Once again, welcome all to my wondrous blog!
This week’s post centers on specifically the American economic crisis, including why it happened and how I think we might be able to solve it. And don't worry folks, next week’s post will center on why I believe in communism, so you just have to wait it out a little. I promise I will follow through.
But first, this is A Nerd's Life, so I'll start with that. Because Thanksgiving is coming up, my school tries to pile on tons of homework and tests right before the break so that it won't have to afterwards. Unfortunately, while I enjoy the policy, it means a lot of pre-holiday stress that screws with me and pretty much everyone else I know. For instance, I had twice the normal amount of AP biology homework this weekend than I normally receive. I have several tests in the next 2 and a half day week. It will not be fun. Also, the quote for this week was changed recently from the "only I don't die" quote to the one by Donald Glover because I watched his hour long special on comedy central and it was hilarious. I suggest you watch it as well. However, this blog and I are in no way associated with Donald Glover or Comedy Central. I really hope that avoids all copyright stuff.
Anyway, on to this week's topic: the American financial crisis. Unless you're dead or Amish (what's the difference? Amish slam!), you've noticed that the current economy of America is not good. As the title implies, we are in a craphole. But there is a lot of misinformation surrounding how we got here. Let me fill you in (get it? craphole? fill in? HA!).
Back during the Clinton presidency, even though the Republicans controlled the Congress (for the most part) by the end of it, he was able to create the first budget surplus our government had seen in 35 years since the 1960s. Then, our nation made a choice to elect what I view as a poor starting president for the 21st century: Bush, the son of the former one-term president George H. W. Bush. And while technically I believe that the supreme court elected him and not the people, we did choose to reelect him (foolishly) and give him two terms. Remember, he went in with a budget surplus. What promptly occurred within these two terms were the starts of two major wars, drone strikes, and other international attacks in support of democracy/against terrorism. He also began No Child Left Behind, and created the infamous Bush tax cuts for middle income Americans. A simple sweep of graphs on the White House website show governmental spending over his terms and president Obama. The total spent under Bush? 10 TRILLION DOLLARS. That is right. Total under Obama so far? Just over 4 trillion. So when people say Obama is outspending Bush, he isn't. 10 trillion divided by two terms is 5 trillion per term. Obama has not yet reached 5 trillion, and he is nearing the end of his term. He is going to be on-par with Bush spending. But spending alone is not what screwed us. Let's examine the Bush policies.
Number one: wars and paramilitary programs. Under Bush, spontaneous funding for strong military efforts in Iraq and Afghanistan began. However, drone strikes and other operations were conducted in Liberia, Pakistan, Somalia, and Yemen beginning under Bush as well. Note that these things are not free. They cost absolute buttloads of money, and it had to come from somewhere. The problem was, that Bush did not correctly fund all this extra spending. He quickly ran out of surplus because he created the Bush tax cuts. To understand why this causes problems, let me explain. The government holds a lot of money. It allocates this money to different spending amounts for different things, ranging from Medicare to military. However, the government cannot simply order the mint to print this money for them to use; that would cause rampant inflation that quickly brings ruin. Instead, the government must tax citizens or impose tariffs in order to bring in sufficient government revenue. Because tariffs only apply to fluctuating trade, taxes are a much steadier, stronger source of government revenue. So, when Bush applied tax cuts to a large segment of the population, he took money that was previously going into the government and placed it in the people's pockets. The problem was that these wars needed money that not only Bush wasn't providing, but he was also going into debt to ensure. This created instant deficits that began building up over his two terms, and the biggest problem was a fault of the people. In order for Bush's plan to work, all citizens would have needed to spend the money they received in tax returns in order to circulate that money back into the economy. However, people are not stupid, so most placed a significant amount of their returns in savings accounts in banks. This means that money which was supposed to be in the economy was now sitting in bank vaults, slowly poisoning our system. And thus, big problems for our economy.
