In her newest book, Senator Elizabeth Warren (D-Mass.), makes the case that the Reagan-era tax cuts were the thing most responsible for the decline of the middle-class. As I noted earlier, Warren and her fellow Lefties conveniently ignore serious underlying trends that began well before Reagan’s presidency. In fact, technological advancement, globalization, demographic shifts, cultural changes, and highly restrictive educational policies are the real culprits behind the decline of the American middle-class. What’s more, onerous taxes and burdensome government regulations are to blame for the loss of economic opportunity for most members of the middle-class.
These were all policies that Warren and her fellow Democrats have, for the most part, championed. Warren is undoubtedly fighting the wrong fight. Even still, she has an incredible platform from which to spout her wrongheadedness. And that’s what makes Warren and other Democrats like her so dangerous.
The creation of America’s postwar middle-class did not happen in a vacuum. Warren fails to mention how America’s industrial capacity during and after World War II played heavily into the creation of that strong middle-class. The war devastated virtually every industrial center in the world except for those in the United States and Canada (and Canada had nowhere near the population necessary to support a postwar industrial boom as America did). Great Britain, France, Germany, the USSR, and Japan were all laid low by years of total warfare and carpet bombing. Only the United States retained its pre-war industrial capabilities. In fact, the war spurred the expansion of America’s industrial might, as the United States became the “arsenal of democracy.” Once the war ended, America repurposed its industry to more lucrative peacetime endeavors.
America was well positioned to be the dominant economic force in the world. Additionally, the United States used its economic power to bind as many countries as possible to itself. Only the Communist portion of the world stood as a true competitor. As history has shown, Communism is incapable of competing against capitalism. So, America was the real force in the world in the last half of the 20th century.
Thus, the postwar generation was primed for unprecedented levels of prosperity. And, since the United States was the virtual center of the world order while all others were slowly rebuilding, average Americans were the greatest beneficiaries of this economic reality.
In the 1950s and ’60s, an American with only a high school diploma could find gainful employment. That person could go on to provide for a family of four comfortably. Regardless of America’s tax policies or America’s social welfare programs, America’s middle-class was given unprecedented opportunities for advancement—with few hurdles in its way.
And when the government did “make investments” in developing the middle class (e.g., the G.I. Bill, which allowed for U.S. servicemen to attend college tuition free), the opportunities for career advancement were far greater than what they are today. Global competition was nothing compared to what it is today. Again, America had competitive advantages in terms of human capital and industrial might that few other countries had at that time, after their economies had been decimated in WWII.
Yet, by the mid-1960s, the story of a vibrant, growing middle-class was already being called into question. Many of America’s Cold War allies were witnessing their own industrial reinvigoration. Indeed, in many cases, these countries were being rebuilt by American wealth and foreign aid (in order to prevent their turn toward Communism).
However, countries like Japan, manipulated American policymakers into signing sweetheart trade deals, even after the Japanese had effectively rebuilt from the devastation of the war. These deals hurt American workers. This also explains the early rapid growth of Japan’s technology sector.
In fact, these trends continued well after the Cold War ended—and today are applied to many other countries. When Trump castigates the leaders of both parties in America for bad trade deals, this is what he’s talking about.
align=”left” Warren’s policy preferences would constrain the middle-class. High taxes, massive regulations, and expansion of government spending all contribute to creating an anti-business environment. Businesses—both large and small—are the sources of employment. If doing business in America becomes too difficult, larger companies will move to other areas and the smaller ones will simply go out-of-business. While Warren may think that businesses didn’t build our infrastructure or provide the most jobs for the middle-class, she would be wrong.
Moreover, if Warren really believes that lambasting Ronald Reagan for his tax cuts is worthwhile, she would also do well to save some ire for John F. Kennedy. After all, before Reagan, it was the JFK tax cuts that were the largest of the postwar era. As Larry Kudlow outlines in his book, both the JFK and Reagan tax cuts stimulated the overall growth of America’s economy as never before. And, you can be sure that America’s middle-class benefited from this as well. These cuts allowed for the greatest diffusion of wealth in America’s history (a rising tide truly lifted all boats).
By misrepresenting history, then, Warren and her allies on the Left misdirect the American people. Indeed, if one were to look objectively at the situation, one would quickly surmise that the Left largely has been responsible for the decline of the middle-class. After all, the surest way out of poverty; the best way to ensure that the middle-class survives, is to have an abundance of easily accessible jobs. That is the one thing that is lacking in today’s America. Far from being responsible for the decline in jobs, tax cuts usually spur a renaissance in entrepreneurial activities and create an explosion in employment.
Warren’s policy preferences would constrain the middle-class. High taxes, massive regulations, and expansion of government spending all contribute to creating an anti-business environment. Businesses—both large and small—are the sources of employment. If doing business in America becomes too difficult, larger companies will move to other areas and the smaller ones will simply go out-of-business. While Warren may think that businesses didn’t build our infrastructure or provide the most jobs for the middle-class, she would be wrong.
Warren and her acolytes believe that government must involve itself in a litany of vital industries, in order to lower costs for most consumers, thereby preserving the middle-class. But how is it that the more involved government becomes in a given industry, the costlier the products that that industry produces become? Over the years, government has intervened in housing, healthcare, and education…and each have seen an explosion in costs.
As we’ve seen during the Obama years, a rapid decline in the middle-class, coupled with massive increases in government spending and regulations are positively correlated. Of course, don’t expect Warren to acknowledge this fact. She’s too busy fighting for “the people” (most of whom she is helping to impoverish). If Warren and her cadre want to really fight the worthy fight, they should pick up a history book (written by someone other than Howard Zinn) and see these trends for themselves.
Until then, the Left will continue fighting the wrong fight…and harming the middle-class in the process.