Defeating The Bully Mentality

 Popular Economics Weekly

"But nobody expects to see a lot of prominent Republicans declaring that rejecting Medicaid expansion is wrong, that caring for Americans in need is more important than scoring political points against the Obama administration. As I said, there's an extraordinary ugliness of spirit abroad in today's America, which health reform has brought out into the open." P Krugman

sfgate.com

We are now seeing what happens when the Republican Party has adopted what I have called a bully mentality, a state of mind so fixed on domination rather than negotiation that it has inflicted massive damage to the U.S. economy and the American people with its hatred of a government that serves all Americans.

Donald Trump is the latest result of Republicans’ attempts to capture as much wealth as possible. They have dumbed down their party to such an extent that they now have a government dominated by the least educated and less talented that threatens to cause another recession.

And what can we do about it?

I quoted Nobel Laureate Paul Krugman on Republicans’ “ugly” behavior as long

ago as 2014 when Republicans opposed Obamacare. Such an ugly state of mind has never prevailed in this democracy that was founded by vanquishing the biggest bully at the time, King George III.

"...while supposed Obamacare horror stories keep on turning out to be false, it's already quite easy to find examples of people who died because their states refused to expand Medicaid. According to one recent study, the death toll from Medicaid rejection is likely to run between 7,000 and 17,000 Americans each year.”

The Republican Party since President Nixon’s resignation has been a record of economic failures. The 27 Republican-dominated red states are the poorest states, with the greatest income inequality, lowest life spans and highest birthrate mortalities. They require the most assistance from wealthy blue states to balance their budget deficits. And they have the highest death rates, including suicides, from drug and gun use.

It is the reason we are experiencing a second Gilded Age, almost a repeat of the turn of the 20th century that created the robber barons. The enormous wealth generated by the digital age has created an economy dominated by the ultra-wealthy with a massive tax burden born by all Americans.

$trillions have been siphoned away from wage earners to the owners of capital since 1980, which most economists consider the start of the second Gilded Age. The result was a series of recessions leading to the housing bubble and Great Recession during GW Bush’s reign.

And did they learn from it?

No, Republicans then elected another bully to two terms who continues to wreak havoc on the American economy with illegal tariffs and an another unending war. Donald Trump is a convicted felon who has always been a bully preying on the weakest. His many bankruptcies (5) and lawsuits (+3500) attest to his methods of defrauding investors and stiffing his workers that he could not dominate.

But perhaps the saddest example of Republicans’ transformation to a party  is that they no longer protect the environment as they did when President Nixon created the Environmental Protection Agency in 1972 by signing the Clear Air and Water Acts.

When will Americans finally wake up to the suffering inflicted from such ugly behavior in a party that only caters to the richest and persecutes the poorest in upcoming elections, before inflation becomes uncontrollable, the air unbreathable, and the Iran becomes another unending war like Iraq?

Will it take another Great Recession and loss of millions of jobs before Americans stand up to such a bully mentality once again to end this Gilded Age?

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why the job Losses?

 Popular Economics Weekly

“The number of job openings continued to trend down to 6.5 million in December, the U.S. Bureau of Labor Statistics reported today. Over the month, both hires and total separations were little changed at 5.3 million each. Within separations, quits (3.2 million) were unchanged while layoffs and discharges (1.8 million) were little changed.” BLS

FRED/JOLTS

The Labor Department’s JOLTS report is another survey showing little or net job growth. That happens when the number of layoffs equals the number of hires (both hires and total separations—losses—were 5.3 million in December).

Alarm bells are ringing because it was the last this low during the worldwide economic COVID-19 pandemic (January 2021).

So now we must wait for the postponed official U.S. Labor Department unemployment report to know if we are slowly sinking into a job recession.

But workers can already see what is happening with their own eyes rather than listen to White House bromides that the economy must eventually get better. The private outplacement firm Challenger, Gray & Christmas said U.S.-based companies announced 108,435 layoffs in January, up sharply from the prior month. It was the biggest tally for the month of January since 2009.

“Generally, we see a high number of job cuts in the first quarter, but this is a high total for January. It means most of these plans were set at the end of 2025, signaling employers are less-than-optimistic about the outlook for 2026,” said Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas.”

It is up 205% from the 35,553 job cuts announced in December. January’s total is the highest for the month since 2009, when 241,749 job cuts were announced. It is the highest monthly total since October 2025, when 153,074 cuts were recorded.

There’s another reason companies have stopped hiring more workers than they are losing. They are waiting for the Supreme Court decision on whether the tariffs are legal that are making many of their products more expensive.

Trump’s executive orders are not laws, unless approved by congress. And congress has said they can be enacted if there’s a national emergency. A scarcity of strategic metals is an emergency whose imports can be taxed, but not coffee and every other product that Americans use every day because Trump doesn’t like that particular government.