Next was the No Child policy, which placed strong emphasis and funding to schools that passed standardized tests. The problem with this standardized testing is that it is not a fully sufficient way to gauge the intelligence of the nation. Also, the true goal of all schools is to make money, not to educate. So, the schools switched all focus to making the students pass the tests rather than learn the subjects so that the schools would receive the funding they desired. This also means that schools with students that actually needed help wouldn't receive the funds they needed for this help because not enough of the students did well enough on standardized tests. This created a hierarchy among students between counties, where the smarter counties would receive all the funding for students that rarely needed it as much while the rest were left in the dust. Two things cause problems here. First, the policy required more federal funding that it simply wasn't getting due to tax cuts. Secondly, while it hasn't quite affected us yet, it does not effectively prepare students for the real world or college quite as well as other systems do, so when kids that went through the No Child policy graduate from college or high school, they are not ready for the work world, and unemployment shoots up. The policy also prevents a large amount of kids from graduating high school at all, lowering the educational expectancy of our nation and deeply cutting the job market with unskilled laborers. But this is not one of the largest problems that caused our decline.
The title of this post notes a "sickness of capitalism." While many of you may not have believed that this was actually a thing, it does exist, and here it is. Capitalism gives great autonomy to citizens and corporations and banks to make their own decisions in the economy. It sounds great, but the fact of the matter is that it forces the economy to be driven by greed. And the greediest of people are generally the ones who hold the most power in companies and already make the most money. This allowed huge banks and financial giants to bet on European debt and other poor decisions using money their customers had put into the vaults. When the banks lose those "bets," they lose the money that is rightfully for the people. And banks can't just say "Sorry, we don't have your money." This is why big bank bailouts occurred, and huge problems with financial crashes began. However, even worse is that some people served to gain by these crashes (Goldman and Sachs). And before that, companies had been taking money out of paychecks and pensions from the "lowly" workers to fund astronomical paychecks and pensions for their CEOs. So when everything crashed, the majority workers suffered even more while the higher-ups had a nice monetary cushion to protect them from harm. This is the sickness of capitalism; it allows the richest to make strong profits while the poor degrade into dust. This is one of my reasons for following communism, but that will be discussed next week.
My solution for the crisis is simple: begin raising taxes and regulations while cutting military spending and ending wars. I'm sure some of you might be thinking "Raising taxes? That's socialism!" WRONG. You couldn't be more wrong. Raising taxes for the express purpose of doling it out to the poor is socialism. Raising taxes to put more money into government budget revenues is still capitalist, and smart. Start by eliminating Bush tax cuts and raising taxes to all those making 250K a year or more, to 40 or 50 percent. But what if they just run away, right? Heh, that won't happen. Even at 50 percent income taxes, someone making that much money still has 125K to use, and that is PLENTY to live on. People live happily with a lot less, I assure you of that. The rich won't flee because they're suddenly not as super-rich as they used to be. As long as they can still buy yachts, they will remain here.
Next, regulations. They may seem restrictive on the free market, but the free market is not smart. It is a small child given infinite money in a toy store. It will not be smart with that money on its own. You must regulate how it spends and receives money so that poor choices and huge fluctuations are not made. By regulating banks and wall street, we protect ourselves for unethical monetary practices and we guarantee the majority receives the extra money they need to weather the financial crisis.
And finally, end all wars we are currently in (Iraq, Afghanistan) and end unnecessary drone strikes in places like Yemen, Somalia, and Pakistan. Seriously, the terrorist threat is pretty much gone by now. We're done, and as long as we have tons of nukes we should be safe. Also, why do we still have military bases in Germany and Mongolia? Do we really need to be funding those? No, so pull funding for all these things and bring troops home. You want American jobs? You can get them for free by having the troops come home and receive them.
All of these measures together would decrease the budget deficit quickly and create a lower unemployment rate, ensuring a stronger growth to the economy. By the way, the economy grew in 2010. Yeah, turns out the surplus did work, and economic growth resumed. During 2009, the budget for that fiscal year had been written in October of 2008 by Bush. 2009 was the only year our economy shrank. Take that as you will. But, I do believe my measures would work.
Alright, that is all for this week, and if you'd like to be in contact with me about this issue you can leave a comment under this post, or message me through Facebook or twitter. I also have an email, zerospintop@live.com. This is SuperJew McLovin, a.k.a Ben Goldberg, signing off, and have a happy Thanksgiving everyone!
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