The last time we faced massive government spending that helped pull us out of an economic dive this deep was when WWII pulled us out of the Great Depression. We paid for that by increasing top tax rates to over 90 percent. It was a time when we took fiscal responsibility seriously (which coincided with our greatest period of middle class economic might and global respect). It will be interesting to see how we proceed this time once the need for stimulus has passed. I would not expect similar tax rates, but I do believe our current tax structure and faith in the myth that tax cuts pay for themselves will need to come to an end.
On a related note, I was pondering the oft-repeated claim that prior to onset of COVID-19 we were in the greatest economic period in our nation's history. On a GDP and unemployment basis, there is some merit to that claim, but how does it stack up by other measures such as income inequality and overall measures of economic security of the middle class, including number of bankruptcies due to medical bills, ability to pay for a 4-year degree without incurring significant debt on a middle class income, retirement security? I've done some preliminary research and it is not quite as rosy as it's been portrayed, which should surprise few.
That such struggles were increasing, as are federal deficits, while the economy was humming on all cylinders should be a matter of concern for all regardless their income level. Sadly, I fear the IBGYBG (I'll be gone, you'll be gone) attitude that lured so many to dismiss the threat of the looming mortgage crisis a decade ago because they figured they'd cash out before the bill came due, has now become an IGMYGY attitude (I got mine, you'll get yours). It's a kind of Gadsden flag, don't tread on me approach to economics. However, history has rarely been kind to societies with vast wealth gaps.
The last time the US faced such inequality was during the Gilded Age of the late 19th century, which eventually saw the rise of the American Communist Party as a valid political player. Its appeal grew even greater with the onset of the Great Depression, which increased the calls for wealth distribution and overthrow of the old economic system. Ironically, Franklin Roosevelt saved capitalism by fighting fire with fire, implementing a vast array of socialist-style works programs, as well as Social Security, as part of his New Deal. They alleviated the pain of the Great Depression and quieted the most extreme calls for action, but it was only WWII (as noted at the opening of this post), which finally put an end to the economic hardship. Oddly, the real savior of capitalism may have been the man who started that war. We can only guess at how prolonged economic hardship would have played out had the war not intervened.
All this is to say that those who look the other way as income inequality grows without considering the long-term consequences risk fomenting a rebellion that the support of Bernie Sanders-style socialism only hints at. A return to the gilded age puts all at risk of becoming victims to the adage that hungry people gripe, starving people revolt. In a nation founded in rebellion, with a populace prone to agitation backed by Second Amendment rights, it will only take a skilled demagogue with the wrong message at the right time to light a fuse we may wish we had doused long before.
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