Admit Trickle-Down Failure

By SAM URETSKY

In 1962, Malvina Reynolds wrote a song titled “Little Boxes”, and a year later, Pete Seeger’s recording became a hit. The song was a satire on middle class life, about suburban sprawl, and the little boxes, tract houses, that were “all made of ticky-tacky and all looked just the same.” As for the families who lived there, “the people in the houses all went to the university ...” The song later found a new audience as the opening music for the first three seasons of the Showtime series Weeds.

Ms. Reynolds was a brilliant social commentator and a passable guitarist, but in many ways the song was wrong. The houses were small and uniform in design, but they were the answer to the post-World War II housing shortage, as returning soldiers needed a place to live and start families. If Wikipedia is to be believed, the song was inspired by a development in California, so that the university would have been the University of California, one of the finest examples of public education in the world. Six of the colleges in the group are in the top 50 in the United States as ranked by USNWR (the ranking system may be badly flawed, but top 50 isn’t bad). Those little boxes and the university may have symbolized conformity, but they were also part of a period when the United States was a middle class nation, and there was a promise of a decent life and quality education for everyone. This, after all, was a time when cars had tail-fins. The tail-fins had no function, but they were a symbol of a better future to come.

President Truman presented Congress with proposals that would increase the minimum wage and remove discrimination in employment. President Eisenhower focused on the infrastructure. Presidents Kennedy and Johnson created Medicare and Johnson worked on civil rights. Nixon (yes, Nixon) created the EPA and expanded civil rights to include women, children and the disabled. This was an idealistic nation, not socialist, but one which understood the importance of sharing and caring and equality of opportunity, and it stayed that way until we bought the snake oil that said that a bunch of rich people understood what we needed better than we did collectively.

We blew it. The rich guys took what they wanted and left us with the stuff they didn’t like. That’s why the job creators created jobs that relied on social services, paid for by taxes, to make life livable.

In Alabama, in 2005, 4,700 children of Walmart employees were enrolled in Medicaid. According to The Atlantic magazine, 41% of SNAP beneficiaries lived in households with partially- or fully-employed workers. The web site GoodJobsFirst reported on other states where fully employed persons qualified for Medicaid; for example Ohio (2013) “For Medicaid, Walmart was first with 13,141 employees, followed by McDonald’s (11,446), Yum! Brands (6,596) and Wendy’s (5,620). For food stamps, McDonald’s was first with 9,316, followed by Walmart (8,565), Yum! Brands (5,286) and Wendy’s (4,623).” Meanwhile, Michael Duke, the CEO of Walmart, is paid $17.6 million a year according to CNN Money, or as much as 796 typical employees. If health insurance seems expensive, consider that Stephen Hemsley of UnitedHealth Group is paid $13.4 million, equal to 218 typical employees.

CNN Money also compared the salaries of workers at Wendy’s ($7.35 an hour), Wal-Mart ($9.40) and Costco ($22.80), but since Costco’s sales per employee are double those of Walmart, the effective cost of labor is a lot closer than it looks. CNN attributes the higher sales to better employee morale, which seems reasonable enough.

This is what we get from our experiment with trickle down economics, that old saw, “socialism for the rich, capitalism for the poor.”

We are finally starting to understand the results of inequality, first with Prof. Joseph Stiglitz valuable book The Price of Inequality: How Today’s Divided Society Endangers Our Future, Pope Francis’ first papal exhortation, which specifically addressed economics: “...some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power ...” And finally President Obama’s economic speech: “... this increasing inequality is most pronounced in our country. And it challenges the very essence of who we are as a people ...”

Trickle down economics was our second Great Experiment, Prohibition being the first, and both were disasters. The problem is, getting us back to where we were in 1950 will take political will, and that may be a problem since we left all the resources with the wrong people.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y. Email sdu01@mail.com.

From The Progressive Populist, March 1, 2014