What are the other culprits preventing job creation? Artificial Intelligence (AI) was cited for 7,624 job cuts in January, 7% of total cuts for the month. Companies referenced AI for 54,836 announced layoff plans in 2025. Since 2023, when this reason was first tracked, AI has been cited in 79,449 job cut announcements, 3% of all layoff plans announced in that period.

“It’s difficult to say how big an impact AI is having on layoffs specifically. We know leaders are talking about AI, many companies want to implement it in operations, and the market appears to be rewarding companies that mention it,” said Challenger.

Tariffs were cited for 294 job cuts in January, after causing 7,908 cuts in 2025.”

That is more sobering news. What will happen to the workers being laid off? Trump has cut back or cancelled many of the infrastructure programs that President Biden enacted in the Infrastructure, Inflation Reduction and CHIPs Acts that would employ these workers in sectors that are intended to modernize our economy.

But no, Trump wants to return to a fossil-fueled economy that is no longer growing (and is in fact losing workers). Republicans don’t seem to have a clue to the horrendous damage he is doing in turning back the clock to a distant era that no longer exists. It was called the Gilded Age and existed in the 1890s.

But the stock market is rallying to record highs with the DOW up 1200 at this writing. Yes, that's all due to the capital spending for new AI infrastructure. But it's creating jobs for robots, not humans.

Back to the 1890s? That can’t be done either, of course, and Americans are already seeing the results.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Trump Imitates Putinism

Popular Economics Weekly

“Russian mathematician and Putin critic Andrey Piontkovsky characterized Putinism as "the highest and final stage of bandit capitalism in Russia; and also as a war, 'consolidation' of the nation on the ground of hatred against some ethnic group, attack on freedom of speech and information brainwashing, isolation from the outside world and further economic degradation". Wikipedia

Medium.com

The latest Ukrainian peace proposal was negotiated between President Trump and Vladimir Putin without Ukraine’s involvement. This is another example of Donald Trump’s attempt to curry favor with Vladimir Putin by literally allowing Putin to dictate the terms of the peace proposal.

Why has Trump turned into Putin’s messenger, whose policies mirror Putinism? Why has the oldest liberal democracy in the world, a nation of immigrants founded on the principle of every member’s inalienable right to be free become the “bandit capitalism” of Vladimir Putin, a dictator who allows no freedoms and kills his own people?

Late-stage capitalism doesn’t fully explain why Donald Trump, a real estate developer with no political experience, could convert a weakened American Democracy into a version of capitalism that concentrates power and wealth in the hands of his oligarchic supporters blatantly ignoring America’s founding principles and laws of the land.

But epidemiologic disease models studied by medical researchers can explain how capitalism could morph into Putinism and bandit capitalism. Such models have shown that there are predictable paths that all epidemics, pandemics, or other contagious disease outbreaks follow from beginning to end.

The body politic of countries and regions (i.e., “the people of a nation, state, or society considered collectively as an organized group of citizens) have endured political outbreaks with similar characteristics. Even civil wars fit this infectious disease model, because they originate internally—brother or sister against each other—and may last longer than years, and suddenly end in unexpected ways.

How do diseases infect? The Black Plague epidemics usually infected people that had been weakened by famines or dysfunctional governments, and the more recent Spanish Flu and COVID-19 pandemics as well that infected and killed millions.

When do such pandemics wane or disappear? They run a recognizable course from inception to a maximum infection rate, then subsided when disease-infected populations eventually found ways to cause their decline. It was quarantines in early times, and vaccines in modern times.

Trumpism, Putinism, and like autocracies or dictatorships have captured weakened political systems. In Russia it was breakup of communism and the Soviet Empire that fostered a Vladimir Putin. In Trump’s case, he took advantage of a democratizing order that had united to win World War II but no longer served many Americans.

Oligarchism, or the Gilded Age model has supported Trump’s version of bandit capitalism with his illegal tariffs that are creating the worst income inequality in the developed world. Trump is promoting a similar hatred of immigrants as Putin, also non-white ethnic and religious groups, attacks on freedom of speech in universities, and Depression-level tariffs that is isolating America from the “outer world”.

The AP just reported that President Donald Trump says he wants to “permanently pause migration” from poorer nations and is promising to seek to expel millions of immigrants from the United States by revoking their legal status. He is blaming immigrants for problems from crime to housing shortages as part of “social dysfunction” in America and demanding “REVERSE MIGRATION.”

He has also followed Putin’s strategy by weakening foreign alliances such as NATO, and breaking up long held foreign trade alliances, all to centralize his power.

But the MAGA movement itself may be in a late-stage decline, as it is slowly disintegrating from internal divisions, with the resignation of major leaders such as Marjorie Taylor Green, growing disputes over policies including tariffs and the treatment of immigrants.

