Who Is Fit to Rule America in the Twenty-First Century and Beyond?: The Twenty-First Century and Beyond American Enlightenment

By Vinep A. Kankam-da-Costa

Whenever a society stands bold enough to tackle controversial issues and inspire the people collectively to solve problems, it makes a far reaching positive impact on the stability, growth, and development of a nation.

• Language: English
• Publisher: Xlibris US
• Release date: Oct 30, 2012
• ISBN: 9781479739660

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Copyright © 2012 by Vinep A. Kankam-da-Costa.

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CONTENTS

List Of Tables

Preface

Acknowledgment

Chapter 1 Economic and Political Perspectives of the United States

Chapter 2 Economic Policy Implementation and Debt Creation in US Politics

Chapter 3 Proto-US Politics and Economic Recessions (1791-1899)

Chapter 4 Neo-US Politics and Economic Recessions (1900-2010)

Chapter 5 Inflation, Interest Rate, and Unemployment in US Politics

Chapter 6 Market Structures, Saving, and Infrastructural Development in Politics

Chapter 7 Educational and Youth Development and US Politics

Chapter 8 Social Problems and US Politics

Chapter 9 Foreign Policy: Strategy, Implementation, and Consequences

Chapter 10 Internal Political Dynamism, Schism, Construction, Change, Status Quo, and Democracy

Chapter 11 Summary, Discussions, and Suggestions

References

Biography

LIST OF TABLES

Table 1   Gross US Federal Debt as a Percentage of GDP

by Presidential Term Since World War II

Table 2   Federal Spending, Federal Debt, and GDP

Whenever a society stands bold enough to tackle controversial issues and inspire the people collectively to solve problems, it makes a far-reaching positive impact on the stability, growth, and development of a nation.

DEDICATION

This study is dedicated to my friends, Mr. Justice Fifi Damuah Wilson (originally from Ghana, currently residing in Ottawa, Canada), Mrs. and Mr. Felix and Professor Barbara Purifoy Seldon (Southfield, Michigan, USA), Anthony Kwadwo Appiah (Ghana), Albert Moses (Ghana), and my Ph.D. advisor, Professor Jazlin Ebenezer, at Wayne State University.

This work is also dedicated to my family: Grace Margaret Awo Asi Adobea (mother), Kofi Agya Koo Sara Kankam-da-Costa (father), Hon. Edwin Wilson Yaw Kwarteng Kankam-da-Costa (brother), Yaa Comfort Kyekye Kankam-da-Costa (sister), Roger Osei Kankam-da-Costa (brother), Montey Acquah Kankam-da-Costa (brother), Josephine Enotza Akyeampomah Kankam-da-Costa (sister), Agyimah Yaa Kankam-da-Costa (sister), Felicia Yaa Nkrumah Kankam-da-Costa (sister), Robert Asase Abekah (brother), Kwame Nyefew Abekah (brother), Mr. Robert Quansah, Kwabena Addo Kankam-da-Costa, Michael Sowah Okpoti Abigidoo, and Joana Akosua Obeng, whose encouragement has inspired me to achieve my highest educational goal.

PREFACE

This study is intended to illustrate how the twenty-first century and beyond should be governed and directed toward a new level of human civilization and development in the United States of America. The world has reached the peak of the old ways, and the need for a new direction has become inevitable for the next epoch. Who is fit to rule the United States in the twenty-first century and beyond in order to move the society toward this new level of civilization? It is the duty of every responsible individual within the country to play a key role. Everyone has to make an effort to understand the issues and to support and install leaders that are capable of shouldering the task ahead in the twenty-first century and beyond. To give unwavering support, dedication, and sacrifice, this book is to assist people to identify the focal point of the issues with both objective and subjective understanding of human action. A new age of enlightenment of the twenty-first century on institutions is needed to reconstruct so as to hit the target for a high level of development and civilization. The study is organized into eleven chapters. Therefore, it is devoted to examining, interpreting, explaining, analyzing, and evaluating historical and present socio-politico-economic conditions in the United States of America to assist in decision making by the ruling groups in the twenty-first century and beyond.

