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October 4, 2008

Economy – Trickle Down Theory Is A Myth: Money Doesn’t Trickle Down But Pain Crawls Up

 What is the trickle-down economy theory? It’s the set of economic policies based on the concept that you provide economic incentives to the wealthy by cutting their taxes (by letting them keep their money) while at the same time deregulating industry, you’ll let loose a tsunami of economic activities that will enrich even the least advantaged among us.

Wow, this sounds great in theory but as we all know now, it doesn’t work.

Trickle-down is largely a rationale for upward redistribution that’s been kept alive by those who benefit from it by paying less tax. Reagan put this stuff on the map, GW Bush brought it back with a vengeance and McCain intends to take it even further. McCain’s policy calls for an extension of the Bush tax cuts plus he adds pork fat of about $75 billion more in corporate tax cuts on top of that!

In the 1990s when Clinton came into office he would have nothing to do with allowing the rich to pay less taxes; he instead cut taxes on lower-income households and raised taxes on the wealthiest. Obama takes a similar approach.

Because of lowering taxes on the middle-class and raising the taxes on the wealthy in hind sight we see evidence of the strong real growth in median incomes and sharp declines in poverty that occurred during the 1990s compared with the opposite movement in the 2000s with Bush’s policies.

The income for the middle-class grew by 10% or by $5,200 in the 1990s (1989-2000); these same households saw a decrease of $2,000 in 2000s under Bush when he lowered taxes for the wealthy.  If Bush had kept Bill Clinton’s policy of lowering the taxes for the middle-class, income would have continued to increase in the 2000s and middle class median income would have gone up $3,600 instead of falling $2,000.

So why do the republicans continue to push tax cuts for the rich?  It seems that it is as simple as ‘because they and their friends are rich’ and it benefits them and their friends including heirs and heiresses.  That’s straight-talk.

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June 11, 2008

Economy: America’s For Sale!

Because of George W. Bush and his economic non-strategies, America is for sale – again. 

I distinctly remember in the late 1980s when the Japanese started to purchase significant amounts of American real estate in Hawaii.  The yen had improved and the US economy was struggling and Hawaii saw a substantial increase of Japanese tourists and subsequently Japanese investors.  It got to the point where local home buyers and investors in Hawaii were competing for the limited supply of real estate with investors from Japan, Taiwan, Korea, Hong Kong and Canada.  Once the Japanese investors bought up Honolulu and The Big Island, they set their eyes on the “The Big Kahuna”.  They came to Manhattan and purchased Rockefeller Center.  New Yorkers were up in arms!  Shocked!  Livid!

It was a matter of pride with New Yorkers and most Americans. The very idea that the center of journalistic and architectural modernity, Rockefeller Center, should belong to another country was beyond comprehension.  Things were THAT bad in America.

Rockefeller Center was named after John D. Rockefeller, Jr., who leased the space from Columbia University in 1928 and developed it from 1930.  It was the largest private building project ever undertaken in modern times. Construction of the 14 buildings in the Art Deco style began on May 17, 1930 and was completed on November 1, 1939 when he drove in the final (silver) rivet into 10 Rockefeller Plaza. Rockefeller Center is a magnificent complicated beauty.  Radio City Music Hall is a part of it. It’s the home of NBC and it’s where Saturday Night Live broadcasts from.  It is the home of the iconic Rockefeller Center Ice Skating Rink which we see in the background of so many movies.  It is where thousands gather each December to watch the lighting of “The Christmas Tree”.

In the late 80s, sadly, the Japanese purchased a major slice of America’s apple pie.

Here we are in 2008, 20 years later and the Chrysler Building is for sale; the world’s tallest brick building is now owned by the United Arab Emirates.   Another beautiful Art Deco building being purchased by a foreign country, this time the super-rich Abu Dhabi Investment Council is negotiating an $800 million deal for a 75 percent stake in the Art Deco treasure that has defined the Midtown skyline since 1930. (more…)

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