Corporations Won’t Revitalize the Economy. The Middle Class Will.
Trickle-down economics is a hard beast to kill, and Republicans are doing a terrific job of keeping this economic theory alive amidst life-threatening conditions. As I noted last week, in a time of stagnant wages, the GOP has ditched their job-growth justification for tax cuts and instead begun to harp on the erroneous link between wage growth and lower corporate taxes.
Tyler Cowen at Bloomberg similarly noticed the conservative’s inadvertent creation of “a new kind of supply-side economics.”
Cowen argues that in the 1980s Republicans sold their trickle-down taxes by focusing on how reduced rates would help the individual. Reagan spoke incessantly about how cutting income and capital gains taxes would “mobilize” money in the hands of the very, very wealthy.
In 2017, however, trickle-down’s emphasis on the individual has been replaced with concern for the corporate sector. Now, Cowen writes, “the core theme behind the [tax] policies is boosting investment into this country” from corporations.
This sleight of hand is obviously an economic farce which will hurt American workers, but it does play brilliantly into the Democratic Party’s hands.
After all, Americans today are really skeptical of big businesses. Two-thirds of the nation feel corporations pay too little in taxes, with “47 percent of Republicans” even agreeing with that assessment. Their distrust of these institutions goes beyond taxes, too. A vast majority of voters have some or very little confidence in big business. And who can blame them?
The world is now “awash with cash” and corporate profits are near record highs—yet the average American is not benefitting from this excess of capital. If corporations will not dramatically increase wages now, when will they ever?
Democratic candidates, think tanks, and propagandists have an amazing opportunity here to brand their political opposition as “bought” and subsequently position themselves as the party of Main Street.
Democrats should be railing against corporate greed from now until 2018. They should not accept any corporate cash (something that the DNC is thankfully moving towards) and talk instead about the power of growing the economy from the middle out. They should let Republicans moan about how raising wages kills jobs in the corporate sector. They should allow Republicans to explain why giving pay increases is bad for a corporation’s stock price.
More than just political posturing, however, Democrats need to offer the American people a real plan on how they will hold corporations accountable. For too long, big business has poisoned communities (figuratively and literally) with their narrow self-interest and disregard for the well-being of their consumer base.
Democrats need to be as diligent as Republicans when it comes to promoting a coherent economic theory. They need to explain why the consumer has, and always will be, at the center of the economic universe. As our plutocratic overlord Nick Hanauer stresses:
Significant privileges have come to capitalists like me for being perceived as job creators at the center of the economic universe, and the language and metaphors we use to defend the current economic and social arrangements is telling.
The time is ripe for Democrats to undermine trickle-down theory by arguing that wages will only grow when corporations are forced to pay their employees more. There is zero reason why we should believe in the generosity of corporations in 2017—and yet Republicans are telling the American people to do just that.
That’s a losing message in a time of terrible inequality. Let’s hope Democrats take advantage of such favorable territory.