In chapters one to six, the discussion emphasizes economic issues in the United States. Attempts have been made in examining the existing economic policies vis-à-vis the philosophical and theoretical foundations associated with practical politics to determine the group of people who can rule United States of America effectively in the twenty-first century and beyond. It is an attempt to look critically into history and make comparative analysis of socio-politico-economic policy approach, and their implementation, outcomes, and future implications for the Americans. Republicans, Democrats, and minor political parties as well as individual independent political figures have unique foundations, but which of them can give the Americans what is closer to their goals and aspirations? The study emphasizes the fiscal and monetary policies which guide decisions of the major ruling political groups. The discussions revolve around supply-side economics, demand-side economics, and coercivenomics. These fiscal policies have been examined and evaluated for readers to understand their impact on the entire society and the need for a new direction toward the future.

The study clearly lays the national debt problems facing the nation. It examines, analyzes, and explains in historical context how the huge debt was created and possible ways of solving the problem. In historical comparisons, it is evident that huge national debt leads to revolutions or other political upheavals. It is, therefore, imperative for the United States to solve the debt problem facing the nation in order to move the rest of the European powers to resolve the excessive financial crises facing them to give hope to the rest of the world.

Unemployment is a major economic indicator of a downturn. The study covers recessions in the United States from 1791 to the present to determine conditions leading to the unemployment problem. The recessions were examined to find out which groups and what philosophies, models, and economic theoretical framework have been applied in creating recessions and depression as well. Attempts have been made to find solutions to prevent its occurrence or to minimize its effects. In addition to unemployment, the study covers inflation, interest rate, housing, and the market structure.

Chapters seven and eight discuss social issues. Some of the social issues are considered to be controversial, but they are all attempts for the Americans to solve their problems to demonstrate as a living example for the world to emulate. Much attention has been given to education, with specific reference to K-12 reforms. The other significant social issues that were fully discussed to redirect the United States to a new form of enlightenment are social security, healthcare, women’s right to choose (abortion), gay or lesbian relationships, the prison industry, gun control, crimes, and immigration.

Chapters 9 and 10 are devoted to US foreign and domestic political issues. There is a thorough examination of foreign policy, strategies, and implementations, and the analysis of the outcomes have given clues on how the United States should lead the world to a higher level of civilization. It is an area that, if care is not taken, the foundation laid by the great Progressives and forward-looking conservatives for world peace would crumble and the world would be doomed. The discussions would assist readers to generate a national debate to guide US policy makers and implementers. Domestic politics are guided by ideological differences of the major ruling groups. The study traces the foundations, philosophical backgrounds, and the practical implications to throw light on modern policy driven of a pluralistic society. In the last chapter of the study, attempts have been made to summarize and give suggestions for further exploration into the various issues to develop twenty-first century enlightenment for American society.

Whenever a society stands bold enough to tackle controversial issues and inspire the people collectively to solve problems, it makes a far-reaching positive impact on the stability, growth, and development of a nation.

ACKNOWLEDGMENT

I am grateful for the intellectual advice and encouragement received from Professor Jazlin Ebenezer, Ph.D., Chair of Curriculum and Instruction Department, Wayne State University, Professor Matthew Kuofie, Ph.D., Engineering Department, Lawrence Tech University, CEO of Global Strategic Institute-Madonna University, and former US Congressional candidate, a banker, and an economist Mr. Paul Kindong, and Mr. George Aduonum, a journalist and a writer.

My gratitude also goes to my colleagues at Evans Solutions, and BKB Academy’s Wise Club at JDF-Detroit for their contributions: Mr. Thomas Drake, Emmanuel Niiquah, and Mr. Ronald R. Redmond (JDF). I am thankful to Mr. Nicholas Sadiq for his contribution on immigration issues. I am deeply appreciative for the moral support given to me by Mr. Kwesi Effah, Mrs. and Mr. William, Nana Yaa Annim-Somuah Nagy, Ms. Mary L. Costa (Canada), Mr. Felix Seldon, and Mr. Justice Fifi Damuah Wilson (Canada). I am solely responsible for every aspect of the content of the entire work.

