I believe in history, that history is the only reality available to us for future planning.
November is upon us and we are officially in an election year. Most of the rhetoric from the presidential candidates has to do with solutions to such issues as national health coverage, immigration and climate change. We are hearing very little from the politicos about the reality of our economic situation about the constant budget deficit and the growing national debt.
President Donald Trump’s solution to our economic problems was to cut taxes, primarily to the wealthiest two percent of the population. So far the result is that the stock market is booming and unemployment is at its lowest point in years.
Sadly, history tells us that the economy has cycles and when we attempt to alter the natural economic cycle bad things happen. A recession normally follows any artificial manipulation of the natural cycle of the economy.
Today, taxes in the United States as a percentage of Gross Domestic Product (GDP) are at their lowest level since 1950. But, are better off with lower taxes? Both the Bureau of Labor Statistics and the Tax Policy Center show that for the past 60 years whenever tax rates were the highest, more jobs were created.
The countries of today’s world with lower unemployment and higher rates of economic growth all have much higher taxes than the U.S. Germany and Denmark are good examples. Republicans in past years have espoused a “free market.” It sounds good to say, “Let the market ebb and flow and keep the government out of it.” Yet, the fastest growing economy in the world is China that has almost total governmental control of its economy.
History tells us that governments are the only entities with the capability to “position” countries in the international marketplace.
Most would identify the “cut taxes” and “free market” solutions to our current problem as based on “conservative” thinking.
In a time of previous economic difficulty, with a Republican in the White House, the response from Washington D.C. was very different from the present administration. From 1957 to the early 1980s when U.S. taxes were significantly higher than now the government created the Interstate Highway System, made massive investments in education and science, created small business incubators and built bridges to the rest of the world for trade. The result was a major development in science and business, major improvements in the education and health industries, 50 years of economic growth, and the highest living standard in the world.
My vote in November 2020 will go to one who can tell us how to work with the natural cycle of our economy and get the budget deficit under control.
History speaks to us. We should listen.
You can reach Dr. Mark L. Hopkins at email@example.com.