Pho to by Sa br ina Be rm ing ham earning less than they used to. We have massive layoffs and plant closings, jobs that are being replaced by service industry work that pays, what, 60 percent of the new jobs pay less than $7,000 a year. We have downward mobility in our economy, the disappearance of the middle class, all, in my view, as a result of the misapplication of our capital. Because of Reagan’s tax programs, because of his military build-up based on debt, based on credit, because of his administration’s encouragement of merger-frenzy, the productive people in our society are starved of capital. Farms can’t get it, small business, entrepreneurs can’t get it, it doesn’t go to plant expansions, it doesn’t go to research and development, it doesn’t go to workers in the form of good jobs; instead it’s going to brokers and lawyers, speculators and bankers. What we got is an economy in which money is chasing its own tail, and on Monday last it caught its own tail. To me the issue is, whatever the market does, we’re going to continue to have farm foreclosures, oil and gas continuing down, layoffs continuing, banks folding. It’s interesting to me that on the very day that Ronnie Reagan went on the television to say that this is purely a market thing, and there are no indicators out there of recession or hard times, two more banks folded in the state of Texas, making a total of 44, which is a single-state record in our history. So the collapse is going to continue, it can be accelerated by a total collapse of the stock market, but what I’m saying is that this is been going on all along. It’s not that the stock market is going to cause something bad, the stock market’s now just getting caught up in the same thing in the same economic foolishness that has been generating an economic collapse for the last six to eight years, depending on which sector of the economy you’re looking at. And that’s why I’m concerned about the debate in Washington, which seems to be focused between a Republican viewpoint that we just need some minor tinkering with Wall Street rules, and a Democratic position that we’ve got to deal with the deficit, when in fact we can deal with both of those and still the fundamental problem remains. Our economy’s fundamentally out of whack and we need some heavy hands in there twisting the knobs and pulling on the levers to get this thing upright again. And that means everything from getting ahold of the Federal Reserve, to the possibility of a wealth tax, to a new farm bill, to greenlining of capital so that it goes to productive enterprises. The next President is going to face possibly double-digit inflation, doubledigit unemployment we’re already there, if you count the people who are working part-time a humongus deficit. . . . The next President has got to at least be Franklin Roosevelt, in terms of willingness to make major changes in the economy and to use the government in an activist way. The Calamity Is Yet to Come RAVI BATRA Professor of economics specializing in international trade at Southern Methodist University. Author of The Great Depression of 1990. What we saw was only a preview of the calamity yet to come. The initial cause was the decline of the dollar due to the trade deficit. But the real cause is the extreme concentration of wealth. At the end of 1989 or the beginning of 1990 the stock market will crash and throw the world into another great depression. The first signs of my previous forecast have already come true. Stock market bubbles are caused by extreme concentrations of wealth. This concentration began to grow in the 1980s when President Reagan cut the taxes for the rich in 1981. In order to stop the coming depression we have to bring the concentration of wealth under control. We need a w _ealth tax on the one percent of the Americans who control 36 percent of the wealth. The tax should fall on. the millionaires and billionaires. A wealth tax on a sliding scale of two to six percent on one percent of the population will bring the government $200 billion, enough to wipe out the budget deficit. The tax must be used only to reduce the deficit and to retire the debt, which can be done in 12 to 15 years. As this will bring down the rate of government borrowing, the rate of interest will decrease. Perhaps some Democrat or group of Democrats in Congress will introduce this wealth tax. I don’t know. But it is a question that you might pose as you interview elected officials. I myself have organized a grassroots movement to promote this wealth tax. The group is called Stop Another that the wealth tax will lower investment. Not true. The super-rich don’t invest. They speculate. What about savings? President Reagan cut taxes for the rich in 1981 to raise savings and investment. While investment has risen, the savings rate has sharply fallen since then. This means the wealth tax will have no adverse effect on people’s investment. Is this wealth tax another scheme to redistribute wealth? No, it is a tax to eliminate the budget deficit. It will go mainly for defense spending, which in the past has been financed by higher taxes. The purpose of defense is presumably to protect life, liberty and wealth from the Russians. Since life and liberty are equally dear to everybody, the wealthy should pay at least a third of the defense spending in the form of a wealth tax in return for the protection of their wealth. Remember, this one percent holds 36 percent of the wealth. That’s five trillion dollars. They earn $400 billion to $500 billion on their holdings. And their speculation caused the stock market bubble. There are always wild swings at the end of a stock market bubble. Before the hurricane comes through there are storm warnings. That’s what we have just seen. \(A free brochure on Batra’s grassroots organization, Stop Another Depression, is available by writing to P.O. Box Marshall Coping in an International Economy RAY MARSHALL Former Secretary of Labor, now Bernard Rapoport professor of economics at the LBJ School of Public Affairs. I was not terribly surprised that the THE TEXAS OBSERVER 11
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