CHAPTER 1

Economic and Political Perspectives of the United States

Republican Fiscal Policy and Politics in the United States (1981-1993)

In the last twenty years of the twentieth century, American history has experienced an undulating economy. The Republican Party’s economic philosophy of governments do little was used to initiate some form of economic expansion policy. The laissez-faire economy, which is a free market economy, almost reached its optimal level during the Reagan-Bush administrations. The classical economists believe that this approach to economic development is the only way to maintain the standard of America. To ensure economic growth is to allow those who have the means of production to determine the magnitude of the economy. The way the economy is being driven toward development demonstrates that the classical economists within the rank and file of the Republican Party always believe that the rich and the affluent should only be the target of the party’s fiscal policy for expansion.

In view of this, the Republican Conservatives cleverly developed a new macroeconomic theory, the supply-side economics, which seems not much different from the old idea of the business-in-charge economy of the 1920s. According to Roubini, N. (1997), the supply-side economists believe that Taxes enter many decisions, but the two most important are probably that they discourage work, since they lower after-tax returns from work, and they discourage saving and investment, since they lower after-tax returns. They emphasized that a lower tax rate on wage income should increase the labor supply. Given the labor demand function, this increase in labor supply will increase employment, reduce the pre-tax real wage, and increase the post-tax real wage. It makes saving attractive and pushes people to save. It is clearly stated in Roubini, N. (1997): We expect lower taxes on interest rate and capital gains, as well as tax-sheltered saving plans like IRAs and 401(k) plans, to make saving more attractive and lead to an increase in savings. In equilibrium, this will lower real rates of interest, as more saving flows into capital markets, and raise investment. This implies that in the long run, this investment would lead to higher capital, more productive labor, and higher output and wages. Most economists may see this theoretical position more sound as lower taxes would increase labor supply and savings.

Making the supply-side economics more attractive to be hailed by intellectuals and the general public in the United States, Blanchard (1997), described vividly Reagan’s revolutionary program to scale down wasteful governmental activities, lower taxes, and interfere less with the market. As a result, it was expected that the US economy would become more efficient with faster growth and minimal inflation. Furthermore, it was made clear that tax reductions would pay for themselves so that the budget would soon return to balance. The crucial empirical question is the extent of the effects of cuts in tax rate on labor supply and savings.

The policy guiding the supply-side economy under the Republican Party is the tax-cut, an expansionary policy. By the use of the term supply-side economics, using the tax-cut as a base in tackling macroeconomic issues puts the conservative approach into macroeconomic theme in solving the society’s problems and not just a segment. Therefore, supply-side economics is a macroeconomic approach that argues that economic growth can be effective by lowering taxes for business as an incentive to boost investment to increase production, hiring more as supply of labor increases and reducing unemployment and inflation. Supply, therefore, creates its own demand and can be effective with deregulation and no price setting by the government. This supply-side economics is what is sometimes called Trickle-Down or Voodoo Economics.

The tax-cut can be used to support both the demand-side economy and the supply-side economy. The tax-cut, therefore, can be used to target the middle and lower class to boost demand or target producers and upper class to boost supply. It works better when an economy is in recession and is about to take off. This approach was used by the presidents Reagan and Bush in their combined twelve-year leadership to end recessions. Expectations to succeed were high due to the charisma of President Ronald Reagan. However, toward the end of the Reagan era and throughout the George H. W. Bush era, the expansion was choked. This was because the policy initiated had not had its full impact on the life of the majority of the American public despite the economic gains observed in some years of the Reagan era.

Although cutting taxes is not a bad policy for either side, the Republican Party’s policy seems to have a problem. Instead of using the tax-cut policy to push up demand or increase supply by government involvement, the Republican Party rather gives a tax break to the rich businessmen and businesswomen who have the means of production, allowing them to determine the nation’s economic future. The irony is that the rich hardly spend when they receive large amounts out of the tax-cut policy. The rich tend to invest the tax-cut money on government bonds and other types of conservative investments. This is because the government would not cut down its expenditure, and, by using credit to finance government spending, bonds are issued for those who have the money to invest in that risk-free conservative way of investing. The multiplier effect from the tax-cut policy becomes minimal because demand is curbed. Over time, there is excess supply as demand sinks so low. Unemployment becomes a common economic feature as supply of labor exceeds the demand over a long period of time.

