Why a Mix of Keynesian Economics and Middle Out Economics is Needed

Definitions

Laissez Faire Capitalism: also known as pure capitalism; the market run themselves with no government intervention. Economic system used in the USA until the Great Depression

Supply Side Economics: USA current economic system brought by former President Reagan and the republican party in the 1980s. Idea is that you cut taxes and regulations on the rich and the corporations and it will grow the economy. We also cut government intervention allowing for the market to run itself with little intervention.

Keynesian Economics: System were the government intervenes into the economy. The point to fill in the area that the private market fails.

Middle out Economics: System is were the government intervenes into the economy specifically by investing into the middle class through multiple of ways like investing into public work programs, education, healthcare, housing.

This graph shows that starting the 80s the rich wage that grow at the same rate as the rest of America skyrockets. This is because of the disaster economic theory of Reaganomics or Supply Side economics. This grew a mistrust for the government. It tried to create a Laissez Faire capitalism system at least as close as it could. But instead of generating economic growth it generated stagnant wage for the 99% that has barely kept with inflation.

 Before wages kept up with productivity but wages has kept stagnant while productivity has skyrocketed. Instead while growth has happened it has gone to the one percent while the 99% percent barely kept up with inflation. So while workers deserved better wages since they were more productive instead the wages went to the one percent. It did not go to immigrants like republicans would want you to believe.

 The rich have concentrated the same amount of wealth right before the 2008 Great Recession as they did right before the Great Depression. Income inequality has skyrocket. While the 99% has struggled to succeed the 1% wealth has skyrocketed.

 This graph shows how the wealth of three American men have so much wealth than they have more wealth than the bottom half of this country. That is a tremendous showing of income inequality that 3 men have more money than about 165 million people. The one percent has stolen all the wealth from the American worker.

This one showing of exactly that. While the wages of the American worker has been stagnant the CEO's wage have grown drastically while under supply side economics

This graph shows that the share of the wealth of the bottom 90% has decreased while the top 5% wealth has increased.

The economy isn't as great as our president would like you to think. First 70% of our population lives paycheck to paycheck. That's 230 million people. 230 million people that make barely enough to live. Not increase consumer spending by buying anything. They go to work and buy just what is necessary for their homes. a large percentage working multiple jobs to survive. If a 500 dollar emergency happened they wouldn't know what to do. They have multiple people working in the homes with some having two or three jobs. This not a good economy for those workers.

 There is 45 million people with student debt of a combined total of 1.6 trillion dollars. They can't buy homes or cars. These are people who did everything they were supposed to. They went to school for a career and now they graduated some with so much debt that they can't do what they are supposed to do like buy a home or a car. They can't follow their dreams because the debt is so much. This a growing problem that wont allow the next generation participate in the economy.

People work more hours, more jobs,and don't get vacation. It takes longer to buy a home. Some are literally are blocked out of the economy because of debt. This is not a sign of a good economy.

This is what happens under supply side economics. The rich get all the wealth while the middle and lower class get nothing. They instead get a economy that doesn't work for them. Corporations have killed the small businesses. If you were to go drive through America in the 70s you would see a bunch of small businesses. If you drive today you see a few small businesses but mostly the same stores and restaurants. This is because after we cut taxes on businesses and we cut regulations we allowed for monopolies to grow. If we look today there is entire industries that are controlled by monopolies. Their is usually 2 to 5 companies controlling the entire industry. They usually control certain regions of the country and don't compete with each other. They grew in a period of low regulations and taxes. When there was a period of high regulations and taxes small businesses and competition flourished. Today there is no competition in certain industries allowing these companies to charge whatever they want.

If you were to travel to the 1920 the concentration of wealth made the economy unstable. It made it that a large of people lived in poverty. Up to 60% of people lived in poverty. Not everyone enjoyed from the economic uprising of the peacetime of the Roaring 20s. Not only did people not enjoy from this uprising the economy was extremely unstable. Eventually this came crashing down in the Great Depression. While this was all happening the economy leading up to the 20s had monopolies of certain industries. The most famous being John D. Rockefeller and the Standard Oil Company. The only reason there wasn't more was because of government intervention in antitrust laws under some of the presidents before. Other than that the county had a Laissez-Faire capitalist country. No government intervention at all. The market ran it itself. Under this pure Capitalism system the market created monopolies, large inequality, large amount of poverty, and a unstable economy that eventually collapse in what we know as the Great Depression. See the problem is that Laissez Faire capitalism and to not the same extent but pretty close Supply Side economics is extremely unstable.

So Pure Capitalism and Supply Side Economics causes

1. Monopolies
2. Large amount of inequality
3. Large amount of poverty
4. Unstable economy that collapses

While this is all in the idea that these low taxes would create jobs. This isn't necessary true. During Reagan the master of this economic system he created 16.5 million jobs. Bush after cutting taxes created 5.8 million jobs. While Bill Clinton after raising taxes and investing in the American people through things like education created 18.6 million jobs without the side effects.

If we look at Keynesian Economics in the from the 30s to 70s few things change. One during the Great Depression the government would create social programs to help the American people like social security. They also created different public work programs that gave a ton of unemployed Americans during the Great Depression. The government become the largest employer during this time. This is after Herbert Hoover didn't intervene in the economy and things just got worse. So FDR had to intervene to help Americans out of this crisis because the market wasn't fixing itself after it crashed. This continued with the government giving relief until world war 2 where the economy mobilized every resource possible into the war effort. This got the USA out of the Depression but not of the Keynesian Economics. The USA had the GI Bill where it gave the veterans free college, access to affordable housing and medical care. This program invested in our workers creating the greatest middle class the world has ever seen. To pay for everything they taxed the rich every high even up to 94%.

Through the 50s, 60s and the 70s standard of living was better because of this economic system. With one person working they could afford a home, a car, a vacation, healthcare, to pay for their kids college, and even retire with a pension. Wages rose as productivity rose. Income inequality was nowhere near as bad. The economy wasn't as unstable. People could live off a high school degree. Things were better overall.

Small businesses flourish and there was no monopolies. Businesses because of the high taxes would invest into their own companies allowing them to grow instead of taking home the profits. Companies because of antitrust laws never were allowed to turn to monopolies. They were forced to compete against each other and invest into itself to allow for it to actually grow. This created a economy that worked for everyone.

They had public work projects like the interstate highway system. This infrastructure bill gave 5 dollars into the economy for every dollar it gave back while creating jobs. LBJ great society program creating many different social programs like medicaid and medicare.

If we invest in our middle class they have more money which they spend. This creates more demand that makes companies expand to meet the demand because they have no reason to expand under the current system. This creates more jobs. This is especially important since our economy is 70% consumer spending. If we invested in things like infrastructure it would create jobs that would give Americans more money to spend increasing the demand.

For this system to work now we would today we would invest into a large public work projects to create more jobs. This would give more money to spend increasing demand. We would also invest in education and allow for more access to college through things like free college. Invest into cheaper healthcare so Americans have access to cheaper healthcare through things like subsidies and Medicare For All. We need increase the wages through things like increasing the minimum wages especially for bigger companies. We would need to invest into cheaper housing. We would need to have tougher antitrust laws to break up monopolies that we have now. We need to expand our social safety net. We need trade deals that help the American worker not the corporations.

A country that does this to some extent is Denmark. In Denmark the people have free healthcare. They have free college and get payed 1000 dollars a month to pay for living expenses. They get help finding a job if they lose theirs. They get world class education. They have real vacation time of a entire month. They have paid parental leave for both parents. They have a social safety net that actually helps there civilians. They are known as one of the happiest countries in the world.