| Title | : | Worse Than You Think: The Real Economy Hidden Beneath Washington's Rigged Statistics, and Where to Go from Here |
| Author | : | |
| Rating | : | |
| ISBN | : | - |
| Language | : | English |
| Format Type | : | Kindle Edition |
| Number of Pages | : | 406 |
| Publication | : | First published March 18, 2012 |
In the 1990s, the economy performed so poorly it had become an embarrassment. To hide the truth from the public, Washington rigged the formulas for calculating unemployment, inflation, and GDP growth, turning a sow’s ear into a silk purse. Worse Than You Think reveals the true numbers by recalculating the data, using the formulas before they were rigged.
What the recalculation reveals is this. By 2008, the typical wage had shrunk to one-third of what it was in 1973. This is why it now takes two bread winners and a maxed out credit card to make it in today’s economy. This has not been easy to do. For one thing, unemployment has been painfully high. In the Clinton years, it averaged 12 percent. It was 13 percent under Bush. And under Obama, so far, it has been 22 percent. Inflation has also been much higher than reported. It averaged 7.5 percent in the Clinton years, nearly 10 percent when Bush was at the helm, and 9 percent under Obama (an amazing feat during a depression). On top of this, the economy has performed miserably. It grew only 4 percent during Clinton’s two terms, shrank 10 percent under Bush, and continues to shrink under Obama, at a rate of -3.23 percent per year.
Washington committed other crimes besides rigging economic statistics. It stole $4.2 trillion from the Social Security and Medicare trust funds to hide the true size of the deficit. It cut taxes for the rich and corporations and dramatically increased taxes for working Americans. Reagan set the pace, increasing workers’ taxes nine times during his two terms. The largest increase was in the withholding tax (Social Security and Medicare taxes). Between 1980 and 2008, the withholding tax rate nearly doubled. Add this to the income tax and American workers now pay higher taxes than their counterparts in Canada, Europe, or Japan.
Worse Than You Think not only explains why our economy has failed, it reveals why our leaders deliberately allowed this to occur. Every president since Truman believed it was the price we had to pay to win the Cold War and, today, to maintain our sprawling military empire.
A final twist to the story is that Wall Street advisers were able to convince Clinton, Bush, and later Obama, that we can continue our military empire indefinitely even while broke. We can, they explained, finance the project by relying on foreign loans from nations that need unfettered access to our market to sell their exports to American consumers. So long as we remain a free trade country, they will give us loans. The price we pay for this strategy is an unrelenting fall in American wages, which hurts workers but benefits American corporations. For Wall Street, a side benefit is that banks will be kept busy processing the flood of foreign money, which increases the income of bankers and Wall Street CEOs.
Worse Than You Think also points the way out of this mess. First, wages will rise if we return to the 1944 tax code. We used this code for thirty years, the period of our nation’s greatest prosperity. Wages doubled even after adjusting for inflation. The economy grew nearly 4 percent, year after year. Second, our economy will grow again if we abandon the policy of free trade. We are the only industrial nation that practices free trade. Every one of our competitors is protectionist. They use tariffs (often disguised as VAT taxes) to shelter their manufacturing from foreign competition. They manipulate their currency to make their products artificially cheap. They subsidize their industries and even nationalize them when they fail. They violate patent rights, ban certain imports, and tightly control investment, making sure the money stays at home. They learned these tricks from us. We were once the most protectionist nation in the world. It is why our wages were once the highest and why we became the most powerful economy on earth.
What the recalculation reveals is this. By 2008, the typical wage had shrunk to one-third of what it was in 1973. This is why it now takes two bread winners and a maxed out credit card to make it in today’s economy. This has not been easy to do. For one thing, unemployment has been painfully high. In the Clinton years, it averaged 12 percent. It was 13 percent under Bush. And under Obama, so far, it has been 22 percent. Inflation has also been much higher than reported. It averaged 7.5 percent in the Clinton years, nearly 10 percent when Bush was at the helm, and 9 percent under Obama (an amazing feat during a depression). On top of this, the economy has performed miserably. It grew only 4 percent during Clinton’s two terms, shrank 10 percent under Bush, and continues to shrink under Obama, at a rate of -3.23 percent per year.
Washington committed other crimes besides rigging economic statistics. It stole $4.2 trillion from the Social Security and Medicare trust funds to hide the true size of the deficit. It cut taxes for the rich and corporations and dramatically increased taxes for working Americans. Reagan set the pace, increasing workers’ taxes nine times during his two terms. The largest increase was in the withholding tax (Social Security and Medicare taxes). Between 1980 and 2008, the withholding tax rate nearly doubled. Add this to the income tax and American workers now pay higher taxes than their counterparts in Canada, Europe, or Japan.
Worse Than You Think not only explains why our economy has failed, it reveals why our leaders deliberately allowed this to occur. Every president since Truman believed it was the price we had to pay to win the Cold War and, today, to maintain our sprawling military empire.
A final twist to the story is that Wall Street advisers were able to convince Clinton, Bush, and later Obama, that we can continue our military empire indefinitely even while broke. We can, they explained, finance the project by relying on foreign loans from nations that need unfettered access to our market to sell their exports to American consumers. So long as we remain a free trade country, they will give us loans. The price we pay for this strategy is an unrelenting fall in American wages, which hurts workers but benefits American corporations. For Wall Street, a side benefit is that banks will be kept busy processing the flood of foreign money, which increases the income of bankers and Wall Street CEOs.
Worse Than You Think also points the way out of this mess. First, wages will rise if we return to the 1944 tax code. We used this code for thirty years, the period of our nation’s greatest prosperity. Wages doubled even after adjusting for inflation. The economy grew nearly 4 percent, year after year. Second, our economy will grow again if we abandon the policy of free trade. We are the only industrial nation that practices free trade. Every one of our competitors is protectionist. They use tariffs (often disguised as VAT taxes) to shelter their manufacturing from foreign competition. They manipulate their currency to make their products artificially cheap. They subsidize their industries and even nationalize them when they fail. They violate patent rights, ban certain imports, and tightly control investment, making sure the money stays at home. They learned these tricks from us. We were once the most protectionist nation in the world. It is why our wages were once the highest and why we became the most powerful economy on earth.
