Honest question, as an economics student, what happened?
A man could support a family and have a decent house and car on one average income. Now it takes two just to stay afloat and be up to your eyes in debt. 'Those were the days' as the Bunkers sang.
I'd like to have your unbiased, non political, thoughts on the matter. What happened, when did it happen, was it inevitable, could it have been stopped, can it be reversed?
Just when you have time and can post a thoughtful response, it would be appreciated.
FTR - I specialized in macroeconomics when pursuing my degree, so my specialty is more to that. But I did study micro at a high enough level that I *think* I do have some expertise here.
Really started under Reagan and it's taught in school using the Laffer curve theory which tries to plot the "optimal taxation" which is obviously way more difficult than a stupid chart. It suggested that optimal tax rates would be at 70% and for most OCED countries it would be around that point.
Why is Reagan important? He lead the largest charge towards reducing tax rates and splitting the increase in productivity that was seen in the US through it's incredibly strong economy and the gains were now being further sheltered in the top tax levels. Of course the upside to this is that if you're a wealthy person or from a wealthy family you're reaping the rewards of Reagan today. If you're not? Well, you're pretty much capped at how well you can do.
Now, having low tax rates isn't the only issue with what happened in the 80's and continued on. Allowing companies to operate in monopolies or in oligopolies with reduction of controls/restraints allowed for the best and brightest minds in the world (located in the US) to find ways to further consolidate power and money within the most well off.
There is an upside to this and it's not to say that Reagan didn't promote economic growth for the US, he did, it's just that the fruits of that are more shared amongst the top levels and less so as you go further down. If Reagan had used the gains he made to increase/modernize social safety nets he could have cemented himself as one of the greatest presidents of all time. One area I think Reagan should've/could've used his cache as deregulating is to have a more robust social security program where it gives the SSA the ability to invest in securities that are not just US Treasury securities. You have the best and smartest financial minds in the planet, have them manage the SSA and allow them to invest the funds into US projects/equities. The issue of oversight will be a concern, but this would be the most sought after and scrutinized portfolio in the world. You can take the leaders of all the biggest money managers and have the portfolio split between them to limit the influence of one firm.
Well no president has offered any solution to the SSA so it's not just Reagan's fault - just that it would have been right up his alley to do something like that.
So Reagan laid the groundwork for the current situation today, Clinton essentially brought the gasoline and lit that fire. Clinton lowered taxes on small businesses, as someone who regularly deals with small businesses it is a term that covers a WIDE swath and gives a bunch of people a nice way to tax plan. He also basically laid the groundwork for the 2007/2008 recession with the GLBA that repealed Glass-Steagal and at a high level gave financial institutions a mandate to do whatever they'd like. This also lead to consolidation in the industry and we know how that works in terms of giving consumers choice and pricing options.
After Clinton everything was already on a crash course that lead to the "Great Recession" and really GWB wasn't going to stop the trainwreck.
Obama offered a vision of change but did little to bridge the gap between the haves and have nots and just continued on the neoliberal ideals and passed the buck down.
The current state of the economy is essentially super late stage capitalism where the general populace is seeing consolidations of industries, jobs offshored to other countries, spending more on things but getting less and the major parties are offering you 1) Cut spending and reduce taxes (further expanding the gap transferring more wealth upward) 2) Continued neoliberal economic policies where there is only performative actions but no meaningful change (further expanding the gap just a frog in a pot boiling).
People don't mind paying taxes and doing their fair share, it's just that the government has not spent the money well and people aren't getting any improvements to their life and are frustrated seeing places around the world have more safety nets for their citizens despite not having the powerhouse economy.
TLDR - Neoliberal economic policies are why we're at where we are and it's thanks to Reagan/Clinton.
