Today, we are paying the price for Reagonomics. In the 1980s, war was declared on the middle class. Since then, in spite of consistent increases in worker productivity, wages have declined and benefits to the rich have accrued. If you look at the results of Reagan/Bush Neo-Liberal economics, the prosperity level for the masses is lousy. Lots of dictators, free-marketeers, CEOs, and their handymen got rich. The policies called for no tariffs, free movement of money from outside the country, low or no taxation of business, slow down & cripple unions, deregulation, and lower wages or move offshore. Sound familiar? It should, that's the recipe for free-market, free-trade-agreement panderers.
The United States and all of the currently successful economies relied on governmental regulation, tariffs to protect fledgling industries, state support of favored industries, and fair wages tied to productivity. These factors were deemed necessary for the economy to grow and for prosperity to encompass most of the people. It also made for balanced budgets.
In other words, Reagan/Bush trickle down, supply-side economics make the rich much richer. The basic notion of traditional economics was that a prosperous working population would fuel demand and increase productivity. The U. S. middle class was the greatest economic engine in history. As an economy reached points where it could grow on its own, supports could be withdrawn for some industries and focused on development of newer technologies. Eminently sensible wouldn't you say?
Successful also in Korea, Japan, the U. S. prior to 1980, and China today. Free market folks have sold the U. S. on the ideas of supply side economics. The problem is that in terms of results, the numbers for most of the people are terrible.
Productivity, a supply item, has increased steadily since the "-80s. In other words, our workforce is more productive--wonderful! Wages, a demand item, have stagnated and even declined in real terms --not wonderful! When that happens, supply outstrips demand and that is not good. So, the Fed and big businesses encourage borrowing, along with wages also a demand item. When you and I borrow, we can buy more of that excess supply while doing several thingsg--get more money into the pockets of free market capitalists, assure the stagnation of wages, and create enormous debt.
Borrowing increases and we keep creating debt. Where does all that borrowed money go? It goes into the pockets of the "guys and gals"- who own the supply. In fact, today, they have so much money that they just don't know what to do with it. They don't increase wages for the working folks but they do for the CEOs and board members. Those folks also don't know what to do with all that money, so they create hedge funds and they speculate in commodities markets like oil, gas, corn, etc with much of that money.
Speculation drives up prices--oil, gas, corn, rice, etc. The Fed lowers interest rates so we can borrow more. The loans are bundled to use as another commodity. We now have amassed tremendous individual and government debt. Foreign countries own us, the dollar is worth less, we don't have jobs, and our wages are still stagnating.
Do you really believe that all corporate managers are trustworthy? Is anyone really trustworthy when they have no accountability, no requirements for transparency, or no need to be responsive to authority? Ha-Joon Chang (Bad Samaritans), Naomi Klein (Shock Doctrine), and Ravi Batra (Greenspan's Fraud; The New Golden Age) can give you more details about what really happens with so-called free markets.
Traditional classical economics is knowledgeable and respectful of the characteristics of supply and demand in addition to an awareness of the problems inherent in uncontrolled, unregulated human activity. Even Adam Smith, who is the ideal for many of the free market folks, saw more value in compassion and empathy than he saw in profit alone.