US Politics and Economics: the patriotism of the rich

Jorge Majfud

17/07/2011

Opinión

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Almost nowhere in the world do the rich emigrate. They rarely form part of the armies that they send off to wars, and that they then cover with honours and applause, and they curse the state that sucks their blood. When the economy is doing well, they demand tax cuts to maintain prosperity, and when things do badly they demand that the accursed state bail them out–with tax money, of course.

Since the financial crisis of 2008, the US middle classes have been worried about the deficit and unemployment, both inherited from the Republican government of George W. Bush. Within this party, the splinter known as the Tea Party has risen with such force as to dominate the discourse, but which could put paid to the Republican Party’s chances to win an election, which in principle would seem in their favor. Their banner is the Reagan-Thatcher ideology and opposition to any tax increases. They assure us that it is wrong to penalize the successful, the rich, with taxes, since it is the rich who create jobs when the riches trickle down from above. In a debate in 2008, Obama noted that those who propose this theory (or rather, this ideology) learned when the crisis struck, that when one waits for the riches to trickle down in droplets, the pain rises up from the bottom.

Contemporary data – to go no further – contradicts the "trickle down" theory which was brought to extremes by the last Republican government, since (1) the avarice of those on top has no limits, it is infinite, and (2) unemployment has not decreased in the last few years, on the contrary it has risen.

Even though the 700.000 jobs that were lost every month a couple of years ago has not continued, the creation of new jobs is extremely weak (between 15.000 and 250.000 monthly; a healthy rhythm to bring down the 9.2 per cent of unemployment would require 300.000 new jobs every month).

On the other hand, during the last year productivity has increased in much larger proportions, and above all, the profit levels of the big companies. Each week one can read in the specialized press the results of a financial, industrial or service giant that has increased profits by 30, 50 or 60 per cent, as something perfectly normal, even routine. Any of these percentages come to several billion dollars. This even includes the once fallen motor industries of Detroit. Without going into details as to how the middle classes, through the State, have financed the rescue of these giants, without an election and under the threat that if this were not done, worse things would happen.

Since the 1980s, wealth continues to accumulate at the top while unemployment, since 2009, continues at historical levels. Studies have demonstrated that the gap between rich and poor (Bureau of Economic Analysis), characteristic of Latin American economies, has grown significantly under the trickle down ideology.

Long before the crisis of 2008, when there was still a surplus inherited from the Clinton administration, the Republicans managed to lower taxes for the richest sectors of the economy, among others the oil companies. This period of grace is to end this year and was extended by Obama under pressure from the Republicans, shortly after the Democrats lost control of the House of Representatives. At that time Obama was strongly criticized from within his own party for granting concessions to the Republicans without gaining anything in return.

Nevertheless, in recent weeks the positions have polarized. In one of the last meetings with Republicans Obama, who never loses his cool, stood up to them with the threat: "don’t try me."

In face of negotiations to increase the debt limit (a normal practice in the United States and in many other countries; the Bush administration had done this seven times) the Republicans continue to attempt to suspend and eliminate various social programmes even as they deny any rise in taxes to the richest citizens (in many cases, billionaires).

On their part, the Democrats and President Obama oppose the reduction of social services and demand an increase in taxes for the very wealthy. I have heard a few millionaires asking why they shouldn’t pay more taxes when it is they who have more to contribute when the country needs it. When the country from the middle on down is in need, we might point out. But apparently these millionaires are not the ones who lobby the legislatures of the rich countries.

In any event, in spite of all this Republican mise-en-scène, I have no doubt that before the second of August Congress will vote to raise the debt limit. Why? Because this is good for the gods of Wall Street. Not because there are unemployed workers or soldiers without legs hoping for help from the State that sent them to the front in exchange for some speeches and a few medals.

- Jorge Majfud, Jacksonville University

(ALAI Amlatina, 18/07/2011. Translation: Jordan Bishop).

https://www.alainet.org/en/articulo/151290