The American Recession That No One Has Noticed

It’s noticeable how when you talk to someone about taxing the 1 percent, suddenly every American becomes a billionaire.

“Get off your butt and make your own wealth, don’t touch mine!” is the general catchcry.

It seems that when the prospect of taxing the uber rich comes up, most Americans consider themselves to be in that category, even though they may currently be living hand-to-mouth. The people most likely to benefit from better social programs and a more even distribution of wealth are often the most ardent opponents of it. Why is that? Well it seems that whoever said that America is a nation of millionaires temporarily down on their luck was onto something. They may not have money now, but they aspire to, and so they will protect the rich so that one day when they join their heady legions, they too might enjoy the benefits of lax tax laws on high incomes.

What it means in reality is that you have poor people viciously defending the right of a handful of other people to keep their own selves in poverty.

And in poverty, they will keep themselves. Thirty years of Reaganomics has been enough time to gather evidence and the data is in — as fiscal policy, it doesn’t work. Almost one in five Americans currently lives in poverty and it’s only getting worse. Giving all the money to the money hoarders does not stimulate the economy, it stagnates it. A lively economy needs to be liquid, and you can only keep it liquid if it’s moving in the middle and working classes. Consumer confidence stays high with redistribution and businesses spring up to cope with demand of a suddenly cashed-up population. Demand goes up, prices go down, jobs are created to meet the demand, more people have more money to spend, and thus, you have an active economy.

Give it to the money hoarders, the 1 percenters, who can only sip one latte at any one given time, and the economy grinds to a halt. That’s what you’re seeing now. Investment in business, the pillar of trickle-down Reaganomics, only makes more numbers on a screen.

Real trade happens with real people, and you need to give money to real people in order for that to happen.

Nick Hanauer, self-confessed plutocrat, leaped enemy lines to give a Ted Talk outlining this simple economic fact and explaining “why a dramatic increase in minimum wage could grow the middle class, deliver economic prosperity… and prevent a revolution.” And as a successful entrepreneur, he has people listening. Some businesses are putting his words in action, and reaping the rewards.

But it’s baby steps. Woefully undereducated in general about economics, or perhaps willfully miseducated by successive years of brainwashing by powerful lobby groups and a complicit media, the American population is having a hard time understanding what stimulating the working and middle classes means for an economy. There is a lot of unfounded fear that redistribution will make people worse off.

Education came in from the most unlikely quarters this week when corporate raider Asher Edelman, one of the men Gordon Gekko from the movie Wall Street was based on, appeared on CNBC’s Fast Money and dropped a truth bomb on an unsuspecting panel of finance journalists.

In a sit-down with the godfathers of Wall Street, and under the caption “Wall Street’s Wisest Weigh In,” Edelman at first set the record straight — the USA is in a recession, and has been so for 15 years. Rubbery finance reporting, with dropping of real trade indicators like consumer confidence and velocity of money, has meant that this recession has gone largely unreported. Despite poverty growing, dismal unemployment figures, and images of once thriving metropolises like Detroit being turned into post-financial apocalypse wastelands, the recession has gone unnoticed by the well-off, and therefore unreported by the media.

It was news to the panel, for example.

Edelman set them straight. “I think it’s pretty straight forward. The average American has not had an increase in pay in fifteen years, but things have cost more in the market places. He has been in a recession for fifteen years. Nothing has changed for him. Up at the top, we’re not in a recession. But eighty percent of Americans have been in a recession for at least 15 years.”

When the panel protested that “nobody realizes we’ve been in one for 15 years,” Edelman asked simply, “Who’s your nobody?”

“I’m talking about money and economics. People can buy less with what they have now than they could fifteen years ago. In their lives, that’s a recession.”

It was when he was asked “who do you think the best candidate for the economy would be?”, things got really interesting. The wolf of Wall Street answered something that literally raised the eyebrows and made one of the panelists leap in his chair – “Bernie Sanders.”

Edelman said that “from an economic point of view, it’s straightforward.” He spoke at length about the importance of “velocity of money,” that is, the speed of which money circulates in an economy, and how Bernie Sanders was the only candidate with a plan for fiscal stimulation.

“When you have the top one percent getting money, they spend five, ten percent of what they earn, when you have the lower end of the economy getting money, they spend a hundred or a hundred and ten percent of what they earn,” Edelman explained. “As we’ve had a transfer of wealth to the top, and a transfer of income to the top, you have a shrinking consumer base basically, and you have a shrinking velocity of money. Bernie is the only person out there who I think is talking at all about fiscal stimulation, and banking rules that will get the banks to begin to generate lending again as opposed to speculation. So from an economic point of view it’s straight forward.”

He’s not a lone voice. Over 170 economists have each personally endorsed Bernie Sanders’ fiscal policies as good news for the economy. The data is in, fiscal stimulation by redistribution of wealth activates economies, but importantly, it vastly improves the lives of ordinary people.

Check out Asher Edelman’s full interview here.

[Photo by Lennox McLendon/AP and Carlos Osorio/AP]