From another perspective, supply of goods is reduced by the nature of the investments made by the wealthy—investments in services and insurance of multinational companies. This affects the production of goods and services domestically, which leads to job cuts and unemployment. If the tax-cut collides with low interest rate by the Federal Reserve Bank, another problem will arise. The potential investors ship out investment to other countries where the interest rate is too high. This is because domestic demand for goods is down; therefore, domestic production of goods can be curtailed for a while. This type of investment shift affects domestic business and production. The end-result is the collapse of local businesses, although the lower interest rate can boost international trade and local trade as well due to lower prices. However, foreign countries buy less from the United States, and the long-term local financial problem changes the elasticity of demand. People in the long run change their buying habits to reflect the reality of the economy.

The Republican Party’s tax-cut-policy approach can be viewed as redistribution of wealth instead of an expansionary approach. This is because when the rich are the target, it becomes evident that they amass wealth to maintain a standard for themselves and their families for generations to come. Though cutting taxes is an expansionary policy, it did not bring the kind of expansion expected by the American public during the twelve years of the Republican administrations of Reagan and Bush. It did not mean a complete collapse of the economy, but it served as an impetus for Americans to welcome an alternative expansionary policy because the Republican tax-cut policy in modern times makes the rich richer and the poor poorer. The unbalanced situation between the rich and poor leads to a shrinking middle class, culminating in the expansion of the lower class.

Despite the economic expansion under the Republican tax-cut policy, it made the rich and the affluent citizens happier and more comfortable because the tax-cut boosted their financial position. The tax-cut had little economic meaning for the poor. It also maintained conservative standard and structure which some segment of the society wanted. The conservative values, standard, and structure associated with the tax-cut policy can touch some beliefs of the very poor people to the extent that they tend to support the Republican Party. They are always ready to vote to retain them in power on the basis of trivial issues and for self glory. This erroneous thinking moved the American public to vote in support of George W. Bush, another Republican leader, to become president to start the twenty-first century with the same Reagan-Bush tax-cut policy and government do-little philosophy.

Democrat Fiscal Policy and Politics in the United States (1993-2001)

In the 1990s, US politics was dominated by the Democratic Party under the leadership of William (Bill) Jefferson Clinton. The eight years of Clinton’s administration demonstrated a booming economy with a policy of higher taxes, high spending, and spending cuts, which led to a budget surplus. The high taxes were to prevent overheating the economy due to a high level of economic expansion resulting from the demand side of the economy, and cutting down expenditure was to reduce deficit financing to maintain surplus so as to boost the hopes of the future generation. President Clinton’s economic policy was backed by the Keynesian-demand-side economic theory, where labor interest is taken into account for economic growth. His economic policy targeted the middle class and the lower class. The middle class and the lower class became the driving force behind the economy. As demand increased, producers and suppliers tried to capture the excess demand, which led to creating more jobs. The economy then tended toward equilibrium and a stabilization point.

This condition put more money in the pocket of the worker and that increased household consumption. The increase in demand increased the velocity of money and emptied the shops and dealerships, which created inventory shortages. The inventory shortages created room for expansion because the suppliers had to catch up with the demand. The increase in demand led to increase in production to fill the empty shops and the dealerships. Higher production then ended up in a higher Gross Domestic Product (GDP) and economic growth. The multiplier effect became greater as the wealthy did not restrict themselves to conservative investment but ventured into more aggressive investments in stocks. The high taxes prevented deficit financing and did not make the government succumb to the mercy of rich people. This gave the government confidence and to the general public hope. The government economic strategy of pushing the demand side of the economy for expansion and collecting high taxes with low government expenditure created the surplus. This left Clinton a legacy of prosperity, which paved the way for liberal ideas to flourish.

A majority of Americans benefited under Clinton’s administration from an economic point of view, but can the masses hold power for long? Even though the middle class was the target of Clinton’s economic plan, the rich rather gained more than expected. As the middle class spent more, the rich increased the base of their wealth and used this financial power to stop the Democrats from winning the office again. Their effort was to take the surplus by legitimate means. It was here that they used their financial position to influence the electorate to vote for a Republican, George W. Bush, who took the surplus and gave it as a trophy to them.

