The New (Old) Economy

Hate to tell ya, but CEOs making 400 times what honest working folks make points up how silly your argument is. Neocons are doing the same as in the Roaring Twenties. In the 1920’s, Andrew Mellon, Treasury Secretary under Calvin Coolidge, worked with Congress to cut taxes for the wealthy because, “…a decrease of taxes causes an aspiration to trade and commerce.”
W. E. Humphrey, Federal Trade Commissioner under Coolidge, denounced Woodrow Wilson’s FTC, which was established to discourage trusts and monopolies, as, “…an instrument of oppression…and injury…to business.” Instead, Humphrey promoted “self regulation of industry.” (Sound familiar?)
Herbert Hoover, Commerce Secretary under Coolidge, sat in secret sessions with industry leaders (like Cheney’s meetings with oil executives) and worked out trade association “codes”, which allowed businesses to set prices and evade anti-trust law. This deregulation (like that promised in the “Contract with America”) allowed men like Sam Insull (the Ken Lay of his day) to set up dozens of shell corporations whose sole purpose was to manipulate stock prices.
The result: In the decade of the 1920’s, profits rose 80%!
But productivity (output per man hour) rose only 40% while wages only rose 8%. The greedy were hoarding productivity for themselves. Because the labor movement and the farm bloc were systematically weakened (much like today), wages and farm prices were kept low. By 1929, the 60,000 richest families had more in the bank than all the 25,000,000 at the bottom combined. Low incomes meant too many folks lacked the purchasing power to enable them to buy the stuff industry was making and keep the economy going. As consumption slowed, the economy did too.
There’s a reason the Grand Party of Calvin Coolidge hadn’t been trusted to run all three branches of government in Washington for those 70 years after Hoover was fired: their policies led to the Great Depression. And there’s a reason they took power again: most of those who remember and who lived through the wreckage of their “Grand Economy” have passed away and (in most cases) can no longer vote.
Now, the Washington spin meisters will say, “Oh, this can’t happen today. Things are different!” And they are. Under Coolidge, consumption was about ½ of the US economy. Today, it’s more than 2/3rds. What happens to this “Grand Economy” when ordinary folks find they can no longer afford enough gas and food and the “stuff” that keeps the economy going? It only took 8 years for the “Grand Olde Party” of Coolidge to wreck our economy.

Gary Andrew S, author of “No Gods Before Me”

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