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22-06-2022, 04:49 PM
Larry Beinhart
5 Jun 2022
......
The best way to assess an economy is not through theory but through historical comparisons. Unlike theory, history is factual. Theory is the theoreticians’ choice.
The situation today likely has the closest parallels with the late 1960s, the Lyndon Johnson into Richard Nixon years.
......
Donald Trump’s most significant economic policy was cutting taxes, primarily for the rich. We’ve seen that happen five times in the last 100 years.
Four times – in the 1920s, 1980s, a relatively minor version in the late 1990s, and in the 2000s – the exact same pattern occurred: tax cuts, primarily for the rich. A boom. Wealth increases at the top, which morphs into a series of bubbles in finance. Bubbles pop. A crash, followed by a recession or depression.
On all four occasions, real financial health came only after some reversal of those tax policies.
There was one exception. It came in the Johnson years.
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From 1944 to 1964, all income higher than US$200,000 was taxed at 90 percent.
......
Johnson took the top marginal rate ...... down from 90 percent to 70 percent.
......
After the Johnson tax cuts, there was a boom. But it did not morph into a bubble. No crash. No recession or depression. Why did the Johnson tax cuts have a different result than the others?
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All the other tax cuts were put through by the “markets good, government bad” people. Those tax cuts were accompanied by cuts in government spending and the withdrawal of government support for the middle and lower classes. All the benefits went ...... to the top. As the concentration of investment money exceeded the ability of society to buy what that money would produce if it went towards actually producing things, that money went towards investing in itself. In finance. In multiple forms – stocks, commodities, real estate, consumer loans, and financial instruments. You could think of it as concentrates of inflation. Booms became bubbles. Bubbles burst.
Johnson was very much a “government good, does many things better than markets” person. He put through the tax cuts to get support for the things he really wanted: Massive spending on the middle class, labour, and the poor to build “the Great Society”. Medicare, Medicaid, Head Start, National Endowment for the Arts, PBS, the War on Poverty, public education, housing, and lots more. In addition, he had the war in Vietnam. War is normally looked at as a negative. But ...... for the United States ...... wars are usually great for the economy. They bring full employment.
......
Wars also demand – and allow – lots of government spending on science, technology, production, transportation, and services. Johnson’s spending on the Great Society and the war counterbalanced the increase of wealth at the top. That’s the closest historical precedent for current conditions.
This time things were divided up. Trump did the cuts, Biden did the spending.
......
Nevertheless, if the tax cuts continue, they will create a major crash. We’re already seeing the tremors and trembles that signal this. If the spending continues, however, it will slow that process, cushion it, and speed the recovery. If there is a crash, the worst thing to do is cut spending.
......
it’s visible for all to see and available from a few hours of research that anyone can do from home – is that full recovery comes – as a historical fact – only after the tax cuts that triggered the crash are rescinded
https://www.aljazeera.com/opinions/2022/...ica-nomics
5 Jun 2022
......
The best way to assess an economy is not through theory but through historical comparisons. Unlike theory, history is factual. Theory is the theoreticians’ choice.
The situation today likely has the closest parallels with the late 1960s, the Lyndon Johnson into Richard Nixon years.
......
Donald Trump’s most significant economic policy was cutting taxes, primarily for the rich. We’ve seen that happen five times in the last 100 years.
Four times – in the 1920s, 1980s, a relatively minor version in the late 1990s, and in the 2000s – the exact same pattern occurred: tax cuts, primarily for the rich. A boom. Wealth increases at the top, which morphs into a series of bubbles in finance. Bubbles pop. A crash, followed by a recession or depression.
On all four occasions, real financial health came only after some reversal of those tax policies.
There was one exception. It came in the Johnson years.
......
From 1944 to 1964, all income higher than US$200,000 was taxed at 90 percent.
......
Johnson took the top marginal rate ...... down from 90 percent to 70 percent.
......
After the Johnson tax cuts, there was a boom. But it did not morph into a bubble. No crash. No recession or depression. Why did the Johnson tax cuts have a different result than the others?
......
All the other tax cuts were put through by the “markets good, government bad” people. Those tax cuts were accompanied by cuts in government spending and the withdrawal of government support for the middle and lower classes. All the benefits went ...... to the top. As the concentration of investment money exceeded the ability of society to buy what that money would produce if it went towards actually producing things, that money went towards investing in itself. In finance. In multiple forms – stocks, commodities, real estate, consumer loans, and financial instruments. You could think of it as concentrates of inflation. Booms became bubbles. Bubbles burst.
Johnson was very much a “government good, does many things better than markets” person. He put through the tax cuts to get support for the things he really wanted: Massive spending on the middle class, labour, and the poor to build “the Great Society”. Medicare, Medicaid, Head Start, National Endowment for the Arts, PBS, the War on Poverty, public education, housing, and lots more. In addition, he had the war in Vietnam. War is normally looked at as a negative. But ...... for the United States ...... wars are usually great for the economy. They bring full employment.
......
Wars also demand – and allow – lots of government spending on science, technology, production, transportation, and services. Johnson’s spending on the Great Society and the war counterbalanced the increase of wealth at the top. That’s the closest historical precedent for current conditions.
This time things were divided up. Trump did the cuts, Biden did the spending.
......
Nevertheless, if the tax cuts continue, they will create a major crash. We’re already seeing the tremors and trembles that signal this. If the spending continues, however, it will slow that process, cushion it, and speed the recovery. If there is a crash, the worst thing to do is cut spending.
......
it’s visible for all to see and available from a few hours of research that anyone can do from home – is that full recovery comes – as a historical fact – only after the tax cuts that triggered the crash are rescinded
https://www.aljazeera.com/opinions/2022/...ica-nomics
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