Our Founders Understood Shared Prosperity Builds America's Future

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PICK A FIGHT WITH OUR FOUNDERS VISION OF SHARED PROSPERITY? NO, THANK YOU.

     Our Founders, the original Patriots of the 1770s, clearly understood what brought them economic prosperity in America over the 150 years since the first of them had landed in the Mayflower at Plymouth Rock in 1620. Their prosperity didn’t come from a King commanding their lives from on high – they preferred to take the initiative themselves and, as religious refugees, to thank their God in their own way. It wasn’t the King and His commanded monopolies handed to His cronies with piled on tariffs which brought them prosperity. That brought them higher prices – they replied with the Boston Tea Party in 1773. 

     It wasn’t His armies on the streets of America, entering homes, farms, and businesses at will, seizing and closing news and book presses, closing harbors and preventing fishermen from pursuing their catch with blockades, that brought them prosperity and unity – the Patriots replied with resistance. It wasn’t the King’s insistence that only British ships could ply the oceans and that all international trade must be carried by companies to which He assigned the monopoly privilege – the Patriots replied by breaking these blockades where they could. It wasn’t His rump courts dispensing favorable treatment to some while punishing others for pursuing their own way to build better lives – the Patriots insisted their own elected representatives push back against invalid assertions of royal authority. 

     The Patriots knew the King’s commands, which pressed down on the American economy; on its citizens on farms, in towns, and harbors; on America’s free expression in newspapers, almanacs, taverns, churches, and colleges, weren’t the way to shared prosperity in America. It was in fact the King, then America’s unitary executive and chief decider of policies and law, who was strangling and sabotaging their vision of shared prosperity – their radical ideas of individual liberty and their "unalienable rights" to “life, liberty, and the pursuit of happiness.”  Strangling American patriotism itself.

     That was the role of the King’s government as the feudal unitary executive – dispensing privilege to some, assigning penury and exploitation to others - which the Patriots fought to banish from America. So, they replied in 1776 – with the Declaration of Independence. Tariffs which taxed imports and raised prices, royal trade monopolies dispensed as privilege to some, harbor blockades which cut off commerce and trade with other nations, anti-immigrant policies which embargoed entry of the workforce needed to economically develop America, courts which privileged some while denying the rights of others, were among the 27 specific causes of the Revolutionary War on the British King as His armies were on America’s streets, and his navies were blockading international trade and domestic commerce. The Patriots succeeded in achieving independence from this feudal unitary executive, albeit imperfectly, in 1781, when the King withdrew from America.

     But even today there are some who prefer that colonial vision of kingly control, a unitary executive, and government driven dependencies created by dispensing favors, and by passing or preventing enforcement of laws to aid and abet some in their exploitation of others. They prefer their privilege and their ability to control over the distinctly American vision of individual liberty, individual initiative, and shared prosperity. They prefer to manipulate and control, to reap the vast benefits of the labors of many and to assign them to their designated and privileged few.

     Freedom was not free in the 1770s. It still isn’t today. It requires vigilance to avoid being trampled by selfish interests of a privileged few over the broad common interests of the People.....

WE HAVE FORGOTTEN HOW WE BECAME PROSPEROUS….

     A few basic economic facts about America: Our total economy, our Gross Domestic Product (GDP) of goods and services is about $29 trillion. That total is made up of about $20 trillion of consumer spending, such as housing, food, energy, and services. The other $9 trillion is mostly private investment, and those parts of government spending which are investments (not related to consumption) - public infrastructure such as government buildings, roads, bridges, airports, military equipment and facilities. 

     Our federal government spends over $7 trillion each year on all kinds of consumer related expenditures - health care, social security, farm subsidies, government employees – and on infrastructure related items such as highways, airports, and military equipment. It takes in about $1.7 trillion less in taxes than its spends, so it borrows that money from private investors in the US and around the world to make up the difference. Since this borrowing has been going on in a big way for over 40 years, our national debt is nearly $38 trillion. Our federal government currently spends the first $1 trillion (about 20%) of the tax revenue it collects from us to make interest payments on the accumulated debt. 

     As of now, our federal government’s $1.7 trillion annual borrowing exceeds not only its income from tax revenue, it exceeds our entire nation’s economic growth from all sources, private and public. Total economic growth fluctuates around 3% per year, about $0.9 trillion each year these days. In other words, the private business part of our economy, including all the total income and expenditures of all America’s farms and businesses, are actually a shrinking part of our total national economy. This is unsustainable. Government cannot outgrow the ability of the private economy to support it with tax revenue forever because government cannot borrow forever, any more than any family can borrow forever to make up for a lack of income and continue to meet its ever growing minimum debt payments. That’s what drives families into bankruptcy. While governments don’t go bankrupt, they can create an economic crisis for us all, similar to the one we had in 2008 with high unemployment and financial distress which came from another kind of debt crisis.

