Economics 101

The Republican Party portrays itself as the standard bearer for the free enterprise system.  As such one would assume that they would have a thorough understanding of the economic principles upon which that system is based.  So it is somewhat surprising that their policies often conflict with the concept that stands at the very core of the free enterprise system…supply and demand.

Take for example the current negotiations over the expiring unemployment benefits.  Republicans see unemployment benefits as a “handout.”  They argue that these benefits encourage recipients to become dependent upon government assistance, stifle the country’s creative spirit and produce a nation of slackers.  They believe that discontinuing unemployment benefits will empower recipients to become more self reliant; to find their own creative path toward economic independence.

If we assume that Republicans are correct, that eliminating these government “handouts” will encourage creative economic growth and productivity; then why are they unwilling to apply those same economic principles to wealthy individuals and corporations? 

Republicans are steadfast in their support of tax breaks and loopholes that allow wealthy individuals and corporations to pay little if anything in the way of federal taxes.  They fight tooth and nail to preserve billions in government subsidies paid to wildly profitable corporations.  Are these tax breaks and subsidies not “handouts” as well?

When confronted with this bit of hypocrisy Republicans typically respond with the age old “trickle down” theory of economics.  This theory says that by giving tax breaks and subsidies to the very rich you encourage them to build plants, produce goods and services and create jobs for the masses. The employees in turn use their hard earned wages to buy products and grow the economy.  

So where are the jobs?  Why are millions unemployed?  Why is the economy still struggling?

What we have in this country is a “demand” shortage brought about by a lack of money in the hands of the true” job creators”…the middle class and working poor.  Corporations build products because there is a demand for the product.  Corporations can build all the widgets they want; they will sit in warehouses if there is no demand from the middle class. 

If you want to spur the economy you have to get money into the hands of the masses.  Unemployment benefits do that. Tax breaks for the rich do not.  Unemployment benefits put money into the hands of US citizens who use the funds to buy food, clothing, medicine etc.  Tax breaks for the rich fund stock portfolios and create jobs overseas.  There is a reason Wall Street is flourishing while Main Street is struggling.

Republicans believe that if you give “handouts” to the middle class and working poor you encourage a society of slackers and bums.  But if you give “handouts” to corporations and the rich you encourage productivity and creativity.  The facts simply do not support that theory.

Growing the economy is all about supply and demand.  As the standard bearer for the free enterprise system Republicans should understand that concept.