Pluralism of Cognitive Dissonance and Creeping American Socialism

Abstract

Economics is a pluralism of cognitive dissonance, with difficulties in recognizing facts. This paper shows how US government policy is based on a pluralism of inconsistent economic theories and indicates the fact that American capitalism has been eroded over time by a creeping socialism.

Data show wages and salaries have declined relative to GDP, but compensated by rising government social welfare to maintain growths in overall personal income and consumption expenditure. The rising social welfare enabled employee wages to fall and corporate profits to rise over the decades in a de facto subsidy to corporations – a mix of welfare and corporate socialism – benefiting both the low and high income earners at the expense of the middle class, in a hollowing of the American economy and a rise in wealth and income inequality. Increased consumption without a corresponding increase in investment, production and entrepreneurialism of the middle class may have caused the secular decline in the US economy. For a related reason, fiscal stimulus has been economically ineffective because government deficit spending has increased total consumption propensity but reduced investment and economic growth.

Keywords: pluralism, macroeconomics, policy, socialism, growth, consumption, investment

JEL Classification: E10, E11, E12, E60, E62, E65, H50, H62, J30, P00