     Market economies with basic rules to constrain greed and exploitation are the world's most successful form over the long term. These successful economies are driven by consumer demand, not by government command. And borrowing is essential to make large scale purchases like houses. Few of us would own one otherwise. But if our income does not exceed our costs, few of us will be able to keep our homes. This same basic fact - income must exceed costs is true for nations including the United States. But that’s not the path we’re on – which has been accelerated by the policy choices made by Congress or its deference to Executive branch policy direction– on taxes, tariffs, trade, and immigration - in 2025. Add in the current government shutdown and you can plainly see this set of poor economic policy choices combining to drive down prosperity and employment. We've made these kinds of giant policy mistakes before in recent history, described below. Our national political class is working on another one now. For other examples of Congressional and Presidential (executive branch) economic policy failures over the past century, see https://banbrainhacks.org/tariffs-and-taxes

     Giant Congressional Policy Mistake #1: Congress wrecked the housing finance industry in the 1980s. It deregulated interest rates and those funds flowed to Wall Street funds, out of the local communities where the funds had been invested in housing. A 5 to 7 million unit housing shortage has resulted over the past 40 years. We still haven’t come close to catching up with this problem. When housing is scarce, as it is in most places with strong employment and income growth, its drives the price of this essential much higher than it would otherwise be. More spent for housing means less for everything else, suppressing economic and job growth all over America.

     Giant Congressional Policy Mistake #2: Our US out of trend rise in health care costs also began in the 1980s. Today, the US has the world’s most costly health care, more than double other high income nations. This means less is spent on everything else as almost 9% of our total economy is wasted on overpriced health care. A few among us benefit from the much higher incomes which result from overpriced health care. Most Americans are forced to spend less on everything else, and American businesses are less competitive because they bear much of this cost for their insured employees and must pass it along in their prices. That's over $2.5 trillion per year which Congressional policy actions and failures have gifted to the health care industry in excess profits, to cover the industry's gross inefficiencies, and to support low health care industry productivity. See https://banbrainhacks.org/a-healthy-america%3F

     With these economic distortions created by the national policy failures of Congress, demand for all the other products and services we would like to have doesn’t grow, jobs aren’t created, and the vast majority of incomes don’t rise. Instead, the benefits of what growth there is skews toward a certain privileged few, selected by Congressional policy choices and failures for special treatment. 

     Giant Congressional Policy Mistake #3: For over 40 years, US economic policy has been driven by a contrary philosophy that says supply is the key to economic prosperity, that the way to increase supply is through investment, and that investment is driven primarily by the wealthy who invest because their taxes are cut. But there are a few basic problems with this supply-side approach when consumer demand is 70% of economic activity, and is actually the key to the entire economy. What good is supply for which there is no income to pay its price, to create the demand? What good is supply for when there is no interest in the product or service? What good is supply when the prices for that new supply are higher than those from another source where it is already plentiful at a lower price? A lack of customers with incomes to consume, a lack of interest in the product or service offering from consumers, a price which is higher than what one must pay for an equal or better product or service, and what have you got? No customers, no income, no business, just bankruptcy and investment capital lost to failure. RAND Corporation analyzed the practical effect of these Giant Congressional Policy (choices) this way:

     “In a 2020 RAND Corporation study, RAND researchers developed a new method to measure income inequality. They found that, had income for workers below the top 10 percent of the income distribution grown at the same rate as the overall economy since 1975, workers in that group would have collectively earned $2.5 trillion more in 2018, 67 percent higher than their 2018 earnings. Furthermore, over the 43-year period from 1975 to 2018, the population below the 90th percentile would have earned $47 trillion more had their incomes grown at the pace of overall per capita economic growth.” 

     “When comparing groups of workers at different percentiles in the income distribution, the only group for which actual income gains exceeded the economic growth rate was the group near the 99th percentile of the income distribution.”

     “For workers at the 25th percentile of income, actual income in 1975 was $28,000 per year. Had income growth for this group matched the economic growth rate, their income would have risen to $61,000 by 2018, but it actually rose to only $33,000. Thus, instead of rising at the economic growth rate of around 120 percent, these workers’ incomes rose about 18 percent.”

