When the final history of the collapse of America is written, it will be laid at the feet of the financial markets, citing both corruption and greed.  For decades America has heard about the ‘entitlement’ programs and how people want handouts for not working.  This is usually followed by a story about a poor minority on food stamps or some other type of public assistance.  This is always told by a privileged member of society.

Yet, behind the scene the true “cheats” were not the people trying to survive, it was the entitled rich.  The people who thought it was their right to make $MILLIONS in compensation on the backs of the disenfranchised.  Truly, nobody is worth $MILLIONS when millions cannot even support themselves.  Not only are 11 million Americans unemployed but another 20 million Americans are underemployed — working part time jobs.  Nearly 50 million Americans do not make a living wage.  Consider that — 50 million Americans do not make a living wage.  There are only just over 100 million people employed in the U.S.

The U.S. needs to pay every adult a living wage because nobody should be allowed to make more than that until everybody makes the minimum.  There is an intrinsic value to each person and a living wage is the validation of that intrinsic worth.  The living wage must include all basic necessities: food, shelter, clothing, transportation, basic computing, education, and health care.  At just a living wage, the person has no money for luxuries of any kind and certainly no money for taxes.  If half of America makes just at a living wage, America won’t even work very well, because America needs their citizens to have considerable disposable income to buy the ‘nice to have’ items which, in turn, employs others.

Consider who actually creates the demand to employ others.  It is not the rich person who “invests” in the latest hot start up as is the general wisdom.  This is because the rich person is not able to create these investable dollars without the consumption of the masses.  Thus, it is the masses that spend the dollars that allow the owners of the business to amass money that is eventually invested in new companies.  If you take away the masses’ ability to consume, then you also take away the necessity to create new businesses and business ability to employ.

The economic recovery will only occur when demand is stimulated.  You can stimulate supply forever and never generate real recovery.  This was the lie of Reaganism — “supply side” economics.  The idea that if you gave more and more money to the rich, it would trickle down.  So, Reagan reduced taxes on the rich and this was continued in both Republican and Democratic administration, culminating with George W Bush’s infamous tax cuts.   Ultimately, this supply side nonsense resulted in a collapse of the entire system. Yes, the entire system collapsed and it is only with $TRILLIONS of bailout that it is being propped up — for now.

However, until the demand is stimulated there will be no recovery.  The only way that the demand is stimulated is to create ‘good’ jobs.  A good job means one that pays at least a living wage and preferably twice that.  It is a job that would traditionally be consider ‘middle class’.   Middle class is simply a reference to a person who has disposable income after his basic necessities are met.

As the middle class was destroyed, businesses had to find “creative” ways to make money.  For decades these creative ways have been financial gimmicks.  In fact, all of the earnings growth for large companies for more than a decade in America have been financial transactions.  This was not real growth it was manipulated growth.  It involved mergers, acquisitions, and even risky bets on financial derivative products.  Through it all ordinary Americans were laid off and even paid less as the life of the middle class was squeeze out.  As the destruction of the middle class continued, Wall Street moved higher with fake earnings.  Eventually, the system crumbled and it doesn’t really matter what pushed it off the cliff — something was going to eventually.   Yet, even now the Republicans want people to believe it was giving loans to minorities that caused all the problems.  It is laughable and scary to think that Republicans actually believe the nonsense, considering the implications of the lie.  That is, if one believe this lie then the solution will not be to stimulate the demand since the argument is the demand was the problem.

The economic crisis could be solved tomorrow if the government announced that every person in America would be given a living wage.  Companies would not be allowed to employ anybody full time for less than a living wage.  Taxes would be increased on the people with the highest income and distributed to people at the other end of the spectrum.  Public work projects would be formed to employ the millions who need jobs. Companies which were involved in basic necessities would be converted into non-profit companies. As more and more people started making living wage salaries, at a minimum, demand would increase.  As demand increased companies would be formed to satisfy the demand, more people would be employed, and eventually higher wages would be required.

It is interesting that America is so invested in the supply side of economic growth that most of the decisions are to prop up the supply.  This is seen by propping up failed financial institutions and insurance companies.  This gives the appearance of saving the economy.  However, this approach is satisfying in the short term as people think the system is being saved.  Yet, it does nothing for the demand side of the economy. Until the demand side of the economy is stimulated, there will be no real recovery.  At best it will just be moving around money similar to a game of musical chairs.  Each chair being removed represents the continued destruction of demand.  As more and more chairs are eliminated the people who are out of the game will organize to destroy the remaining chairs.  Republicans will consider the people out of the game terrorists.

America is doomed.