UNSUSTAINABLE GROWTH

From the Progressive:

The Bush economy is not likely to sustain itself. Nor does the uptick compensate, in any significant way, for the destruction Bush's policies have wreaked on U.S. workers over the last three years.

The high rate of growth "is great as far as it goes," says Max Sawicky, an economist at the Economic Policy Institute. "But you shouldn't gloss over all the damage that's already been done: the bankruptcies, the mortgage foreclosures, people going without health insurance, evictions, repos-all the things that happen when you run out of money."

The amazing thing about the growth in the third quarter is that it took this long for the economy to get moving. Alan Greenspan at the Federal Reserve Board has been holding interest rates down at historically low levels. Bush has been spending money on the military like he was Ronald Reagan, and his summer tax cuts--as lopsided as they were in favor of the rich--still shoveled $100 billion of disposable income into the economy.

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Neo-liberalism, or "voodoo economics," as I now prefer and our President's father once preferred to call it, just doesn't work. The theory essentially asserts that aiding business and investment rather than consumers is the best approach to improving the economy--consumers will benefit in the long run because there will be more jobs and, therefore, more money for them to spend. This is, of course, foolish.

It's like buying high grade motor oil for your car and believing that it no longer needs gas--all that great oil will make the tank refill magically. Alas, the car will run more efficiently for a while, giving some credence to the magic tank theory, but reality interferes and it will eventually run out of gas. Neo-liberal reforms can provide, in fact, some short term economic boost which makes neo-liberalism seem to be grounded in reality. However, if that boost comes at too much of an expense to consumers, recession ensues. We are currently seeing that scenario in play.

Good economic policy serves both business AND consumers. Sadly, from politicians, to economists, to businessmen, almost everybody in power is quite taken by neo-liberal views. The magic tank theory is believed to be true to life. That's why our economy, despite the recent seven percent growth spurt, has tanked.

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