     To read the eight page Rand study report on income inequality, see https://www.rand.org/pubs/research_briefs/RBA516-1.html

     “.....would have earned $2.5 trillion more in 2018......” GDP was $20.5 trillion that year. That $2.5 trillion would have added 17% to overall consumer spending and saving below the 90th percentile of incomes for just that one year. That’s some serious economic firepower. The 67% raise for all incomes below the 90th percentile would create demand for 10% to 12% more products and services, together with 5% to 7% more savings in that one year. The cumulative effect of this increased consumer spending and saving would create more sustainable private sector economic growth which drives American jobs and investment, and sound government finances instead of vast accumulated debt. Giant Congressional Policy (choices).

     That virtuous cycle of private sector job creation would in turn spur still more demand as it generated about $600 billion more federal revenues to help balance the federal government's budget - currently over $1.7 trillion in the hole every year. It would have avoided adding about $10 trillion to our ever spiraling national debt, which is up from about $0.5 trillion to $37.6 trillion since 1975. Wring out the excess health care costs, now around $2.5 trillion each year, and put those funds to better use in the private sector, and you have a strong economy. But we have Giant Congressional Policy (choices) instead.

     Those long-running policy choices are the economic and income pressure many of us feel every day in our own lives. There is a simple, basic reason for this sense of the loss of American prosperity among most of us. Economic development and prosperity are driven by demand for products and services. The driving force of mass consumption is obvious – it requires a large mass of successful people - consumers who have incomes to spend on the choices in a market economy. Not an economy riven with shortages, inflation, and cost inefficiencies driven by Giant Congressional Policy (choices) and by the actions of an overreaching Executive set on being a unitary executive like the King we threw out in 1781, imposing still more bad economic and anti-liberty policies upon us all.

Congress In Action Or Just More Congressional Inaction

     What Congress has done for "...the population below the 90th percentile would have earned $47 trillion more" since 1975 is effectively given that additional $47 trillion to a wealthy few by vastly lowering the effective tax rates on their higher incomes and giving them the difference to invest - the so-called supply side economics described above. With current policy remaining this way and actually skewing more in this direction in 2025, and with little demand arising from below trend income growth and ever spiraling costs for basics like shelter and health care among the majority of America’s consumers, those investors have largely turned their concentrated pools of capital shared among the few away from funding innovation and building durable American enterprises toward more speculative financial instruments, toward financial engineering of companies which uses asset stripping, adds debt, and flip businesses to another buyer every few years to add to their income taxed at the much lower rates. That’s the core of the supply-side economic policy failure which has driven private sector growth to less than zero in America over more than 40 years, and hollowed out and bankrupted many American businesses since it was peddled to America in the early 1980s. You can see the basic analysis of the US economy since the 1960s which leads to this conclusion under the subheading US Tax Policies Stifle..... at the bottom of this page.

     At least for now, we have the politicians in Congress and the Executive we have - short-sighted and focused on party dogma, not on sound economic policies which would lift all Americans toward greater prosperity and personal financial independence. Both parties are more interested in partying among themselves, in manufacturing spectacles of partisan distraction like unnecessary mid-term redistricting and a party convention, or in trying to blame some other nation for our self-inflicted national economic policy failures, so they can try to avoid taking responsibility for their own failures, than in engaging in serious policymaking to support the return of prosperity and reinforce the financial independence and freedom of American families 

     Instead of freedom, instead of empowering more American innovation, initiative, and enterprise, instead of providing a livable income floor for workers, both political parties have burdened our nation with more and more dependence on government. These policies range from government subsidies and favoritism bestowed on some to coercion and manipulation by threats to remove government support for others – both these types of policies are simply efforts to abuse dependencies to coerce continued political support. 

     Specific current and recent examples of these dependency oriented policies include income replacement to bail out farmers, government subsidies to support lower income workers whose compensation has been suppressed when compared to overall economic growth, and funding freezes for vital infrastructure projects required to replace or expand infrastructure essential for further economic development. If the vast majority of Americans were provided instead with competitive floors - trade policies which help support prices by encouraging exports for farmers, and a basic living standard wage floor for workers, we would not need government to prop some of us up with its dependencies. We could avoid decades of accumulating national debt with little or nothing to show for much of that debt other than the burden of future interest payments stretching to infinity. Meanwhile, these failed national policies remain in place, with some being made still worse as our national debt spirals ever higher.