And Donald Trump, its leader, is showing signs of declining health—with fewer public appearances (that also afflicted former president Biden), irrational outbursts and making sudden policy changes without explanation. The MAGA movement has blindly followed him, believing in totally irrational conspiracies until the conspiracies are debunked or and fade away (just as did the flu and COVID-19 pandemics).

The first Gilded Age was defeated by the election of President Teddy Roosevelt riding on the wave of a progressive movement that uncovered the corruption and concentrated wealth of the time.

Trump doesn’t even attempt to hide his blatant corruption nor his promotion of the disease of Putinism that is attempting to destroy American Democracy. So it will take constant vigilance to identify and combat such a widespread contagion, as we have defeated past diseases of the 'body politic', and bring Americans together once again in common purpose to preserve our democracy.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

 

Why the Recession Calls?

Financial FAQs

The Conference Board’s Index of Leading Economic Indicators (LEI), a read on actual economic data rather than an opinion survey as its Conference Board’s Consumer Confidence Index, has called a recession. Its Confidence Index is hinting at the same.

conferenceboard.org

“Besides persistently weak manufacturing new orders and consumer expectation indicators, labor market developments also weighed on the Index with an increase in unemployment claims and a decline in average weekly hours in manufacturing. Overall, the LEI suggests that economic activity will continue to slow.” Conference Board

 Is that really a surprise? President is attempting to bring back a Gilded Age that prevailed in 1900 by steering as much business to his oligarchs and himself as possible by deregulating while slashing government programs that protect all Americans, and rounding up working immigrants that has badly hurt the job market.

The LEI forecasts business activity six months ahead has been forecasting a possible recession for some time, but now says it is here.

Why? “Its widespread weakness among the LEI’s components and a negative growth rate over the past six months triggered the recession signal in August,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.

The graph shows where its LEI components dropped below the horizontal red line at the start of past recessions. The blue line of the LEI graph shows the two recoveries since the 2001 and 2008-09 recessions and its current low in August (gray bars are recessions).

Consumers weren’t much happier in the confidence survey. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—decreased by 1.2 points to 74.8. Expectations remained below the threshold of 80 that typically signals a recession ahead, said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. .

The LEI is nowhere near past recessionary lows, per the graph, and stock indexes are at record highs. Then why does its LEI keep predicting an incipient recession?

It partly because consumers’ appraisal of current job availability declined for the eighth consecutive month in the survey, and it is the most heavily weighted LEI component. We now know what consumers must have already been intuiting. There were -991,000 fewer jobs created over the past year and one half in the Labor Department’s just released benchmark revision.

Chairman Powell has been hinting of late that the Fed has no good choices in deciding whether to ease credit conditions by cutting interest rates or not, because the job market is deteriorating and inflation has been rising since April 2 when Trump first announced his tariff war on the world.

The September rate cut of -0.25% was the first since last December and Powell said there will probably be two more cuts by the end of the year to support more job creation.

Why the job weakness? There were just 22,000 hires and the unemployment rate rose to 4.3% in August. The hires were in the Leisure/Hospitality, Education and Health sectors. Manufacturing, Construction, Professional Services and Government (state and local included) lost jobs. And initial jobless claims for workman’s comp have risen to a three-year high.

And there is widespread weakness among most of the LEI’s components, such as fewer hours worked. Businesses had in effect stopped adding workers, because not knowing what the final tariff rates may be. This is enough to shake consumers’ confidence in their future.

Add to that the demoralizing effect on hourly wage earners in construction, manufacturing that require manual labor and mostly employ immigrants, the target of the ICE raids.

The financial markets are more focused on how to spend the record profits of big business, hence the hysteria over AI, TikTok, IPOs, and the irrational exuberance that has driven the stock indexes to record highs.

In fact, it’s what is looking increasingly like the last Gilded Age where a small group of the extra-wealthy partied while the US economy as a whole declines.

It can be reversed, of course, if Republicans have enough cajónes to stop Trump from weakening almost every sector of the American economy that creates growth, from consumer and environmental protections, healthcare, to national security (e.g., NATO by alienating our allies).

Consumers are extremely on edge and their behavior determines what happens next, and the poorest largely live in the red states. Republicans will be the most affected.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

 

It's Taxation Without Representation

 Financial FAQs

“Oh, and as for all these tariffs: Whatever you think of them (and I am not a blanket opponent), they are taxes. They are sales taxes. Where in my copy of the United States Constitution does it say that the president has the power unilaterally to impose whatever sales taxes he wants, on whatever products he wants, at whatever moment? I must have skipped school the day they taught that in civics.” Bret Arends, MarketWatch

Thoughtco.com

I quoted MarketWatch columnist Brett Arends because it was a cause of our Revolutionary War for those that remember the Boston Tea Party. King George III tried to tax American colonists and it didn’t work. Why does ‘King’ Trump believe it will work when he promised he would bring down inflation on “Day 1?”