The Keynesians believe that the demand-side economics is the only way to ensure economic growth and development, while the classical thinkers believe the Keynesian approach is a short-term relief. Who should control or take the lion’s share of the surplus created under the Democrats’ administration? Using the surplus for expanding public good is an abomination to those Americans who believe that economic equality is not a value to be entertained and that developing the public domain more than the private would push Americans away from extreme capitalism to a welfare state. On the other hand, if the workers get the largest share to increase household expenditure, it would be considered as socialism or communism. Therefore, the competing forces should compete for it through political action. As a result, political strategies were developed, some of which were diabolical, such as the Florida election, that became controversial and a challenge to US democracy in terms of a close election. The struggle for the surplus led the conservatives to attack liberal values. They set Clinton up with the Monica Lewinski scandal, which almost disgraced American political thought as if a pope were needed to head the country. It also deprived Americans of their age-long democratic right to choose leaders. This prompted the Supreme Court to decide the outcome of a close election instead of the electorate. This led to the defeat of Al Gore and the rise of a compassionate Republican George Walker Bush in the year 2000.

Republican Fiscal Policy and Politics in the United States (2001-2009)

The twenty-first century had begun with a classical economic approach for expansion. This type of expansionary approach, with high government spending, in theory was not the Republican Party’s traditional approach. However, it was adopted because of what they were spending on and how the money was being spent. The high expenditure was due to two external wars in Iraq and Afghanistan. The war, in turn, became associated with high investment tax break for the affluent-rich Americans to invest more and increase the GDP. There was also a minimum tax-cut for the middle class and the poor. At the beginning of his rule, George Walker Bush’s economic stimulus plan gave every single household $300 and families $600 but gave the rich businesspeople millions of dollars through investment in tax breaks. This policy seemed like an expansionary policy, but it was limited in scope. It was, therefore, a continuation of the old Reaganomics supply-side economic policy.

The economic approach to solving United States’ problems throughout the eight-year leadership of George W. Bush ended up in liquidating the Clinton’s surplus. It could be viewed more as a policy of redistribution of wealth than an expansionary policy. This gave the rich the power to move the economy in a direction they wished. They invested in a neoconservative way domestically by buying government bonds instead of real estate and investing in overseas business for higher return on investment. The rich left the real estate market because in Clinton’s era, they manipulated the middle class in grand style by pushing them into real estate business. The middle class was convinced that they had almost caught up with the rich in the game of money-making. The rich benefited enormously by using their business establishment to charge high interest rates. Mortgage fraud became a business game as property was overvalued, and constant refinancing led to higher taxes for the various local governments to collect.

The high mortgage payments and property tax associated with high interest rate on credit cards, appliances credit, as well as high utility bills, complicated financial matters for the middle class and the poor. The middle class, imitating the rich in the game of money-making by refinancing their mortgage, became a tool for causing financial suicide for the housing industry. The liquidation of Clinton’s surplus was welcome at first with high expectations for the middle class and the poor. The hope was that the rich would invest to create jobs for the people and reduce their financial burden. The unintended consequence of the liquidation of Clinton’s surplus was an opportunity for the rich to invest in such a way as to maintain their standards and values.

The Federal Reserve Monetary Policy Mix with US Politics (1993-2009)

In the United States, two types of policies drive the economy: fiscal policy used by the federal government, and monetary policy used by the Federal Reserve Bank (Fed) to maintain sanity in the economy. In Clinton’s time, the Federal Reserve Bank accommodated government’s expansionary fiscal policy with a monetary policy of low interest rate. This increased the potential to borrow and invest. Although low interest rate can lead to investment demand shift-out for foreign countries with higher interest rate, the US interest rate level was reasonable because the stock market was financially rewarding. Therefore, people who saved in Certificates of Deposit could still have a good rate of return on saving investment. Some Certificates of Deposit attracted an interest rate of 4.5%-6%. This made domestic investment more secure and lucrative for all groups of people as Clinton instilled hope into people for a better economy ahead.