     That's the American Dream fading for most of us - the real consequences of enduring Giant Congressional Policy (choices) failures reinforced by the federal Executive - both in their actions and in their failures to reform. Bad policy choices in Congress by both parties which favor the few, those who provide them the primary sources of funding for their reelections, have given us ever increasing dependencies on government along with more unfavorable outcomes for most Americans. These Giant Congressional Policy (choices) have increased the need to rely on these kinds of dependencies, since the basic policy framework of shared prosperity which allows Americans to make our own way in a land of liberty and choices has been severely damaged by pandering politicians looking foremost to being reelected.

Giant Congressional Policy Mistake #4: Voters Reelecting These Failures 

     We can handle this one – a Congress whose members reinforce their prior economic policy failures which erode American families, farms, and businesses economic independence; a Congress which has created and reinforced government dependencies among Americans; a Congress which has made programs into tools of government which can be used for the partisan coercion of any group of Americans; a Congress which has created and perpetually funds illegal bioweapons to play God in the lives of its citizens; a Congress which aids and abets racketeering programs run by outlaws with police powers who destroy families, businesses and lives; a Congress which funds federal courts and which confirms federal judges and justices who refuse to uphold the basic principles found in our Constitution and in Marbury v. Madison (1803), intended to deliver us from the arbitrary whims of men by preserving our unalienable rights as Americans, guaranteed by our rule of law. See https://banbrainhacks.org/a-serious-mess

WE KNOW PROTECTIONIST, TARIFFED, COMMANDED ECONOMIC MODELS DON'T WORK

     The last time someone tried to command their economy with protectionism, favoritism, and tariffs, they got the Soviet Union - a command economy with state control of key industries, media, arts, and sciences, imports effectively banned, production quotas on home country industries which produced low quality goods leaving consumers no better or less expensive choices – all forced on consumers and driven by government policy, not by consumer demand. The impoverished, unproductive Soviet Union collapsed economically and then politically under its own weight. 

     The Soviet bloc was crushed by its own sclerosis, driven by a few key government officials into the ground. Western capitalism with its free markets, multiple competitive choices among products and services, and innovation which drives better, faster, cheaper products and services, prevailed over centralized command and control by a few. In 1987, US President Reagan asked Soviet leader Gorbachev to tear down Soviet bloc barriers and allow the free flow of people and ideas, to introduce free markets so consumers could flourish, and free the peoples of the Soviet bloc to join the rest of the world. Well timed to meet the moment, the approach worked. https://banbrainhacks.org/1980s-%26-sedition-a-plan

     In the 1930s Congress commanded America to embrace protectionism and tariffs, and gave us the Great Depression. Stock prices crashed in October 1929 in anticipation of the 1930s tariffs which collapsed trade by 67%. Agricultural exports and prices collapsed in an era when many more people lived on farms. Banks failed and depositor funds fled, so bank loans could not be made. Industries folded and unemployment soared from 8% to over 25% in less than two years. It took World War II and massive government spending on war goods to get the American economy back on its feet.  https://www.britannica.com/topic/Smoot-Hawley-Tariff-Act

     At the end of World War II, we had about the same amount of debt to total GDP (130%) as we have today. But we had something to show for it then - global fascism was rolled back, freedom was restored to most of Europe and parts of Asia. Soldiers came back from war, and the post-war boom was off and running. Inflation rose briefly but industry converted back from war production to consumer products as 6-7% private sector economic growth gave us jobs and consumption and led a private sector investment boom which lasted somewhat unevenly for about 25 years. 

     In the 1970s, a US President tried yet another command economy intervention when US inflation rose. President Nixon’s clumsy command-style wage and price controls precluded profitable capacity investments which distorted demand and prices still further, and ignited so much more inflation that interest rates had to be forced up dramatically for a time. The long boom from the 1950s was over after spending and investment had been distorted more than ever by a President's clumsy command intervention. So, we do know how, and how not to, to meet these moments, and beat back bad economic and tax policy run by amateurish, ham-handed politicians who are certain they alone are smarter than all the rest of us – and prove it just like Nixon did.

AMERICA WAS FOUNDED, GREW, AND PROSPERED ON MARKET-BASED DEMAND DRIVEN ECONOMICS

     There is the other way: Demand driven market forces and sound economic and tax policies based upon principles of shared prosperity were embraced by Eisenhower and Congress after World War II. These policies gave us 6% to 7% private sector growth in the 1950s well into the 1970s and supported reasonable levels of government spending with sustainable tax revenues instead of the current down-the-drain spiral toward a debt crisis.

