The fundamentals of capitalism are based on one important factor: consumers. If it doesn’t have consumers, it dissolves. The short-sighted view that it’s their/my money and they/I should decide how that money is spent negates the fact that those who have the money, need those that don’t to sustain their position.
Henry Ford was notorious for paying what many believed was too much to his workers. When he was asked why he did so, he responded, “So they can BUY cars.” When Will Rogers was asked to respond to the Laissez Faire and “Trickle Down” policies of the Republican party of the 1920s, he said, “This election was lost four and six years ago, not this year. They [Republicans] didn’t start thinking of the old common fellow till just as they started out on the election tour. The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellows’ hands. They saved the big banks, but the little ones went up the flue.”
A year ago, Republicans passed the largest tax cut for corporations in history and what is happening to the stock market (which is the thermometer of the corporate America)? That market has turned downward, or at best gone flat like my left rear tire did a week ago. The promise was that it would spark employment, increase wages, and promote innovation. What it wound up doing was create a short-term increase in the value of the company through stock buybacks. But stock buybacks are not sales and, without sales, long-term growth cannot exist.
The top 1% can never consume the same amounts of products and services as the bottom 99%, a fact that seems to be ignored in the fundamentals of supply side economics. And as the disparity between the workers and the leaders widens, the consumers will soon be just that 1%. Everyone else will be living hand to mouth. The 99% are tapped out. They will soon run out of money and credit. They won’t be buying new I-phones anytime soon and how many I-phones do the top 1% need?
A Randumb Thawt
Most people think that economics is too hard to understand. The fact is, it is as simple as life itself. Take the human body. Consider all the cells as people and the blood as money. If those cells (people) don’t get the necessary blood (money), they die. If enough of those cells die, the whole body dies. This is happening right now as I write this. The wealth disparity is widening. In other words, most of the blood is going to the heart and brain. Now, the heart and the brain run the body, but if the rest of the body is deprived of that precious blood, they die and eventually the whole body dies.