We are already seeing the result in almost all prices. Walmart and Target have already announced that they will raise some prices because they can no longer absorb the increased cost of their imported goods from the tariffs.

It’s Trump’s attempt to bring back President McKinley’s Gilded Age of robber barons and rampant corruption that prevailed in 1900, until McKinley was assassinated and Vice President Teddy Roosevelt succeeded him and initiated the modern Progressive era of reform.

Britannica has more to say about its history.

“The great burst of industrial activity and corporate growth that characterized the Gilded Age was presided over by a collection of colorful and energetic entrepreneurs who became known alternatively as “captains of industry” and “robber barons.” They grew rich through the monopolies they created in the steel, petroleum, and transportation industries. Among the best known of them were John D. Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, Leland Stanford, and J.P. Morgan”.

The Foreign Trade Court that has jurisdiction on such matters has ruled Trump’s tariffs without congressional approval are illegal. Yet gave Trump the opportunity to continue the tariffs while it was being appealed.

And though Trump agreed to repay the tariff taxes he has already collected if he loses the case on appeal, he continues to levy the tariffs.  Why? They already amount to more than $130 billion the Treasury must repay that it has already collected.

Because he knows our federal debt is unsustainable, and so he must find some way to pay for the tax cuts in his big beautiful tax cut bill that are projected to add $5 trillion to the federal debt.

On May 16, Moody’s Ratings downgraded the U.S. credit rating, citing an “inability of the nation to address large and growing deficits.” This downgrade means that for the first time ever, all three major credit ratings agencies have downgraded U.S. credit below their top AAA rating.

Trump is therefore begging an appeals court to allow the tariffs. It could lead to a “GREAT DEPRESSION” Trump said on social media, with Americans “forced from their homes” that will threaten social security and Medicare.

But what if the higher tariffs lead to stagflation, the combination of slow growth and inflation that caused so much grief in the 1970s? Economists are saying it’s a risk. Higher prices are already affecting consumers that power 70 percent of economic activity and the retailers.

So what do we need that can stop Trump’s highway robbers from not only milking the American people of their money and social benefits, but reversing the environmental and public health protection that protected Americans until Trump’s big beautiful tax cut bill and DOGE firings eviscerated the federal government?

Do we need another revolution?

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Trump's Manufacturing Scam

 Financial FAQs

“Why? It’s not like we’re a small country or full of stupid people. No, it’s the takeover of the economists and bankers. Simply put, modern American law is oriented towards ensuring very high returns on capital to benefit Wall Street and hinder the ability to make things.” Matt Stoller, American Economic Liberties Project

CBPP.org

Matt Stoller’s cry is a sign that even Libertarians are alarmed at Donald Trump and the Republicans’ scheme to grow the manufacturing sector. It’s another scam that enables them to turn the economic clock back to the 19^th century, the Gilded Age of Robber Barons and rampant corruption and downsize government while ignoring modern laws and even the constitution.

Trump is doing it by raising tariff rates to a level not seen since 1930 at the onset of the Great Depression. But it won’t bring back a manufacturing industry that was lost to a globalized economy over the past 30 years.

The Manufacturing Institute and Deloitte accounting firm have projected that manufacturing will need an additional 3.8 million workers by 2033, in part due to the Biden administration’s $2 trillion worth of projects already invested by the Infrastructure, CHIPs and Science, and Inflation Reduction Acts, according to a recent NPR report.

And the Trump administration’s goal of deporting millions of undocumented workers as well as eliminating DEI programs that develop more skilled minorities will defeat his purpose by hollowing out the required workforce.

Early 19^th century was a time of few laws to protect working folk, and there was no income tax until 1913 when Teddy Roosevelt’s Progressive era began to level the income playing field for workers. Oligarchs had to pay income taxes for the first time.

It was Ronald Reagan and the Business Roundtable of corporate CEOs that began the “takeover of the economists and bankers” that moved whole industries overseas while reducing their income taxes—from a maximum personal tax rate as high as 92 percent in President Eisenhower’s time—transferring $trillions that once went to the 80 percent of Americans earning salaries to the oligarchs that owned the capital and became “rentiers”; i.e., living off the capital created by their workers.

Trump wants a return to the era because it’s how he made his money. Who better than a convicted felon, a “liar and cheat” his whole life in the words of his erstwhile attorney Michael Cohen, to con Americans into believing that a tariff war against the whole world is the best way to bring back our manufacturing industry that has already migrated to Southeast Asia and China?

