Conservative economics is basically little more than a house of cards. Every single school of economics regularly utilized by Libertarian and Republican think-tanks and politicians is custom-built with the end in mind. When you start with the idea that giving rich people more money is the goal, you’re going to end up with policy recommendations that — surprise! — increase the wealth gap.
But every once in a while (every moment of every day) there comes along an event that so blatantly disproves the conservative economic mythos that it deserves to be point out with a million-candlepower spotlight so that the conservatives can’t help but see it and wonder how the world could possibly be failing to live up to their ideals.
In this case, it’s all about negative interest rates. Specifically, the European Central Bank (ECB) has been utilizing a base rate of -.02% for a few months now — charging banks for the right to use the Central Bank to safely store their Euro.
According to the conservatives, this should have an immediate and obvious effect: the other banks, who don’t want to be charged for the privilege of letting the ECB hold their funds, should pull those funds out and simply hold them in cash. But that isn’t happening. Instead, banks across the EU are simply paying the (small) costs associated with using the ECB and dealing with it.
Why? The obvious answer is obvious: because the real world is always more complicated than the conservative economic theories want it to be. More concretely, they’re paying the negative rate because it’s cheaper than it would be to pull all of their money out of the system and then hire a bunch of people to work out inter-bank loans and payoffs as efficiently as the ECB does it.
To add weight to the evidence against the conservative theories, many national banks, including the Swiss, Swedish, and Dutch national banks, are fielding interest rates significantly lower than the negative rates already offered by the ECB. The current world-record lowest base rate is Sweden’s, with an interest rate of -1.1%. Yep, keeping your money in the Swedish National Bank for a year costs you eleven cents per ten dollars stored — yet, even there, corporate banks are paying the negative rate and continuing to do business as normal, in complete defiance of the conservatives’ economic ideals.
What Else Are The Conservatives Wrong About?
Simply put: most of economics. There have been massive studies, for example, proving that:
- Welfare isn’t subsidizing lazy people — it’s subsidizing corporations that won’t pay a living wage.
- “Illegal” immigrants (note: they’re not really illegal, that’s a deliberately-chosen conservative hate word) don’t drain the welfare system — they fund it.
- Raising the minimum wage doesn’t cause inflation, and it doesn’t even cause a meaningful amount of job loss.
- Giving tax breaks to the wealthy doesn’t create jobs, because the wealthy don’t spend money when they get more; they save it.
- Similarly, giving tax breaks to corporations doesn’t create jobs, because corporations don’t spend money when they get more; they either record it as profit and pass it off to their shareholders, or they use it to buy back their own stocks, creating a windfall for the Board of Directors and the Chief Officers.
In fact, the very notion that a corporation’s purpose is to maximize value for its shareholders — a gospel preached from every soapbox since about the mid-70s — is corrosive to nearly every aspect of our economy. The moment that this philosophy became the guiding light of our economy is the moment that “greed is good” became an actual catchphrase rather than a satirical stab.
Before that stupid idea took root, it was common to have a career — to devote your life in willing service to a company because you knew it would take care of you once you retired. It was common for a CEO to take home an insanely meager thirty times what a rank-and-file worker was paid — compared to the five hundred and thirty times which is standard today.
And just like Europe’s negative interest rates aren’t causing the economy to collapse in on itself against every economic belief the conservatives hold dear, there are companies today that are proving that taking care of your workers makes for a stronger economy. Costco, In-N-Out Burger, Ben & Jerry’s, Whole Foods, Trader Joes, and dozens of other industry-leading examples are proving that a workforce isn’t a cost to be minimized — it’s a strategic asset to be skillfully employed. I’m sure the conservatives are bewildered.
