Finally I am back to writing on my blog. After a five week trip in the UK, France, and Spain this summer, when we were refreshingly out of pocket, I returned to a pile of work and responsibilities that required attention and action. If possible, I will be posting twice per week now.
In our travels around western Europe, we were astounded at the cleanliness of the cities, the perfection of the motorways (freeways), though not always of the signage, especially in Spain, and the obvious affluence of the people. The people were nice to us everywhere. They are in good health and obesity is rare. Of course I lost 15 pounds just because of the constant walking and I returned feeling refreshed and energetic.
This set me to thinking. When I came to the US where I was born, from Argentina where I grew up, for college, I noticed the same sort of life here: healthy people, an abundance of wealth, a dollar which had amazing buying power, clean public spaces, and good roads. This was 1967, a the height of American power and affluence.
I won't belabor the contrast between then and now. The difference is clear to anyone who lifts eyes and looks around. Since the 60's, we have been told that lowering taxes for the rich would bring great prosperity, because they (the rich) would create jobs. That clearly has not happened: the rich have become unimaginably richer and the rest of us are faced with power, medical, and mortgage bills that eat up our income at an alarming rate.
In the 60's wealth was redistributed by a progressive income tax and high taxation on the biggest estates. The rich enjoyed lavish lifestyles and most of the rest lived comfortably with a great deal of affluence. Since then, for a number of reasons, the distribution of wealth has come to a standstill. It is instructive to look at Greece or Argentina to understand why this is. They borrowed large amounts from the IMF and, when it came time to pay, the IMF required them to impose austerity, that is, cut government spending so the taxes would go to pay the debt. But austerity meant that many people were out of a job or had to get lower-paying jobs. The result was that they paid less in taxes and bought less. Of course then the economy contracted: as sales went down more people lost their jobs and even fewer taxes came into the coffers. Argentina recovered when Nestor Kirchner became president and promptly refused to pay the IMF and ended all austerity measures. Economists said that it would spell disaster for Argentina. What happened instead was that the economy grew until the government had enough money from taxes to pay off the IMF in a single payment. Enough said.
What is needed in the US is to stimulate the economy, with care, of course. If the wealthiest people are taxed higher and the middle class are given tax relief, the government can spend on repairing our crumbling infrastructure. That would create jobs. The middle class would have more money to buy whatever. The more they and the newly employed buy, the more employment they create. The more employment there is, the more taxes are gathered. The more taxes are gathered, the easier the government can pay off its debts and the less it needs to borrow. It is a virtuous cycle.
That is how economy works. I bring this up as grist for thought as you decide whom to vote for. I for one am looking for a candidate who understands these matters because he (or she) thinks widely. As Bill Bryson says: That's all I'm saying.
