The down fall of are economy must be observed in a historical sense. While many will point to globalism and international treaties as the main reasons for our present economic situation. I feel that these are talking points that have nothing to do with solving the problem of our bad economy.
Supply and demand has long been the first basic lesson learned in economic
courses around the world. Prices will rise and fall as the relationship between
supply and demand shift. However, one must have both elements present for the
system to work. If there is no demand, supply will be worthless. No supply
means that demands will not be met, meaning no profit.
For decades we have been killing our ability to create demand. Falling
wages, jobs moving off shore, and increased costs of living have decreased the
ability for people to purchase items and goods. This has caused a decline in
demand and the loss of business. Entrepreneurs now have no reason to start new
businesses or create new inventions with no one present to buy the product and
create a profit for their work and ideas. While people my be full of desire for
a product, they have lost the ability to buy that product and create demand.
How to create demand? Simple, government projects. An example of this can be
seen when studying President Roosevelt’s labor programs such as the Tennessee
Valley Authority (TVA). When these formerly unemployed people were given jobs
they now had money to spend. This extra money created demand. When the demand
was present businesses began to get the supplies to meet that demand. This new
demand not only gave rise to stores (small businesses) but also to the
factories that supplied those stores and business.
At each level more people became employed. These employed individuals
created demand in their areas and thus spurred the same response. The growth of
stores and businesses. Supply and demand in action. A beautiful thing!
We have allowed this simple yet effective, economic model to be dismantled.
Businesses no longer share their profits with employees. A rising tide no
longer lifts all boats. Businesses profits seem to be reserved for top
executives. Businesses try to turn over employees to avoid giving them
benefits, thus adding to the cost of living and eliminating demand. Businesses
shift and move to follow profits taking their low wage model with them creating
no demand at the new location.
The economy is a flowing mechanism. Money must follow and not pool in a
single account or economic class. This explains why the tax rate was 91% after
three million dollars under President Eisenhower. That high tax rate kept the
money moving, not allowing it to pool at any level in the economy. America’s
economy was strong during those days and remained strong until the tax rate was
lowered under the President Carter Administration.
As money flows it is taxed at every transaction helping to fill public
coffers. Money earned by the working and middle class will be spent. This
spending will create demand and serve the business environment and the
factories that supply them. The answer to our problem is simple. Bring back