere with the market!

Well, I hate to tell you, but it has already fallen on millions
of our pauperized citizens who paid as long as they could,
and then failed. Market magic lifts all yachts, and swamps
the row boats in their wake. It's your basic Social Darwin-
ism 101. Winners take all. Losers lose all. The big fish eat
the little fish. Here's how it works in the real world: In 1983
Alan Greenspan, then head of the Fed. Reserve, urged Con-
gress to raise the payroll tax in order to build up a surplus
and insure the stability of Social Security. The payroll tax
disproportionally effects low and mid-level earners. After
these working people paid higher rates for two decades and
built a healthy Social Security surplus, Greenspan endorsed
Bush's plan to use the surplus to pay for huge tax cuts for
our wealthiest people! And here's the kicker: after the cuts
have wiped out the surplus and left us record deficits, Mr.
Greenspan (no longer in govt.) has a solution. You guessed
it! He thinks we should cut Social Security benefits! Not
the tax cuts for the wealthy, mind you, but the rent and
grocery money for retired workers!

And Greenspan is not alone. In fact he is now a minor figure
in a formidable and growing movement that threatens to dis-
troy Social Security. William Greider explains it all in an
electrifying and well-argued report in The Nation (2/11/09):
"Looting Social Security." He finds "an impressive armada
is lined up to push the idea" that the government can recover
its bank bail-out costs by robbing the old folks at home. He
says that "leading think tanks, the prestige media, tax ex-
empt foundations, skillful propagandists posing as economic
experts, and a self-righteous billionaire is spending his for-
tune to save the nation from the elderly." There you have
it, sports fans. That's Social Darwinism in all its glory!
How do you like it? Let me hear from you!

jgoodwin004@centurytel.net