He has rationalized the economic chaos his tax war is creating with the promised goal of returning to an earlier era when we were a manufacturing superpower. But workers had fewer rights and benefits until Roosevelt’s New Deal.

Are we to believe it justifies more tax cuts for himself and his oligarchs that will grow our record federal debt ever higher, endangering the “full faith and credit” of the U.S. Government, as well as creating another era of stagflation with possible double-digit inflation and interest rates as happened in the 1970s?

Trump is attempting to recreate a time (1900) when we invaded and occupied Cuba and the Philippines. The reason for his nonsensical pronouncements that Canada should become our 51^st state and Greenland a U.S. territory now begin to make sense.

Democrats do have an answer to the huge wealth gap between blue states and red states that might bring US back to present times. Start with small steps such as lobbying to raise the national minimum wage, currently $7.25 per hour to what it is today when inflation adjusted—$10.50/hour. That is already the case in 30 of the mostly blue states, where the minimum wage has risen above $15 per hour.

It will be a terrific struggle that will take time. President Trump and Republicans have erected such a wall of ignorance to protect his administration—officials of such incompetence that they lack the ability to even think for themselves that they will obey his commands without question and even anticipate them beforehand (Pete Hegseth, et. al.).

We aren’t a country of stupid people that can’t see the erosion of rights and civil liberties the Trump administration is justifying that enacts a return to an earlier century. The mass protests and demonstrations against Trump and Musk’s chainsaw tactics are proving it.

It’s a good time to return the Democratic Party to the party that has always supported greater equality for wage-earners and farmers. That is the best way Democrats can block Trump’s impossible time travel back to an earlier century that no longer exists.

Harlan Green © 2025

Follow Harlan on Twitter: https://twitter.com/HarlanGreen

Why the Shock and Awe?

 Financial FAQs

“White House aide Peter Navarro said Sunday that he expects President Donald Trump’s tariffs to bring in $6 trillion in revenue in the next decade, which could amount to the largest tax hike in US history. CNN

The financial markets are close to panic selling as Donald Trump’s tariff announcements were far more draconian than expected. The Washington Post described Trump’s tariff policies as ‘shock and awe’ tactics to inflict as much pain as possible on the countries Trump and MAGA Republicans consider to be taking economic advantage of the U.S.

But history has shown that such strong-arm tactics don’t work. They create more enemies than friends and more wars.

The most recent example is GW Bush’s ‘shock and awe’ invasion of Iraq on false pretenses (Saddam Hussain had weapons of mass destruction) that brought Iraq closer to Iran, created ISIS, the Sunni rebellion, and ate up the prior Clinton administration’s four years of budget surpluses, costing more than $1 trillion.

Trump maintains his decision to do battle with the whole world will make Americans more prosperous on the presumption that it will reduce our budget deficit lower taxes. Instead, the tariffs will amount to the largest tax increase in history.

Why? “That is a tax,” said Sen. Mark Warner in an interview on Fox immediately after Navarro’s appearance. “That money doesn’t come falling out of the sky. That money comes because (the price of) these products will go up, Americans will pay more. We’re talking a $700 billion tax.”

And small businesses, who thought Trump would bring some relief from regulations as well as lower prices, do not like what they are seeing. The National Federation of Independent Business on Tuesday said its Small Business Optimism Index dropped 3.3 points in March to 97.4, falling just below its 51-year average of 98.

Economist David Rosenberg of Rosenberg Research, cited by MarketWatch’s William Watts, said the three-month drop of 7.7 points in the index is the steepest in more than four years, with drops of that magnitude having occurred only in April 1980, December 2008, April 2020, May 2020, December 2020 and January 2021 in the 50-year history of the series.

NFIB

The NIFB graph illustrates that the biggest dip in optimism occurred during the 2008 Great Recession (gray bar in graph), the worst worldwide recession since the Great Depression.

“The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months.” said NFIB Chief Economist Bill Dunkelberg.  “Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them.”

Why has Trump chosen to punish so many countries, many with no trade deficit at all, as well as islands with no people, just penguins?

David Brooks in Atlantic Magazine has quoted George Orwell’s 1984 novel as an example of what a future government dominated by an autocrat and political party interesting in holding on to power at any cost would look like. It rules by inflicting pain and suffering.

“Obedience is not enough. Unless he is suffering, how can you be sure that he is obeying your will and not his own. Power is in inflicting paid and humiliations.”

Trump acts like a thug who only knows how to inflict pain to get what he wants, which is more power. He extorts rather than negotiates when he believes he has the upper hand. It is becoming obvious that he believes that by inflicting maximum economic pain on ally and enemy alike, countries will submit rather than retaliate out of fear that it will sink their own economies.

But why would they when they can negotiate with each other rather than Trump?

