Reverse Reaganomics

Ronald Reagan’s approach to governing still resonates with many who like the idea of smaller government, lower taxes, and “trickle down” economics. For those of you too young to remember, trickle down refers to the scenario where individuals and companies make a boatload of money and, in spending it, create opportunities and riches for those farther down the economic food chain. “Trickle” is the key word because a majority of the dollars seemed to stay in the pockets of those occupying the higher rungs of life’s ladder. Nevertheless, it still has support.

Unfortunately, the converse is also true: as money becomes scarcer at the top, less (or little at all) flows down to the lower reaches. We all know what does regularly flow downhill, though, don’t we and we’re getting more than a small taste of it as it “trickles” past. Within the upper echelons of the political and corporate worlds, much stays the same, but the trickling down of benefits has slowed to a barely perceptible degree. I’m not a physicist or an economist, but I’m surprised that such an outrage exists at such an understandable, and foreseeable, situation.

The slowing of the money train initially became obvious to me as Hurricane Katrina slammed into the city of New Orleans. The media reported that no agency seemed to be well prepared to deal with the aftermath. Perhaps “they” were very well prepared to allow other agencies to step in and foot a bill that “they” could not pay. The city was more or less broke and I find the idea that they simply waited for the state of Louisiana to come to their rescue more than plausible. Unfortunately, the state was no better off, financially, so deferred to FEMA. And we all know how FEMA performed. A combination of limited resources and bureaucratic obstacles created a debacle that continues to this day.

The latest example seems to be the extreme flooding in Atlanta and the surrounding areas. Once again, media reports show city officials hoping the state of Georgia will come to their rescue and state officials are turning to Washington for federal dollars. And, once again, we all know that the federal coffers have little to provide.

As help from Washington is reduced, states are forced to deal with their own problems, but their financial problems are no less severe. As the states turn to counties and cities for help by reducing the flow of money to those smaller entities, the supervisors and mayors look for help and find there is nothing lower (except the general population, of course). Each of us enjoys daily conveniences provided by each of these political players, but as the money slows to that trickle, those conveniences begin to disappear. Library hours are curtailed. Public swimming pools, parks, and the like are closed. Public universities reduce their enrollment numbers due to reduced faculty. Things we once took for granted no longer are there for the asking.

The business world is not much different as executive pay remains high so as to “attract and retain the brightest and best”. The worker bees, however, continue to struggle making ends meet as the cost of living goes up while the reward from working remains the same.

Let’s break this down to the family level. We’ll assume you have kids and they receive an allowance. They enjoy other benefits that seem to automatically flow from the fact that they live under your roof. Now you lose your job. The same trickle down that created a boon for your family during the good times is now morphed into their bane. The allowances decrease or disappear. Cable, cell phone, and the other accoutrements of the good life become, instead, luxuries that may not survive the scrutiny of a revised budget reflecting less discretionary income.

Face it folks: everybody’s broke. It isn’t limited to your family. Yes, your taxes are down because your income is down and/or your house value is drastically lower. So your contribution to the local, state, and federal cash boxes is lower. Why would you expect to maintain the same level of service from them when your own family can no longer expect the same level of service from you? The only way to find that money, short term, at least, is to raise taxes and that idea meets with instant outcry.

Our elected leaders claim to pay for everything by reducing (or eliminating) fraud, waste, and abuse. Nice theory, but I see it as more smoke than substance. First of all, nothing is 100% efficient, so you can scratch off waste as it is a by-product of effort. Fraud and abuse usually go hand-in-hand and so long as people are involved with any process, there will be those that take advantage.

It strikes me funny that, while many rant and rave about keeping government out of their medical affairs as we try to reform healthcare, some of the same folks rant and rave as services are reduced from the same government they claim to loathe. Which way is it? (No, you cannot have it both ways.)

Our economic way of life is changing in significant and perhaps irreversible ways and our consumer driven economy may well be a thing of the past. What will replace it? That’s anyone’s guess, but make no mistake: trickle down economics, just like most everything else, isn’t always a good thing.