A healthy economy needs controls

Years ago we were told that trickle down economics will help us all. Hey, it’s only been twenty years or so, you have to give these things time.

The fact of course is that it does no such thing. All economists who aren’t in the pockets of the super rich will tell you that. The US economy always does better when everyone shares in the wealth, because when people have money they spend it, which increases demand and builds growth. I mean, duh.

Of course, none of that has happened since the days of Reaganomics.

You see, back before the Stock Market Crash of 1929, there were practically no controls on the economy. The US averaged a crisis every seventeen years — For example, there was the Panic of 1819, the 1837 Crisis, the Panic of 1873, the Panic of 1893, the 1907 Banker’s Panic, and so on up to the Great Depression. Then Franklin Roosevelt put in controls and restrictions on Wall Street and banking and lo and behold, no depressions and no recessions for fifty years. Reagan comes in and removes those and bang! The S&L crisis, the 2001 recession, the 2007 Mortgage crisis, and the 2008 Bush collapse.

Capitalism works, but it only works with controls.

Here’s a series of charts showing how the economy has fared in the past twenty years or so. Note how no matter what happens, the income of the top 1% goes up. They always do well while the rest of us suffer.

So when someone tells you that restrictions on businesses are bad for the economy, just laugh at them, because clearly they have been brainwashed.


6 thoughts on “A healthy economy needs controls

  1. Because, apparently, the Federal Reserve instituted 13 years before the Crash of ’29 did not constitute “controls on the economy”.

    The S&L crisis was not “lack of controls”; it was “controls perverted to maximize risk and socialize losses”.

    I’m actually not arguing against your core argument; if the government is going to be a neutral arbiter enforcing a “level playing field”, there do have to be both rules and the means to enforce them. But let’s derive a proper definition of “control” before claiming that anything which didn’t work isn’t one of them.


  2. For that matter, I guess the stagflation of the 70’s doesn’t count either…?

    And Reagan left office in 1988. The seeds of the S&L and housing bubbles were sown by Clinton’s policies of subsidizing mortgages and sub-prime loans…. under the pretext of helping the poor. Paved with good intentions, indeed.

    Government has a role in enforcing contracts, not in tipping the playing field in favor of any individual players. Unfortunately, government is made up of politicians, who have their own self-interest in mind, and are therefore susceptible to corruption by any number of private interests. Whether these private interests claim to represent the 99% or the 1% doesn’t really matter in the long run. The poor are better off in a free market than in one artificially propped up by government fiat.


      • Because you, like, totally answered my points.

        Let’s say it a different way, so you can understand:

        Any time you give the government regulatory power ostensibly for the purpose of helping the poor, the end result will be the usurpation of that power by the corrupt rich (since they can afford to buy politicians etc). In other words, it backfires on the very people you wanted to help and concentrates wealth and power in the hands of those you most detest.

        Better to keep the government’s role limited (not zero) to those functions that are absolutely necessary — protecting individual rights. Is this always possible? No, I recognize that there are difficult gray areas, mostly involving the tragedy of the commons, which are harder to resolve. We then have to take the risk of regulatory powers being usurped by the “wrong” entities. But intentionally expanding regulatory powers into the private sphere is both morally and practically wrong.


  3. Yes, yes, the libertarian philosophy that keeping government as small as possible gives us all a healthy economy with a libertarian paradise — no child labor laws, no minimum wage, no health care, no safety standards, no equal pay for women, no minimum hours per week. But, on the other hand, the poor people could hope for that ol’ trickle-down effect to start working one of these years.

    Oh, right, isn’t that what we had in the past and got rid of because it didn’t work?


  4. Pingback: See? I wasn’t exaggerating. |

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