Trump’s problem is that he is already breaking his “Day One” promise to lower prices and taxes, and it will take years to repatriate manufacturing jobs and businesses to find alternate supply chains to avoid the tariffs.

We will soon see the reactions of most of the 180 countries he has targeted as they retaliate with their own tariffs on American exports. Shock and Awe tactics have been shown to create enemies rather than allies, poverty instead of prosperity, war instead of peace.

Most of all, it doesn’t work economically. President McKinley’s Gilded Age that Trump cites as his model economy was golden for the Robber Barons and wholesale corruption, not ordinary Americans.

President Bush created the first $Trillion-dollar federal debt on the lie that cutting taxes while fighting wars created jobs and greater prosperity, when it instead created the Great Recession.

By promising what he cannot possibly deliver, “Starting on day one, we will end inflation and make America affordable again, to bring down the prices of all goods,” Trump risks even more, a greater recession, and maybe another war.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why Another Gilded Age?

 Financial FAQs

"I remember '29 very well ... the drugged and happy faces of people who built paper fortunes on stocks they couldn't possibly have paid for. ... In our little town bank presidents and track workers rushed to pay phones to call brokers. Everyone was a broker, more or less. At lunch hour, store clerks and stenographers munched sandwiches while they watched stock boards and calculated their pyramiding fortunes. Their eyes had the look you see around a roulette wheel ...but despondency, not prosperity was just around the corner.”—John Steinbeck

Graph: Last Tech Age

This is what happened in the 1920s that led to the Great Depression and Roosevelt’s New Deal.

Marriner Eccles, Rooselvelt’s New Deal Federal Reserve Chairman was one of the first to characterize the cause of the Great Depression, when he said in testimony before congress that it was the record income inequality of that time:

“The United States economy is like a poker game where the chips have become concentrated in fewer and fewer hands, and where the other fellows can stay in the game only by borrowing. When their credit runs out the game will stop—Mariner Eccles, Federal Reserve Chairman during the Great Depression.”

The current Gilded Age began in earnest with the election of President Ronald Reagan and his credo that “government is the problem.” It has resulted in the huge transfer of wealth from workers to the owners of capital—as much as $1trillion, according to some economists—by cutting their taxes and deregulation of whole industries.

Laws were also enacted to weaken labor unions and monoply laws were not enforced so that corporations could transfer their factories overseas where labor was cheaper, basically gutting America’s middle class industrial base that has been the cause of so much anger and despair of America’s workers.

The U.S. is in 106th place of the 149 countries in income inequality as ranked by the CIA’s World Factbook; with a Gini inequality index of developing countries like Peru and Cameroon. Whereas Finland and the Scandinavian countries are at the top of equality rankings, Germany and France are 12th and 20th, respectively, as I’ve highlighted in past columns. The higher the index, the greater the gap between wealthy and poorer citizens of a country’s population.

It’s had to believe that we have reached that point once again, a time when today’s wealthiest exceed the wealth of the Vanderbilt’s, Rockefeller’s and Morgan’s tenfold that built those massive 5^th Avenue mansions at the turn of the 20^th Century to show off their wealth, before there was an income tax or Federal Reserve.

It was spawned by an economy fueled by oil, railroads, and a banking system that enabled so many consumers to go into debt, until the stock market crashed on Black Friday of 1929.

History is repeating itself with $Trillioners instead of the $Billionaires (and $Millionaires) of that era because of Sillicon Valley and the Internet that have made an Elon Musk, now the richest person in the world.

But it is at the cost of a greater concentration of wealth than ever. Today’s moguls duplicate the 20^th Century robber barons in wanting to share as little of their wealth as possible—instead, they use their wealth to elect conservative policies that lower tax rates and cut government benefits that protect the other 99 percent of Americans.

Is President Biden’s Bidenomics’s spending of $trillions to modernize America’s industrial base, infrastructure, and mitigate disasters caused by a changing climate the last gasp of Roosevelt’s New Deal programs that protect ordinary Americans?

The incoming Trump administration has tasked the richest man in the world to set up a “Department of Government Efficiency”, they say, to downsize or eliminate some of those programs to eliminate waste, but really to shrink or eliminate the health and safety programs; such as the US Environmental Protection Agency, Health and Education department, and even shrink the IRS once again to enable the $Trillionaires to better evade taxes.

Trump is clear about his intentions. He intends to pick a cabinet based on their loyalty to him as he did in his first term. Many have no qualifications; most were lobbyists with blatant conflicts of interest which resulted in many having to resign when their corruption was uncovered.

Such dysfunctional behavoir was a reason President Trump lost the House of Represetatives to Nancy Pelosi and the Democrats in 2018, and Trump lost to President Biden in 2020.

Sadly, the incoming all-Republican congress will probably give him the tax cuts, inflationary tariffs and the mass deportation of undocumented immigrants that will also be a repeat of Trump’s first term.

