Populist Economic Myths Debunked

As we approach the 2012 elections, liberal and conservative political strategists, talking heads and pundits are all ramping up their outrageous claims about the opposition.

The populist crowd on TV is led by a group of MSNBC loud mouths that include Cenk Uyger, Chris Matthews, Dylan Rattigan, and Ed Schultz. These know-it-alls rant and rave on a par with the most radical Tea Partiers on the far right. And so, it might prove useful to voters if a few of the myths being tossed about by this group are debunked. After serving many years at several corporations, banks and investment banks, I have gained a unique perspective into the contributions of the organizations targeted by the media and Congress. 

Here are the most important ones: 

All affluent people are unanimously against tax increases. Every informed American knows that increased revenues must be an integral part of any plan to decrease our national debt. The problem is that it will not be enough to impose increased income, capital gains, and estate taxes on the wealthy. Expenditures need to be cut as well to balance our budget.

The issue for many affluent Americans is that they do not believe our elected officials have done enough to decrease waste in government. If the feds rooted out the cheaters and eliminated entitlements and other government programs that are unproductive, wealthy taxpayers would not object to a tax increase if the nation’s finances continued to generate deficits. Further, there are nonsensical subsidies to oil companies, agriculture, financial institutions, and health care organizations that should be rescinded immediately.

Every worker on Wall Street is a mortgage banker. The fact is that only a selected few at investment and commercial banks actually are involved in the type of real estate transactions that precipitated the economic crisis. So, it is inane to demonize every banker as if he or she is an emanation of Bernie Madoff.

It should be noted that commercial banks, community banks, Congress, mortgage originators, borrowers and the rating agencies were also culpable in the debacle that we are all suffering through, although Congress (ironically) and populists attribute economic distress almost exclusively to Wall Street greed.

Entitlements benefit all Americans. Most government programs are for needy and retired Americans. So, when the federal government cuts entitlements, the needy will suffer disproportionately.

Given the hundreds of billions of dollars being redistributed by social programs, do we honestly think that all of this spending is productive and is being received by those who need help the most? Or perhaps some money is going to those who do not qualify. It is almost the same as believing there is no waste in defense spending. Of course there are abuses, padding of invoices, and illegitimate delays. In fact, all government programs are to some extent contributing to the country’s economic problems and/or keeping money from going to those who really need it.

Rich people do not pay their fair share of taxes. Paying one’s fair share of taxes means you pay what the government requires you to pay; our lawmakers determine each taxpayer’s fair share. Unless a taxpayer is evading taxes by not reporting earned income or inflating deductions, they are paying their fair share. Populists have a right to petition their elected representatives to increase taxes if they believe the tax code is discriminatory in some way. But, abasing the affluent simply because they have more than others is wrong.

Banks are evil organizations that serve to enrich their management at the expense of others. Since the birth of our country, banks have assisted businesses and individuals alike by lending them money to expand, to buy homes, and to foster trade domestically and internationally. A healthy economy axiomatically has an efficient banking system. This is not to say that all regulation is a bad idea. Abuses and conflicts are inevitable, so our government must oversee the banking industry. 

It is stunning that so many Americans fail to recognize that the companies they work for are dependent upon banks to prosper, which in turn enables these businesses to hire more people and pay a fair wage. When banks are under pressure for economic, financial, or regulatory reasons, they will contract their operations and every one of us will feel the impact.

Unions are good and corporations are bad. Corporate abuse early in the last century resulted in a proliferation of unions; it was a defensive response to protect workers from unfair conditions. Over the years, the pendulum has swung to and fro as unions and management vie to gain an advantage over the other. In any case, a healthy balance between the two groups benefits our nation.

Overly generous concessions to unions in the form of pension and health care benefits are now bankrupting corporations (the auto industry has suffered mightily in this regard) and state governments throughout America. Rollbacks are inevitable to bring financial stability to many very large entities. Rather than fighting needed changes to the death, union leaders would be better served by working with management, governors, and the like to bring about changes that minimize the pain for all the interested parties.

To conclude, the responses to this essay are likely to include a massive blowback from populists who believe conservatives also create myths. I do not dispute the fact that extremists on both sides are perpetuating an unhealthy political environment. My hope is that both liberals and conservatives will provide voters with unbiased and accurate data that make their respective cases so voters can be more intelligent in the voting booth.

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