1969-2006: Republicans Erode the Consumer Economy

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Over seventy years of hard data (1933-2004) reveal that the Consumer Economy strengthened during Democratic administrations and weakened under Republicans.

Professor Jack Lessinger, author of "Schizomania", concludes that “by boosting labor’s ability to consume, Democrats sent the consumer economy on an upward course for over 35 years. In the next 35 years, increasing Republican influence damped labor’s ability to consume and eroded economic performance.”

Lessinger measures economic performance by percentage increases in the nation’s real GDP per capita. As shown in the attached chart, from the lows of the 1930s to the highs of the 1960s, percentage increases in real GDP per capita grew every decade and, over all, more than doubled. Thereafter, (1969-2004), growth per decade steadily fell to less than half.

Lessinger is Professor Emeritus, University of Washington. His books are available at http://www.predicting2020.com.

Except for Eisenhower (who pursued New Deal policies) the whole period of climb 1933-1968 (from FDR to Johnson) was Democratic. The whole period of fall was mostly Republican. Carter and Clinton resembled moderate Republicans.

Concludes Lessinger, “The rise and fall of labor’s ability to consume reflects Democratic enabling and Republican disabling of the Consumer Economy. The Consumer Economy requires robust consumer spending. Democratic policies empowered the poor, our most reliable spenders. On the Republican watch, the poor were increasingly disempowered.”

To boost spending, Democrats backed labor unions, regulated business, shifted the cost of government from the poor to the rich and created a plethora of entitlements. As a result, workers stoked the economy with openhanded spending. The result was full employment at good jobs, prosperity and rising wages. Not a single recession blemished the 1960s.

During the Republican watch, labor’s decreasing share of wealth and income was the result of less favorable treatment of unions, reduced taxes on the rich, lower trade barriers, laborsaving improvements, mergers, increasing numbers of immigrants, outsourcing, imports, relaxed business regulations and spectacular increases in executive compensation.

The Republican era proved increasingly toxic to the economy. Down came the relative equality of the 1960s. Down came the vigorous ability to spend. Down came the growth of real GNP per capita. And down came the Consumer Economy.

Wait. Aren’t consumers spending as much as before? Let’s not be fooled. We’re increasingly spending borrowed money. Hardly a recipe for sustainable prosperity.

A new economic strategy is needed. Just as FDR ended the opposing Pre-Consumer Economy and pioneered the Consumer Economy, a new generation must now pioneer an opposing Post-Consumer Economy.

The Post-Consumer Economy has already made a start. According to Lessinger, in the 1950s, migration to suburbia—the city facilitating consumption spending—signaled the coming era of the consumer. Today, people are streaming out of suburbia to a new kind of city serving the Post-Consumer Economy.

By 2020, he predicts, new industries will launch novel opportunities and a sustainable wave of prosperity. See Lessinger’s: Schizomania as well as Your County—Boom or Bust? Also, his website, http://www.predicting2020.com.

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