Opinion Henry Ford's stimulus economics

Henry Ford apparently knew more about economics than George Bush.

He wanted to make money from producing Model T Fords but he understood that as they rolled out of the assembly line there was the need to have enough customers to purchase them, so he decided to pay workers $5 a day, well above the normal wage.

He knew people would work for less, but he also knew that it does no good to keep making cars unless people have the money to buy them. His insight was more advanced than those who have created American policy for the last 20 years, for their faulty policy is the main cause of the current economic recession.

Supply and demand must be in sufficient balance so that what is produced can be purchased. This principle may be so overly obvious that it has escaped those who have guided economic policy.

Remember "supply side" economics? By giving additional funds to the already wealthy, the "logic" was that they would create expansion of business and this would "trickle down" so that jobs would be created and the economy would prosper. But the Henry Ford principle was lacking, for if production was increased people would need the money to buy what was produced.

The "demand side" of the economic equation was left out and the predicable chickens have now come home to roost. Stores are glutted. There is plenty of supply but not enough demand. The Bush administration continues to advocate trickle down economics as payback for the last election and as pay in for the next election.

Apparently only public understanding of the looming economic disaster will prevent momentum toward lemming-like policy that takes us back to the 1930s. With concentration of wealth and power turning us into the leading first world oligarchy and with CEOs and workers having an inequality ratio of 500 to 1, the time has come for a national wake-up call.

The American public does not seem to understand that when the economic pie is divided and some get big pieces, others get smaller ones. Other industrial nations divide the pie more equally. The question of who gets what involves not only a moral question of fairness but under economic capitalism the failure to put money into the pockets of the lower and middle class produces depression.

Business cycles represent the effects of distribution inequality -- the more inequality the greater the amplitude of the cycle. If the cycle is sufficiently extreme there can be basic collapse of the social structure which can produce revolutionary politics.

The Bush policy of give-away to the rich -- no inheritance tax, reduced taxes on unearned income such as stock dividends and capital gains--has caused many to consider the policy a form of "class warfare."

Kevin Phillips, a Republican but a real conservative (author of Wealth and Democracy), says "Republicans are gambling that ordinary Americans are too numb or too dumb to go beyond the 20-second sound bites to see that the thinly disguised bailout of upper-income stock investors is another round of old GOP trickle-down economics."

Robert Reich, Secretary of Labor in the Clinton Administration, says the "proposed tax cuts won't create jobs and won't grow the economy, it'll only make the rich even richer."

So how can we stop the vast giveaway? Public outcry of course, but campaign financing reform is especially needed to take back government from control by the corporations and the rich. Not only can policies of economic fairness help lessen class conflict but an increase in the spendable income of working people is the basis for real "stimulus."

Bottom up demand will move the economy. Bush's top down "supply side" is a basic cause of the recession, not a solution. The Bush propaganda campaign relies on public gullibility for belief in the myth that everyone can become a millionaire. But the current concentration of wealth is mainly reverse Robin Hood economics based on government policy. Those with memory of the '30s know it can bring down the entire nation.