The result of conservative economic policies

Job growth by decade, chart

Conservative economic theory asserts that the economy will flourish when wealthy captains of industry are free from the chains of government regulation and taxes. The wealthy will get more wealthy and spread more money around for the rest of us. A rising tide lifts all boats. Unfortunately for the majority of Americans, their theory was wrong:

There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.

Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 — and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.

And the net worth of American households — the value of their houses, retirement funds and other assets minus debts — has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.

Remember that the previous decade was one of conservative control over the presidency, Congress and the Federal Reserve. It was a decade where conservatives managed to pass massive tax cuts for the wealthy and deregulate large sectors of the American economy.

I’m not just talking about Republicans. Democrats like Bill Clinton follow the same ideas, even if they aren’t as devoted as Bush and the Republicans in Congress and the Federal Reserve. After all, it was Clinton who signed the Republican crafted law deregulating banks, paving the way for the financial sector crisis of 2008.

It remains to be seen whether or not Obama has learned the lessons of the last decade. He has three more years to enact strong financial reform and roll back other tax and deregulatory excesses. All we know for sure is that Republicans have learned absolutely nothing.

3 Comments

  1. Good post…need to get it out there……too many think that GOP is the answer to the economic probs……they have never been the answer…they are a band aid for a gunshot wound….

  2. Ian

    I hate to throw a wrench in the works, but check out the 80s. I mean that’s Reagan and Bush 1 right there near the end of the decade and there’s quite an increase.

    This doesn’t strike me as a result of typical conservative calls for deregulation. This whole crisis seems to me like a result of people making a cash grab. Trickle down economics, which I believe to be utter crap, can’t even work in theory when there is no real money to pay out. These guys cheated the system. They basically found a magic way to disguise a lot of the negative numbers in their books. They performed a magic trick in which they were trading debt for cash. When that debt didn’t get paid, the companies faltered, the taxpayers suffered, and the guys who got the cash still got to keep the cash.

    The GLBA you cite didn’t quite cause the crisis, it was merely the catalyst. The credit default swap is the problem, and it predates the GLBA.

  3. Chris

    Ian,
    If it wasn’t for the GLBA, credit default swaps wouldn’t have been able to bring down gigantic consumer banks. That garbage would have stayed with risky and separate investment entities that could have been allowed to fail.