Yes we have been here before.
Capitalism is an economic system that values the accumulation of wealth. In free-market economics, governmental regulation should be as little as possible. The combination of capitalism and the laissez faire, free-market economy has brought the United States to a major imbalance of wealth distribution. Today, CEOs make more than 400 times the salaries of the average worker.
The bankers and corporate owners have worked hard to change laws and
regulations that allow them to keep their wealth at levels not seen
since the 1920s.
In the 1930s, the United States suffered a
similar financial crisis. One percent of the population owned most of
the nation’s wealth. Laissez faire economic philosophy had reduced
government regulation, allowed for risk-taking and created financial
bubbles. In 1929, the markets dropped, which kicked off the Great
Depression. That crisis was even worse than today’s, mainly because
unemployment was at 24 percent and there weren’t any government programs
in place that helped people get back on their feet.
A New Theory
from the Great Depression came from President Franklin Delano
Roosevelt’s turning away from laissez faire economics and embracing
Keynesian economic theory. When the private sector failed, the
government funded programs that kept the economy growing. With Francis
Perkins, the first female Secretary of Labor, programs like Social
Security and unemployment insurance were created.
Industrial Recovery Act gave communities money to hire people to work
and create useful community buildings, like post offices. For each
person hired by the program, another person was hired by private
business because getting people back to work created demand for goods
and services again. It was the NIRA that first encouraged workers to
collectively bargain for wages and work conditions, followed by the
National Labor Relations Act in 1935.
U.S. citizens were protected
from financial disaster with the creation of the Glass-Steagall Act in
1933, which separated commercial and investment banks. A year later, the
Securities and Exchange Commission was created to watch the stock
market and protected investors.
President FDR was from the 1% and
supportive of capitalism, but he was forced to look at different
economic theories due to the growing number of unions and socialist and
communist political groups. People started to believe in their
government and to think that the government should provide opportunity
for all, instead of just for the wealthy and corporations.
How did Roosevelt Pay for It?
the 1930s, Roosevelt went to the wealthy and convinced them that they
would have to pay more into the system to help the economy recover and
to stop the hundreds of strikes per year by the workers. Roosevelt’s
plan was to tax the wealthy 100% on any earnings over $25,000 per year.
The wealthy ultimately agreed to a major tax hike. The Revenue Act of
1942 forced America’s wealthiest to pay taxes on income over $200,000 at
a tax rate well over 90 percent.
Today, the tables have turned.
The wealthy pay a mere 15 percent on their capital gains income. This
is compared to worker’s payroll taxes, which are 25 to 35 percent of our
earnings. With all of the loopholes, the wealthy, especially
corporations, may even get money from the government. Only seven percent
of the workforce is unionized. Socialism is demonized as a threat to
capitalism and the rule of the 1%. Protecting American interests in the
United States and abroad really means protecting the interests of
corporations, not the safety of our citizens.
How Did We Get Here?
of legislation have undermined unions, reduced funding for government
agencies, and rolled back laws that regulate industry and protect our
natural resources. Laws friendly to Wall Street have returned us to
laissez faire economics. We lost the Glass-Steagall Act in the 1990s. Corporate and capital gains taxes have gone down over the years.
urge you to check out the movie “Koch Brothers Exposed” and Bill
Moyers’s “The United States of ALEC” to see how we have lost our
democracy. Today, corporations and our politicians work for the benefit
of corporations–not people. The people need to demand the return of
-Virginia “Ginny” Anders-Ellmore
LA County Nurse Practitioner