Ominous parallels between the pre-Depression economy and the current Bush-o-nomics economy...be afraid.
Then read this:
Economic Policy Institute: What's wrong with the economy?
In the 1920s:
- Income was maldistributed. The richest 0.1% had a combined income greater than the lowest 45%'s income.
- Savings rates were low. The same richest 0.1% held 34% of all savings on deposit, where 80% of all Americans had no savings at all.
- During the Coolidge era, there was a mania for cutting taxes on the richest Americans. At the same time, a modest minimum wage law was struck down by a conservative Supreme Court.
- The US economy in the 1920s rested on two pillars: luxury spending by the rich, and credit sales to everyone else.
- A mere 200 corporations controlled half of all wealth in the United States.
- Most of the prospering businesses were concentrated in two industries: Automobiles and Radio. A third industry that prospered during the 1920s was the construction industry, spurred by the prosperity of the well-to-do and the new mobility afforded those with cars.
- A few companies had their worth inflated artificially by the Stock Market. RCA Corporation went from a value of $85/share to $420/share.
Does all this sound too familiar?
What's going on right here, right now, on the last week of 2005?
- Income is maldistributed.
- Savings is low.
- Tax breaks for the rich are rampant. The tax burden rests disproportionately on the disappearing middle class and poor.
- Debt is high and savings are nonexistant for most Americans.
- Prospering businesses are concentrated in a small group of industries. Housing is now 50% of the current economy's growth. When Housing tanks, so will the rest of the economy.
Google is the RCA Corp of today. Google is now valued at $426.72/share, up from its value of $85 in its IPO. Other stocks are similarly inflated beyond their worth, although not in as wild of a range as they were during the "dot-com boom" of the late 1990s.
There are, of course, big differences between the situation now and the situation then. Our economy is thoroughly globalized. We do not practice the kind of protectionism that exacerbated the weaknesses in breadth of the economy. Globalization carries its own market basket of maladies that may be more or less damaging than the protectionism of the '20s.
Let me leave you with a newly coined phrase, something I thought of when I started working on this post: "A rising tide that only lifts yachts will eventually drown us all." Think of that a little as we slouch into 2006.
BTW, one last thing: political posts like these will be moving into http://enoughisenough2006.blogspot.com/. I will be crossposting this post there. My friend Beep will also be posting there, as will perhaps a few other selected editors. Enough Is Enough 2006 will concentrate on the quest to flip the House and Senate in the coming year. A Democratic House and a Democratic Senate is the necessary step to do things like impeaching Bush and his cronies. It is JOB ONE next year. I urge you to keep an eye on Enough Is Enough 2006.