On October 27 2011 08:16 DeepElemBlues wrote:
Sure.
First of all, our standard of living increased from 1945 to approximately 1958 because of two factors:
1. The people had had a large savings rate during the war and had lots of saved-up disposable income.
2. The United States was the only industrialized country in the world that not had its industrial base substantially destroyed.
These two factors combined to make the perfect consumerist boom.
In 1958-1960 there was a recession that partly helped Kennedy win the 1960 contest (along with massive - tens of thousands of fake votes at the least - vote fraud in Texas and Illinois, but that's beside the point).
Kennedy cut taxes and the economy improved. Johnson raised taxes and entitlement spending and regulation and Nixon added more entitlements and regulation. The result? The stagflation of the mid-late 1970s that resulted in Ronald Reagan and his sensible tax-cut (the amount of taxes he "raised" from 1981-1989 doesn't even come close to how much he cut in 1981 alone), monetary and regulatory policies caused the biggest jobs boom since just after the war, 17 million jobs from 1983-1989.
High taxes retarded the economic growth of 1940 to the mid-1970s; it would have been even better without them. And government heavy-handedness culminated in the economic misery of Jimmy Carter.
Raise taxes to 45% on every dollar above 2 million in yearly income and capital would flee this country faster than almost everyone in Europe did from Attila the Hun. Capital in massive numbers would go to other countries with lower tax rates and the American economy would simply collapse.
You can't just imagine that you can take huge amounts of capital out of the market with no effect. Confiscatory tax rates have a double whammy - first what the government takes and then misallocates, and then second all the other the money that is sent to Europe or Asia or India or Africa because the governments there won't take so much.
Raising taxes on personal income to that rate would make such a small difference in the deficit anyway that the damage would far outweigh any benefits.
The only way to fix the debt at current spending rates is to raise taxes on everyone making more than the poverty level a year - middle-class and rich alike. This is an unacceptable solution, so people will continue to push the fantasy that we can fix the problem simply by soaking the rich.
It doesn't work. The rich don't have enough to be soaked, they only get soaked for a short time before they move their money to a place where the government can't get at it, and you end up fiscally and economically worse than you did before.
The State of California is a perfect example of what the soak-the-rich attitude results in when implemented as policy. Capital - and people - have been leaving California for years. The government's finances are fucked up almost beyond repair. The economy is in a shambles. The standard of living has fallen for everyone but the super-rich. The state of New York and the State of Illinois are less extreme examples.
Saying we'd go back to the 1930s was a little bit of hyperbole, but we've tried at the state level what you are suggesting we do at the national level, and it has been disastrous.
Sure.
First of all, our standard of living increased from 1945 to approximately 1958 because of two factors:
1. The people had had a large savings rate during the war and had lots of saved-up disposable income.
2. The United States was the only industrialized country in the world that not had its industrial base substantially destroyed.
These two factors combined to make the perfect consumerist boom.
In 1958-1960 there was a recession that partly helped Kennedy win the 1960 contest (along with massive - tens of thousands of fake votes at the least - vote fraud in Texas and Illinois, but that's beside the point).
Kennedy cut taxes and the economy improved. Johnson raised taxes and entitlement spending and regulation and Nixon added more entitlements and regulation. The result? The stagflation of the mid-late 1970s that resulted in Ronald Reagan and his sensible tax-cut (the amount of taxes he "raised" from 1981-1989 doesn't even come close to how much he cut in 1981 alone), monetary and regulatory policies caused the biggest jobs boom since just after the war, 17 million jobs from 1983-1989.
High taxes retarded the economic growth of 1940 to the mid-1970s; it would have been even better without them. And government heavy-handedness culminated in the economic misery of Jimmy Carter.
Raise taxes to 45% on every dollar above 2 million in yearly income and capital would flee this country faster than almost everyone in Europe did from Attila the Hun. Capital in massive numbers would go to other countries with lower tax rates and the American economy would simply collapse.
You can't just imagine that you can take huge amounts of capital out of the market with no effect. Confiscatory tax rates have a double whammy - first what the government takes and then misallocates, and then second all the other the money that is sent to Europe or Asia or India or Africa because the governments there won't take so much.
Raising taxes on personal income to that rate would make such a small difference in the deficit anyway that the damage would far outweigh any benefits.
The only way to fix the debt at current spending rates is to raise taxes on everyone making more than the poverty level a year - middle-class and rich alike. This is an unacceptable solution, so people will continue to push the fantasy that we can fix the problem simply by soaking the rich.
It doesn't work. The rich don't have enough to be soaked, they only get soaked for a short time before they move their money to a place where the government can't get at it, and you end up fiscally and economically worse than you did before.
The State of California is a perfect example of what the soak-the-rich attitude results in when implemented as policy. Capital - and people - have been leaving California for years. The government's finances are fucked up almost beyond repair. The economy is in a shambles. The standard of living has fallen for everyone but the super-rich. The state of New York and the State of Illinois are less extreme examples.
Saying we'd go back to the 1930s was a little bit of hyperbole, but we've tried at the state level what you are suggesting we do at the national level, and it has been disastrous.
There's so much wrong with this diatribe that I don't have time to refute a fraction of it, but I will point out that it misses the Occupy Wall Street context entirely. The wealth of the middle class was nearly stagnant in the Reagan years. Most of the gain went exclusively to the 1%. This is the point of the OWS protests -- that growth shouldn't be relegated to the top 1%, that everyone should share in economic gain and not just the wealthy. Since the Reagan era, economic "growth" has forgotten about the middle class entirely. It's about shifting the discussion to what matters, not about taxing/crucifying the rich. Our measures of economic health are a farce and we need to accept that before we can return to a truly stable economy.