It's A Lack Of Demand That's Holding The Economy Back

I know I probably sound like a broken record to some of you, but I feel it is very important to point out the fallacy of Republican economic theory ("trickle-down" economics). They are still preaching, and trying to further enact that policy -- a policy that says giving more to the rich and the corporations will cure what ails our economy.

Now an economics professor from Columbia University, Joseph Stiglitz, has taken up the cause. He knows that neither lower taxes for the rich nor higher profits for corporations will solve our economic problems. The rich have more than ever before, and the corporations are making record profits (and sitting on a record amount of cash, and that has not cured the economy. Giving them even more will fatten their bank accounts, but it will do nothing for the economy.

There is only one way to get the economy going strong again, and create the jobs that are badly needed. It is to increase the demand for goods and services. Increased demand will increase profits, but it will also spur job creation (as businesses will have to hire to meet the new demand). But giving more to the rich won't increase demand. They are already spending as much as they want, and there aren't enough of them for their spending to spur an increase in demand.

The only way to increase demand is to put more money in the hands of most Americans -- the poor, working, and middle classes. Those groups will spend that new money, and that spending (since it is on a very large scale) will increase demand -- and that can be done by strengthening unions, raising wages (especially the minimum wage), increasing government help for hurting Americans (poor, underprivileged, unemployed), and stopping the export of good American jobs.

The Republicans will whine that this will only increase the budget deficit -- but that can be covered in the short-term by raising taxes slightly on the rich and eliminating the subsidies and loopholes that allow corporations to avoid paying taxes. Then, in the long-term, the new workers created by the increase in demand will also pay taxes (and put more money in government coffers).

The key to a prosperous economy is to increase demand -- and that won't be done by giving more to the rich and the corporations.

This cartoon is by R.J. Mason in Roll Call.