Changing our Economic Priorities

Written by Rebecca Zietlow on March 5th, 2009

President Obama’s speech last week was hailed by some as a declaration that the era of Ronald Reagan is over.  I hope that is true, Reaganat least with regard to our country’s economic priorities.  Prior to Reagan’s presidency, our country had gone through a long period of relative prosperity that began after the end of World War II.  Sure, there were some downturns during that period, including a deadly combination of inflation and unemployment under President Carter that contributed to his loss to Reagan.  However, what was most notable about that long period was the steady increase in real wages of middle class people.  There was at least an implicit understanding that the goal of our economy was to provide decent, well paying jobs for people so that they could achieve the “American dream” of a comfortable middle class lifestyle.  An indication of this consensus is the fact that even Republican president Richard Nixon supported the right to a minimum income.

After Reagan became president, our national economic priorities shifted to overall economic growth regardless of who benefited.  Under the “trickle down” economic policies of Reagan and his allies, as long as the rich got richer, we would all eventually benefit.  Our country began to focus more on the stock market as an indicator of wealth – as long as the market was rising and GDP was growing, then the country was doing OK.  The problem with that theory was that the wealth did not trickle down.  Rich people got richer – a lot richer, but for the rest of us real wages began to decline, and are still far behind those of the mid 1970s when inflation is taken into account.

The decline of real wages since Reagan became president was no accident.  It is the result of government policies that favored rich people and large corporations, including tax cuts for the rich and de-regulation of business, accompanied by policies that hurt low and middle class people, including the end of welfare as we know it and strident anti-unionism symbolized by Reagan’s firing of the striking air traffic controllers.  The weakening of unions has placed a downward pressure on the wages of all of us because it reduces the bargaining power of workers as a whole.

My mention of “the end of welfare” deserves more explanation, and illustrates the fact that not only Republicans, but also Democrats, bought into these harmful economic policies.  Under Bill Clinton, a Democratic Congress voted to end the entitlement to welfare of the New Deal era Aid to Families with Dependent Children (“AFDC”) program and replace it with Temporary Assistance for Needy Families (“TANF”), a program that has a five year lifetime limit and requires recipients (with a few exceptions) to work in order to receive their benefits.   While AFDC was not ended under Reagan, he began the process with his campaign rhetoric that included lies about Cadillac driving welfare mothers.  The end of AFDC places downward pressure on wages, since most people now have no alternative but to accept low wage part time service employment, providing fiercely anti-union companies like Walmart with a ready supply of cheap and exploitable labor.

For the sake of all of us, I really hope that Obama’s speech signals an end to Reaganomics, and a real change to our national economic priorities.  We simply can’t afford the old ones anymore.


No comments yet.

Sorry, the comment form is closed at this time.