Opinion: Biden and Congress should manage our economy not the Federal Reserve

Activists and critics of human groups and systems often make the same mistake. They accurately cite good or bad examples of behaviors and results, and favorable or unfavorable statistics, to praise or demonize a group or economic system. But those behaviors, examples and statistics are usually caused by good or bad individuals, and not the inherent nature of the group members or system.

This conclusion could be extended to any kind of human group: religious, ethnic, nationality, race, gender identification and so on.

Bad leaders — typically closed-minded totalitarians — will ruin any economic, social or governmental system, whether capitalism, socialism, democracy, theocracy or republic. Good leaders will use the open-minded scientific method to test hypotheses about observable realities, and then implement appropriate solutions.

Consider today’s popular views of capitalism vs. socialism. Are they contradictory and antagonistic to each other, or are they actually complementary and their combination is key to the success of either one? When is deficit spending needed vs. austerity measures? What are the existing benefits and detriments of international free trade vs. protectionism? Are corporate profits too high or high enough compared to worker’s wages and work conditions? Should successful investors pay higher progressive tax increases or are their taxes too high and need to be reduced?

Those who want to make America great again should look at the last century of our own country. Forget what has happened in Venezuela, China, Russia, Norway, Sweden, Denmark, etc. They are different cultures and traditions and had politicians who used their power to govern in different ways.

Exactly when did we create the greatest middle class in history? President Franklin Roosevelt’s New Deal started building the world’s greatest and most vibrant middle class. From 1933-1980 our political leaders managed our pluralistic economic system — a combination of capitalism and socialism — in ways that increased the living standards of workers, the middle class and poor, and greatly reduced the growing income and wealth disparity between the rich and everyone else.

Congress raised taxes to the highest level in our history on incomes, estates and corporations. During WWII we even had an excess profits tax. Against strong Republican opposition, Roosevelt insisted that workers had the right to unionize, even during wartime. Workers made enough money to not only afford a decent lifestyle, but also to pay taxes. A well financed government addressed problems that businesses in the private market ignored. Despite higher progressive taxes, the wealthy continued to get wealthier, but not nearly as much as they did during the “Roaring Twenties.”

In that pluralistic economy, individuals and groups of individuals created successful small businesses and large corporations that made the U.S. the world’s economic leader. We also had Social Security, federally set minimum wage standards, work safety measures and a host of other legislations that benefited workers, the middle class and poor.

The U.S. became the world’s governmental model. It had an unacknowledged belief in pluralism, and the deliberate application of the scientific method to correct emerging social and economic problems.

More: Opinion: Biggest causes of inflation are international; but even Asheville does its part

More: Opinion: Rising inflation: Biden needs to warn voters that inflation will get worse

How does President Biden’s economic actions rate on the pluralism and scientific method scales? Morgan Stanley analysts recently concluded that Biden’s 2021 infrastructure bill has created “a boom in large-scale infrastructure, while domestic business investment is rebounding, led by manufacturing.” We now have the best economy among developed nations.

So why are voters so negative about Biden, since Democrats have been accurately reporting his good results? It’s because they’re sending the wrong message.

Biden needs to point out that worldwide inflation is going to continue no matter what the U.S. does, climate change is creating food shortages everywhere, and Republicans cut taxes on billionaires and millionaires and made our economy worse during a pandemic. This at a time when they were proliferating and getting richer. They also insisted that we do nothing to combat climate change.

More: Editor: Open call for women to share their voices, during Women's History Month and always

Except for relying on the Fed to deal with rising inflation, Biden wants to do the right things. He and Congress should manage our economy, not the Federal Reserve. Its anti-inflation solution is to raise the prime interest rate to cut employment and decrease worker spending, which does nothing to slow spending by the wealthy.

Our nation can control only two kinds of inflation within our borders: spending by the wealthy or spending by workers. Today’s economy actually needs wage inflation, not wealth inflation.

Fairview’s Chuck Kelly is author of "Why capitalism thrives—and how it self-destructs." He can be reached at kellycm2@bellsouth.net

This article originally appeared on Asheville Citizen Times: Biden and Congress should manage economy, not Federal Reserve