And many in the working class who voted for him will suffer again, and as they have throughout Trump’s working life; thanks in large part to the Elon Musk’s of the world that don’t believe in sharing their wealth.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

How Do We Fix Inflation?

 Financial FAQs

I said last week that: “Many of us remember when a gallon of gas was less the $2, or a quart of milk less than $1, or housing was last affordable in the 1970s. I remember the inflation surges in housing. What happened?”

So, Shouldn’t we as voters be able understand how to fix inflation such as we just experienced with the COVID-19 pandemic? That didn’t happened on November 5. Trump was able to convince most of his voters to blame someone rather than learn what needed to be done, and had already been done, to cure the problem.

It is now doubly important because if Trump raises tariffs and begins to deport undocumented workers on ‘Day One’ of his presidency as promised, inflation will soar again and the U.S. economy will quickly go into a tail spin.

Why couldn’t Trump voters see this? Their anger was fostered by an out of control social media catering to their own interest groups by elevating conspiracy theories and denigating scientific facts to keep their audience rather than what is good for most Americans and the American economy.

It has always been difficult to pierce the fog of propaganda and obfuscation that has dogged anything related to our economy because the U.S. economy is the most complex in the world with its competing mix of private and public enterprise needed to to make it work.

FREDcpi

The retail Consumer Price Index (CPI) in the FRED graph above dating from 1980 is the eaiest way to understand why we had high inflation spikes and how long it took for it to return to normal.

Simply put, the spikes that hurt most Americans were due to supply shortages mostly out of our control. The 1980 spike was mainly because of an oil shortage that took a decade to reverse. In 2022 the other high spike was the COVID-19 pandemic that shut down supply chains and took approximately three years to recover.

It didn’t matter which political party was in charge—Republicans in 1980 and Democrats in 2022. Both parties had the tools to mitigate the inflation surges that took some time, as I said.

How were they solved? Both political parties used their financial institutions, mainly the Federal Reserve and Treasury Department, and did not disparage them as Trump’s MAGA supporters do as a matter of policy. Because they control the flow of money—regulating whether there is too much (inflationary) or too little (deflationary) money is in circulation to counter the supply disruptions.

But playing the blame game that has enraged so many working class voters doesn’t solve the inflation problem, though it did win enough workers to the Republican side. They now must prove they actually know something about its causes.

What will hinder any good faith effort to tame inflation is the maldistribution of the money supply. Too much of it is in too few hands, a hallmark of what has been called the second Gilded Age that has favored the wealthiest since the 1970s, and not ordinary workers damaged most by higher inflation whose household incomes have stagnated since then.

We have working solutions to the inflation that has plagued the American economy for decades. But deporting undocumented workers and raising tariffs will raise inflation, since tariffs are a tax on imports, and fewer immigrants form the backbone of the supply sector (restaurants, transportation, retail, construction) that has been the mainstay of this recovery. It will cause a labor shortage, which means fewer goods and services will be produced, thus raising the price of things, as well.

This is the most basic of Econ 101 priinciples, but Trump was able to fool his voters because there is a general ignorance of economic principles.

And our capitalist system hasn’t been helping the working class since the 1970s, as I’ve said in past columns. The increasing income inequality created an almost unstoppable anger that grew after decades of income loss for working class voters as more and more wealth was shunted upward creating ever larger budget deficits.

If we are able to reverse the income inequality with more progressive taxation policies that pay for better social benefits, for instance, we might convince more voters to realize government isn’t the problem and inflation is really governed by the common sense rule of supply and demand.

They might then not choose someone who only knows how to blame but rather vote for real economic solutions to mitigate inflation.

Once Roosevelt created the New Deal in response to the Great Depression, governments began to work for ordinary Americans—from social security to a federal minimum wage, to workers rights. Only such a private-public partnership will help to cure our inflation problem.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why the Inflation Problem?

 Financial FAQs

Most of us remember when a gallon of gas was less the $2, or a quart of milk less than $1, or housing was last affordable in the 1970s. I remember the inflation surges in housing. What happened?

Shouldn’t we as voters understand inflation if a majority of voters were so angry about the soaring price of everything that the majority would find somebody to blame (President Biden), and elect somebody else (Donald Trump) who said he will make everything better, even though that didn’t happen during his first term?

It is a peculiar form of American amnesia that caused so many to vote against their own interests—in this case a majority of white women to vote for a sexual predator and abortion opponent, young working class males to support a con-artist who had stiffed or defrauded his own workers and filed bankruptcy multiple times to avoid paying them.

It has to be because everything is happening too fast in our high-Tech driven economy and culture (Internet?) that has left so many people still wanting to live in a world they remember or imagine.

