Fixing the US Economy: Replacing the Engines of Inequality

From the leadership from the greatly weakened U.S. labor movement, the same that once led the country to economic strength and a strong middle class, comes its analysis of what ails the U.S. Economy.

The crash of 2008 and the Great Recession were inevitable consequences of three decades of economic policies designed by and for Wall Street and the wealthiest Americans. At the heart of the problem was the hollowing out of American manufacturing, the growing dysfunction of our financial sector and a rapid increase in economic inequality, all of which crippled the growth engine of the U.S. economy.

Starting in the 1980s, corporate America decided to boost profits by shipping U.S. jobs overseas. NAFTA and the admission of China into the World Trade Organization (WTO) accelerated the drive to relocate production to “export platforms” in foreign countries that would ship goods back to the U.S. market. Corporations that sent jobs overseas became forceful proponents of a “strong” (overvalued) dollar, which enhanced the profitability of their overseas operations but at the same time made much of the U.S. manufacturing sector uncompetitive and led to perennial U.S. trade deficits.

Fixing What’s Wrong….

 

The Republican presidential candidates not only failed to learn anything from Wall Street’s mistakes, they now want to double down on more of the same. They propose to deregulate the financial sector yet again, pass more trade agreements that encourage the offshoring of U.S. jobs, suppress wages by intensifying the assault on unions, prioritize inflation-fighting over full employment and perpetuate overvaluation of the dollar and the U.S. trade deficit. We already tried this approach, and it already failed spectacularly.

The Republican candidates pretend that tax cuts for corporations and the wealthy are the answer to wage stagnation and the economic crisis, but the Bush years taught us that these obscenely wasteful tax cuts only make the problem worse. They are the equivalent of eating our seed corn, because they starve the kind of public investment in education, infrastructure and innovation that is indispensable for long-term economic growth.

Steven Greenhouse of the NY Times comments

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