Under George W. Bush’s administration, the Fed equally accommodated the government’s fiscal policy. The Fed targeted inflation by lowering interest rates consistently to push prices of goods down, giving the government enough space to expand the economy by cutting taxes. The irony was that the Fed’s policy was a failure because the lower interest rate was not matched with high domestic spending. There was high investment demand shift to foreign countries. This resulted from low domestic spending by the rich who had the bulk of the Bush tax-cut package to pursue their selfish but rational business interest and the federal government’s high expenditure on foreign wars. The most frustrating to the Fed was that while it targeted inflationary reduction, the international market was making gasoline prices soar, which created artificially uncontrollable and unidentified hidden inflation, or high prices, of some goods. Thus, the main purpose of keeping the interest rate low was defeated by oil prices. The oil shock increased commodity prices. For example, fifty pounds of Jasmine rice increased from $23 to $48 in Michigan near the end of George Bush’s presidency in 2007. The rationale behind the Fed’s policy was to avoid double danger, which is high inflation and high unemployment (stagflation). The Fed kept the economic castle in check with lower interest rates. However, at that rate, unemployment too was soaring under Bush; if care had not been taken, the economic problem would have surpassed the 1930 depression period.

Under the George W. Bush’s administration, the government expenditure also led to the flow of dollars into foreign countries due to wars in Iraq and Afghanistan. Foreign governments gained through Bushian-American course by over floating the US dollar on the international financial market. Normally, from an economic perspective, the low interest rate and low exchange rate in terms of the dollar would lead to lower prices and, as a result, foreigners were supposed to buy goods and services from the United States. This did not happen as much as expected. The impeding factor could be attributed to the 9/11 attack in New York City, where the World Trade Center Twin Towers were brought down by terrorist act on September 11, 2001.

The 9/11 plot created fear for foreigners coming to the United States. The threat of a repeated action affected the airline industry. The 9/11 threat led to overburdened security measures by the Homeland and Security Administration Department, which discouraged decent people from coming to spend holidays in the United States. This condition affected the tourism industry in America, reducing the income of the hotels and restaurants as well as the airlines. The net outcome was for investors to look for alternative investments. The Bush investment tax break gave the rich and affluent many opportunities to invest in a way to keep the value of their money constantly growing.

As the US economy faced low interest rates and low demand for goods and services due to high unemployment rate, the wealthy companies were attracted to a higher return on investments in foreign countries where production resources were cheap. By shipping jobs overseas, the companies were able to minimize cost as labor, raw materials, and other costs were lower in comparison to those in other highly industrialized countries. In addition, the companies were able to maximize profit by selling at high prices in US and other markets in the world.

This process weakened the US middle class financially. The big companies’ investment shift to the outside world created employment problems as United States lost many jobs on the home front. The rationale behind the low interest rate was to slow down the soaring of the national debt. The lower interest rate, which targeted inflation in order to keep prices of goods and services low, led to loss of income due to a low rate of return on any form of savings. The low interest rate reduced the percentage of people who saved, making banks’ lending and borrowing business more difficult. As the banks tightened their lending, investors in the housing industry were severely affected. This led to a mortgage crash. With the mortgage crash, many citizens’ assets were depleted. The fallen stock market collapsed the modest investments of the middle class. Hope was lost, and panic was becoming the order of the day. When the investment moving-out of the country reached its maximum, many Americans could not foresee a brighter economic future any time soon in their lives.

Alternative Approach to Prevent Economic Breakdown

Close to the end of George W. Bush’s administration, the big businesses, with their inefficiency in financial management, came out with another scheme that scared the American society more than ever: the bail-out plan for big businesses was one of its kinds in the United States’ history as a capitalist nation. Usually, in the past, individuals could bail out the government, and that illustrated a true capitalist approach. This is because government executives are there to manage the affairs of those who have the means of production. Therefore, those who have the means of production have to take care of those who manage their affairs financially, and not the other way round. It could be noted that Morgan twice helped the government out of financial difficulties. In 1895, a run on bank notes nearly wiped out the government’s supply of gold. Morgan lent the government gold at an interest rate of only 2%. At the time, the standard rate was 30%. During the recession of 1907, Morgan bought gold for the government, (Hughes, Miller, and Volkening, 1978). However, the government bail-out plan of 2008 would have been good for the rich if the government had funded the collapsing companies without regulations. That way, they could have gone ahead to invest the way they had done before so as to exploit the situation for their benefit. Other conservatives disliked the government bail-out because they were afraid of government control. Originally, the bail-out plan under George Bush was a plan without government regulation, something the Democrats disliked. The Democrats would only accept the bail-out with government regulation.