This happened at least once before and signaled how difficult it is for Americans to face forward rather than look backward to a time that never was, even though they crave change. It was first noticed in Thomas Frank’s 2005 best-seller: What’s the Matter With Kansas; How Conservatives Won the Heart of American?

Such nostalgia enabled GW Bush to win a second term, although he started his wars on terror by lying about weapons of mass destruction after failing to anticipate 9/11.

To understand what happened with Trump’s false economic narrative—that Americans were better off financially in his first term—we should understand the complexity of our own economy.

The main priority of Republicans—tax cuts that Bush and Trump Republicans enacted were a giant scam that actually transferred more wealth to their supporters and imp0verished more working Americans, while adding $trillions to the national debt.

But enough Americans remembered an earlier, whiter America that had experienced a victorious, post-World War Two prosperity—until the 1970s and school integration, minorities wanting more rights (including women), the killings of the Kennedy brothers and Martin Luther King, Jr., and a Vietnam War tore our country apart.

It’s hard to imagine such a tumultuous history today several generations later.

Republicans have always favored tax cuts that enriched themselves, but not better healthcare for Americans—especially women and children.

CBPP.org

So how should voters understand the American economy? Firstly, we have been living in what has been called the second Gilded Age that has favored the wealthiest since the 1970s, and not ordinary workers whose household incomes have stagnated since then.

But most Americans probably understand it’s most basic tenet: The Law of Supply and Demand. It’s an economic term, but based on commone sense. The price of things depends on the supply of things. And when there is an abrupt shortage, such as oil and gas because of the Arab oil embargo that cut off OPEC (The Organization of Oil Exporting Countries) oil imports in the 1970s, gas prices soared. And that began the upward cycle of price fluctuations.

Meanwhile, more than 80 million baby boomers became consumers at the same time who wanted more of everything. And the housing industry couldn’t build enough dwellings to satisfy the increased demand.

This is as good a common sense explanation as any to understand inflation. Prices go up or down when they aren’t in equilibrium—i.e., too much supply lowers prices, while too much demand from consumers and businesses raises them.

The same thing happened with the COVID-19 pandemic that killed one million Americans. The worldwide shutdowns and shelter-in-place requirements to keep it from spreading caused massive shortages of everything, which caused the price hikes that infuriated so many.

Consumers couldn’t very well blame COVID-19, a virus like the flu though much more virulent, but they could blame who was supposed to protect Americans from it.

What is most remarkable is that prices had been rising rapidly since the 1970s, but Americans hadn’t reacted as angrily as they did after the COVID-19 pandemic—maybe because of the trauma from so many lives lost—whole families in some cases.

Inflation is like the frog in water that has been slowly coming to a boil. For whatever reason, we have only noticed it since the water (meaning our economy) has come to a boil from the pandemic’s aftereffects that have most hurt our working class, many of whom had lost jobs as globalization moved good paying manufacturing jobs overseas in the name of making everything cheaper.

Most of us remember when a gallon of gas was less the $2, or a quart of milk less than $1, or housing prices were last affordable in the 1970s, as I said. But there was no quick cure. The OPEC oil embargo jump-started the decade-long inflation surge in the 1970s, for instance.

What can be done to cure the current inflation surge? Republicans and Trump’s “Drill Baby Drill” promise can’t do much to lower oil prices because the U.S. already produces more oil than it uses, while adding more CO2 to the atmosphere that is accelerating global warming, that endangers whole parts of the country.

And higher proposed tariffs won’t increase the supply of anything and might lower demand, since it makes imports more expensive because it is a tax on imported goods.

There are two solutions that the Biden administration have implemented, but Republicans don’t like—federal funds to make construction of affordable housing cheaper, and the elimination of loopholes that encourage the profit-taking by cartel-size pharmaceutical corporations that took advantage of the pandemic shortages and continue to raise their prices.

And lastly, we need more comprehensive healthcare legislation that would increase productivity of our workforce because they become healthier. But Republicans have historically opposed that as well, having attempted to repeal Obamacare, the Affordable Care Act, more than 30 times. It is the only private health insurance that insures more than 30 million Americans against preexisting conditions.

Republicans are even talking about downsizing Medicaid and Medicare in the name of increasing efficiency. That will also increase inflation, because M & M keep overall costs of healthcare lower with their power to control treatment and drug prices.

So it’s difficult to know if it was ideology and conspiracy theories triumphing common sense economics that enabled Republicans to win this election.

Inflation has returned to its historic norm, and the American economy is fully employed so everyone’s job is safe. Many voters want someone to blame for their myriad anxieties, as Kansans had done two decades earlier.

We will now have to worry if this Gilded Age will end as did the last one. So much wealth had been accumulated in too few hands that it caused the Great Depression and led to World War Two.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen