Why Extreme Politics Hurts the Economy: What the Far Left and the Far Right Fail to Accomplish
American politics have evolved into a battle of extremes. Both extremes depend on ideology rather than detailed policy. Right wing religious zealots argue a distinct line of attack: hate government, shrink government, yet allow government to interfere with personal and religious decisions. Left wing zealots argue their side: more government, free college, socialized healthcare.
Why is centrist policy and less hate-based ideology better for the economy?
History tells us strict socialism, (or the more extreme communism), does not offer as much opportunity for wealth and prosperity and should not supplant free enterprise, entrepreneurial spirit, and rewards for work. Free college revokes incentive for an 18 year old to take a well-paying union job or even to become a young entrepreneur, invent an app, or sell his own artwork. Basic economics really does prove incentive based work is the best model. While the starvation and poverty of communist regimes is not apparent in most socialist countries, economic mediocrity frequently is. Democratic socialism is a mixed bag and rightly should be scrutinized for its huge potential expenses and the decreased incentives that could arise from very high tax rates necessary to fulfill the Sanders agenda.
History also tells us austerity is terrible for the economy, the poor (who lose services), and well, everyone. There would be no roads, antiquated infrastructure and fewer jobs (both public and private sector) under a strict conservative policy structure. Some of Europe has ruined its own economic recovery by austerity and is now seeing its flaws. We need a New Deal style expansion where people are hired (by government and government contractors) to improve everything from roads to airports. Maybe high speed rail even. The Reagan tax cuts added to poverty but did spur economic boom for the middle and the wealthy. Why did Grover Norquist want the IRS abolished and to shrink government to fit down a drain? What if the tax cuts had been smaller or the cuts went only to the middle and lower income earners and not the super-wealthy?
Minimum wage, better union power (or a new modern organizational structure supplanting unions), and access to health care coverage would help level our widening income gap. Does it have to be free health care and free college? No. It should be humane and affordable. If all working people earned a living wage, they could decide to choose an affordable college with legitimate financing instead of high interest loans and extremely high tuitions. The Affordable Care Act has our uninsured rate very low and is still new and improving.
The old fashioned competing views of classical versus Keynsian economics, i.e., tax savings and little government intervention and a more free market OR more taxes, regulations, and higher minimum wages are outdated. The best aspects of both should be cherished. Sure, allow companies to compete based on fair laws to which all companies are equally subject. Enforcing antitrust laws and fair labor standards and wages leads to hearty competition. Absent a minimum wage, we would have sweatshops and near slavery. Absent antitrust enforcement we would (and do right now) see huge mergers that hurt consumers. An economic hybrid that creates growth in a sustainable way that encourages fairness and environmental responsibility can decrease income inequality while growing the economy so more people prosper. The Reagan years cemented the truth that supply side economics (low regulation, lower minimum wages and lower taxes) increases poverty, leaves out those working the hardest, nothing trickles down and the environment and minorities are not protected. With a huge middle class in the 1980s, the tax savings was a pro-growth move but it came at a great expense to the poor through cuts in public education, assistance to the poor, health care choices among other government services. To replicate it with our current income distribution would favor only the very rich and not spark economic growth at all. Now, top earners (the top 1 percent) have ample incentive to continue work and could handle tax increases well. If taxes were decreased, they would indeed not spend the money saved and most likely would stash it offshore. Putting more money in the hands of the poorest and hardest workers is the faster path to growth as well as the fairest. That doesn’t mean we have to hand it to them or give an exorbitant minimum wage but for government to fail to regulate is not the right thing.
While at this moment the Democrats running for president offer different policy solutions and the Republicans offer no policy solutions, we must choose a policy initiative. Extreme ideology like Bernie Sanders’ protest campaign (c’mon, we all hate Citizens United and Obama could try to reverse it by executive order or Congress could legislate it away before the new president takes office and it would be great if the Supreme Court had a new justice and addressed similar facts), Donald Trump’s wall (no I do not elevate that to “policy” but it is his platform), and Ted Cruz’s use of religion to get the poor to vote against their own economic interest is not a basis for decision. They don’t represent policy. There are no workable numbers or sensible proposed budgets among the far right or the far left. While Bernie Sanders at least represents public morality, Trump and Cruz do not.
The highest marginal tax rate has varied tremendously over the years and has been low for quite some time. Republicans fear taxes disproportionately and irrationally. They should see how taxes help with roads, public schools, and many crucial services, even defense with which they are so enamored. Sanders and his supporters seem to want huge taxes burdening everyone to pay for free college and public healthcare allowing the very wealthy to get a bunch of free stuff while those in the middle would continue to pay more than their fair share. I am not voting for Barron Trump to go to Berkley for free.
While I would consider myself very socially liberal and economically progressive, I don’t hate banks or hate people who have achieved big time financial success. I also don’t hate people from other countries here either legally or illegally. I also don’t hate organizations providing health care to women. The very far end of the spectrums harbors a lot of hate. For a long time, Republicans seemed more like haters instilling fear and paranoia of everything from government to immigrants and Democrats were positive thinkers. But Sanders seems to be joining the ranks of the haters and I have a feeling it is me and my investment banker husband that he hates.