The Bush administration’s bail-out plan demonstrated a weakened economy in the twenty-first century. It illustrated the failure of the idea of small government, supply-side economy, do-nothing government, and tax-cut with corresponding government high expenditure. The fiscal policy of tax-cut and high government expenditure vis-à-vis two external wars and business investment moving out to other lands made it financially difficult for high economic growth on the domestic scene.

Republican Justification for Political Leadership

This state of the economy was inherited by Obama’s administration. Who is fit to rule the United States of America effectively in the twenty-first century and beyond? Critically examining the foundation of the American society, the idea of the pursuit of happiness, individualism, independence, and freedom from stricter control from the imperative coordinating order, in terms of material well-being, Republicans of today are fit to rule. They allow the freedom to choose and individual decision making. They believe that the economy must be left alone for private individuals to manage rather than having the government intervene. To allow individuals to determine their material well-being would pave the way for the market to determine its course. Therefore, what to produce, how to produce, and who gets what is produced should be determined by private individuals. Limited government intervention at both micro and macro levels of the economy is enshrined in the foundation of the American society. However, the question is, have the last twenty years of the twentieth century proven that Republican control is what the American public needs for economic stabilization and growth?

Republicans have the idea that to pursue a sound economic policy, conservatism should be the core of US politics. The rise of conservatism in our modern era could be attributed to the work of Richard Nixon, Gerald Ford, political commentator William F. Buckley Jr., and the economist Milton Friedman (Newman and Schmalbach, 2004). The conservatives’ economic issues in the 1980s include lower taxes, few social programs, and a reduction in the emphasis on Affirmative Action. As such, they were opposed to big government, new deal liberalism, and welfare.

Before 1980, Republican economic beliefs were becoming popular as could be seen in the tax payers’ revolt. California, in 1978, revolted by passing Proposition 13 that cut property tax. The economist Arthur Laffer’s belief that tax-cuts would promote economic growth and Jack Kemp and William Roth’s proposed legislation to reduce Federal taxes by 30% formed the basis of the Reagan tax-cut (Newman and Schmalbach, 2004). Reagan’s attack on economic policy for the 1980 election was on big government solution to problems and the Misery Index of 28 (rate of inflation added to the rate of unemployment). This campaign resulted in Reagan winning 51% of the popular votes and almost 91% of the electoral votes, while Carter won 41% of the popular votes and John Anderson, a moderate Republican, 8%. The Reaganomics tax-cut was initiated, which led to a 25% decrease of personal income taxes over three years. There were also the corporate income tax cuts, a capital gains tax, and a gift and inheritance tax, all which guaranteed a large share of the tax relief to the upper income tax payers. The top income tax was reduced to 28%, and the small investors’ provision allowed them to invest $2,000 a year in an Individual Retirement Account (IRA) without paying taxes on this money. Overall, the Republicans and conservative southern Democrats cut over $40 billion from domestic programs such as food stamps, student loans, and mass transportation. Can the effects of Reaganomics be so pleasant that the American public will cry for a comeback of this economic policy in the twenty-first century and beyond?

Coercivenomics: Demand-Sup Economics, 2008-2012

Coercivenomics can be referred to as Demand-Sup Economics. It is a macroeconomic policy that has two targets for economic recovery and growth. This policy came to exist between 2008 and 2010 and has to continue until 2012. President Obama initiated this policy throughout the first half of his administration but has been conditioned to continue to the end of his first term. One part of this unusual fiscal policy for economic recovery and growth came from Keynesian macroeconomic approach. This is the demand-side economics, where labor or household or the middle-class and lower-class interest is taken into consideration as the target for economic recovery and growth. President Obama favored this fiscal stimulus where tax-cut is given to the middle and lower classes, and he initiated it immediately when he came to office to boost the demand-side of the economy for speedy recovery.

In addition to President Obama’s own fiscal policy, there existed supply-side economics tax-cut for the rich. This fiscal policy, laid down by President Obama’s predecessor, George W. Bush, could not be terminated until 2010. President Obama was, therefore, forced to add it to his own fiscal policy