     It’s the only way back toward real prosperity for Americans, along with fixes for housing finance connected to local market conditions to drive supply, and vast reforms to drive health care productivity up, overall costs down, and attain the healthy outcomes our lower cost peer nations already enjoy. It’s the only way forward to improving federal government finances before a debt crisis does profound long-term damage to all Americans. A debt crisis and other continued poor policy choices will force profound cuts in government services at all levels, including state and local governments faced with failing economies, high unemployment, falling tax revenues, and the need to balance their budgets as they must each year. Those who are wealthy, with higher incomes, will not escape these consequences. Investments in the means of production, whether through the stock market, through corporate debt including bonds, or through owning private businesses, are worth less or perhaps nothing at all, if Americans cannot afford the products and services offered by those private sector businesses. Giant Congressional Policy (choices) must be redirected by American voters given Congress' 40 year track record of poor choices, see https://banbrainhacks.org/a-serious-mess

An Economics Primer

     For a quick, not too academic tutorial on basic economic systems - centrally commanded economies, pure market economies, and mixed economies like ours - spend ten minutes watching a Crash Course at https://www.youtube.com/watch?v=B43YEW2FvDs

     To better understand the key components which make up our American economy, and our path to greater American prosperity, check out these links:

     Congressional tax and economic policies have effectively rigged our system

https://data.epi.org/productivity/productivity_growth/line/year/national/real_index_1948/productivity_pay?timeStart=1948-01-01&timeEnd=2024-01-01&dateString=2024-01-01&highlightedLines=productivity_productivity_pay&highlightedLines=compensation_productivity_pay&focuses=

      Wealth inequality continues to grow 50% of Americans, who held 3.5% of all US private wealth in 1990 are now down to 2.5% in 2025. https://news.research.stlouisfed.org/2019/07/fred-adds-wealth-distribution-data

     Income inequality has grown to favor still fewer people as federal income tax rates on the highest incomes have been dramatically reduced

https://data.epi.org/wages/hourly_wage_percentiles/line/year/national/real_wage_2024/wage_percentile?timeStart=1973-01-01&timeEnd=2024-01-01&dateString=2024-01-01&highlightedLines=wage_p10&highlightedLines=wage_p50&highlightedLines=wage_p90

     Federal minimum wage floor has declined to its 1955 level while our modern economy is three times more productive and far more expensive https://data.epi.org/minimum_wage/minimum_wage_levels/line/year/national/real_minimum_wage_2024/overall?timeStart=1938-01-01&timeEnd=2024-01-01&dateString=2024-01-01&highlightedLines=overall

     Job creation is the engine which would drive a virtuous cycle of economic growth - some industries and services create more jobs than others. Since America does not produce enough skilled and educated people for certain types of jobs, we have to import people from other countries. Otherwise, those direct jobs and the indirect jobs they create will have to be funded in other countries. The practical effects of job creation, job multipliers by industry type, and how they build American employment are at:

https://www.epi.org/publication/updated-employment-multipliers-for-the-u-s-economy/

     Consumer spending directly powers 70% of the US economy and most private sector investments in productive capacity:

https://www.visualcapitalist.com/americas-19-trillion-consumer-economy-in-one-chart/

     See our Founders' views on the tariffs and taxes which sparked the 1773 Boston Tea Party, the King's 1774 retaliation, and the 1775 opening conflicts of the Revolutionary War in and around the Cradle of Liberty at https://banbrainhacks.org/tariffs-and-taxes

     Our Founders also held strong views about immigration's role in national prosperity. In our Declaration of Independence, they declared the King's barriers to immigration and naturalization as a cause of their war for independence, see the Right Sized Workforce webpage at https://banbrainhacks.org/right-sized-workforce

TAX RATES DRIVE BEHAVIORS - FOR BETTER AND WORSE

     You can clearly see the actual negative effect of lower tax rates for high wealth and income investors on American economic growth in recent American history in the pdf chart below. Tax cuts for the wealthiest put more money in their hands. But with little mass consumer demand worth investing in to produce more goods and services, more funds in the hands of the wealthiest flow toward price action speculation, not toward investment. Fewer jobs are created as private sector investment dwindles. Overall demand thus continues to shrink, and the new job opportunities more consumer demand would bring disappear and are replaced by layoffs, all pushing overall consumer buying power down as our economy continues to dwindle. This sort of down-the-drain spiral is created by current economic and tax policies, which give us protectionism, higher costs, and short-term favoritism toward a few over the many.