A Very Brief History of the Welfare State: From Hamilton and King To Reaganomics and Bailouts

In a week where many are congregating on Washington D.C. as well as parades and protests all around the country, for another historic series of events to occupy the Dream, Congress and the Courts, I thought it would be a good time for a brief recall of economic U.S. history particularly from the 20^th Century to the present.

 One doesn’t have to be a historian or even a history major in school to understand basics about history.  If you were alive in the 20^th century and old enough to remember events as they unfolded, you can actually say you lived through that which is now called history just like we are experiencing history being made every day as participants in the Occupy Movement.

 Growing up in this great country, I often recall hearing about how the poorest people of our nation cheat our welfare system and they don’t want to work. At best that segmented, marginalized and often ignored portion of the population somehow caused such a huge drain on our economic system as if these millions of people are exclusively to blame for our recessions and high taxes.

Even to this day we may hear different terminology from some people to make it seem politically correct, but the same concept is verbalized in what is still considered a class-based society.  If one wants to use the term ‘welfare state’ then it would be more accurate to say that there are two welfare states.  One is for the rich and the other one is for the poor and the middle class.

Alexander Hamilton, the first Treasurer of the United States, believed that the society as a whole would benefit most if more money were in the hands of the rich because they understand how to create ‘productive investment.’

Fast forward to the 20^th Century.

In the 1920’s, Calvin Coolidge’s Presidency lowered taxes on the rich and while there weren’t extended military expenditures, the greed of the period eventually grew to October 1929’s stock market crash.  

As World War II unfolded overseas in the 1930’s, Franklin Roosevelt’s New Deal temporarily created new jobs during the Great Depression that inspired the private industries, including the manufacturing sector, to eventually do the same.  The United States entered into the war in 1941 and the unstable economy turned around. 

Though the country was supposedly in prosperous times again in the 1950’s, it returned to war and President and former General Dwight D. Eisenhower warned of the dangerous effects of a military industrial complex as a means to building a strong economy.

By the 1960’s, the Vietnam War and the Civil Rights Movement were in full swing.  Though these issues were at the forefront of the mainstream dialogue and seemed to be the focus of the nationwide protests, leaders such as Rev. Martin Luther King clearly understood that the bigger issue behind it all was the economic injustice of a welfare state that still focused primarily on benefitting the wealthiest class.  This was evident from the content of many of his speeches and sermons.

In the early 1970’s, the capital gains tax cuts added billions more dollars into the pockets of the wealthiest Americans who were stock investors.  During the Nixon Administration, the Gold Standard was eliminated. Subsidies and literal ‘BAIL OUTS’ were given as the Federal government became a ‘silent partner’ in order to keep some major corporations from filing bankruptcy. At the same time, significantly less amounts of tax dollars were set aside for public welfare programs. Sound familiar?

For a while, due primarily to a productive manufacturing base and the global demand for U.S. made products, more people were working, saving money and personally being more productive.  It was possible for one parent to work and financially provide for their family, allow for more family time and therefore a higher quality of life for more people was a reality.

By the time of the elections of 1980, the movement that started in the 60’s had been for the most part silenced by another movement that promoted itself largely with terminology such as ‘Supply-side economics’ which eventually became coined Reaganomics.  The Reagan Administration often boasted of a strong economy while in reality it fell back on Hamilton’s economic philosophy for the original thirteen colonies. This time instead of the distribution of wealth being invested in more productive assets to produce more jobs, it was focused on Wall Street and other financial investments such as what was then called ‘junk bonds,’ IOUs on pieces of paper rather than an investment that would be the same as a valuable stock. Even though Reagan came into office with a Democratic controlled Congress, the Southern Conservatives along with the Republicans pushed many of the Administration’s policies into law including significantly loosening certain regulations, a trend that encouraged monopolies and gave multi-national corporations more benefits and continued with the Bush I and Clinton Administrations of the late 80’s and into the 1990’s.

While the military is credited with having created the Internet which involved significant job creation starting in the 90’s, the second Bush Administration continued the war economy, many jobs were outsourced and off shored, and unlike his conservative predecessors, did not raise the taxes on the wealthiest Americans even one time. So also began the massive bailouts for automobile manufacturers to the Federal Reserve (which isn’t Federal) and the banks with that famous catch phrase ‘too big to fail’ as its’ mantra.  The second term ended with a huge deficit and growing uncertainty that would surely lead to public restlessness with the next Administration.  And don’t forget 9-11 and the War On Terror.

Now, here we are.  We are still facing the greed of economic and social injustice continuing with some of the same policies from previous Administrations. Profits are skyrocketing for certain major corporations along with a handful of the wealthiest 1% of the population while more and more people are working pay check to pay check and longer hours, are unemployed, underemployed, and non-classifiable. Since 2008, millions of people have lost their homes technically being added to the statistics of the homeless. This is in addition to what Dr. King already saw in the 60′s as the plight of the poorest whose numbers have been growing for decades. 

What is next? Some of us ask ourselves this question every day.  We must be the hope for the present as well as the future.  We are the history of the moment and everyone is in some kind of need.  The greatest need is not exclusively economic, but there are seven billion people now on the planet. There are millions of people in the United States of America alone that are contributors to the welfare states, and remember my friends, there are two of them. Millions of people are in dire need not only to survive, but to also be participants as the vision of our Founding Fathers is laid out in the Constitution, being a part of a truly productive economic system that is genuinely open to everyone. 

Love and Peace NOW!

NOWMAN

Occupy Outreach  https://www.facebook.com/pages/Occupy-Outreach/141679115935494