A work colleague of mine mentioned that he believes people in the US have changed for the worse in the past 35 years. He remembered fondly a kinder, gentler time when people were focused on family values and not the mighty dollar. I agreed and then started thinking why that was. I believe that an argument could be made that links the degradation of the population to lower Taxes on the wealthy and lack of Regulation.
Without diving into specific numbers (I am still researching the exact details) and noting I am not an economist or a historian, let's set the stage for our discussion. For instance, after the Great Depression and leading up to 1980, when Reagan came to power, the income tax was very heavy on the ultra rich. The corporate income tax was much higher than today (from what I have read the corporate income tax now in the US is the lowest among Industrial Nations) and there was a lot more regulation. For example, a person could not buy a house unless he/she had enough money to afford it. US was the largest creditor to the world and our national debt was small.
Then, some changes started to occur which I believe are linked to the change in our people. Specifically, we have cut the income tax on the rich from 70% down to 28%, cut their taxes on unearned income (interest, investments, etc.) to 15%, cut the Corporate Interest Rates and others. Thus we have decreased the money supply coming into the system. At the same time we have increased defense spending and borrowed heavily for that, increasing our National Debt from 700 Billion to 3 Trillion. Thus we were spending more with less coming in. We have also changed the Alternative Minimum Tax to switch the burden from the rich to the middle class and subsequently raised Social Security Taxes. Thus, we had given the rich more money and took away money from the middle class and also deregulated allowing free market economics to "flourish."
And here is what we created. Middle class has less money coming in with rates on everything going up due to the deregulation. That leads to the households with 1 breadwinner turning into a household with 2. Which in turn leads to less time available to spend with the children and teach them "right from wrong." Greed is Good is born, rich people are playing with their money in the stock market creating Savings and Loan scandal which again hit the middle class. Housing bubbles were created because the prices went up. When people need to work more to make ends meet they become more aggressive and less happy. When the difference between the rich and the poor widens and those who are poor do not have a sustainable standard of living, crime goes up which leads to less trust between people. When people feel that they are being taken advantage of they are dissatisfied, and on and on and on. To add to that you have now new generations that are raised on different principles and that are profit driven and then you have predatory lending practices, insurance companies dropping people when they need coverage, etc. etc. etc.
Finally to prove my point you can look at Europe and see that places like Denmark with 52% tax are the happiest country with the high standard of living, free education, healthcare, 4 weeks vacation, low crime, etc. etc. etc. I am not saying everything is as easy as raising taxes and regulating better. All I am saying is that we should look at history and learn from it.
No comments:
Post a Comment