I have a blog post tomorrow morning, and then three upcoming blog posts on the Great Depression, the Great Recession, and COVID. If I had to give the short answer to why I'm a libertarian, I would cite these three events.
I think they should make you a Radical Centrist. :) Did you see my comment on FDR on Slow Boring?
“And in the "Roosevelt, warts and all spirit" it should be recognized that not all of his economic legacy is positive when "unfairly" judged in present 20/20 hindsight.
The Agricultural Adjustment Act which encouraged reducing agricultural production was just a bad idea and the system of subsidies that replaced it after it was properly declared unconstitutional is still with us. Likewise the National Industrial Recovery Act permitted cartelization and industrial price fixing at scale. Both were misguided attempts (as were increases in minimum wages) to deal with lack of aggregate demand stemming from too-tight monetary policy that created the Depression in the first place, policy which Roosevelt, to his immense credit, subverted by substantially raising the price of gold. [If only Obama had been able to do something similar against the Bernanke Fed policies!]
Although completely understandable, it was also a mistake to finance the new Social Security system with a tax on wages instead of a (not yet invented) VAT. That not only created a distortion between the cost to the employer of employing a worker and the wage they receive but, becasue a wage tax was (and is) politically more difficult to manipulate, creates demographically driven cycles of deficit and surplus that throw more of the burden on other taxes to adjust (or counter adjust as at present!)
It was also a mistake to set very high marginal income tax rates [No, I'm not going to ding FDR for taxing income rather than consumption. :)] with enough loopholes and exceptions that no one but the occasional sports figure ever had to pay them. In particular the tax increases of 1937 (remember, the Fed was not actively managing aggregated demand at the time) triggered a recession that interrupted the fast, investment led, recovery that began in 1932.“
I agree with pretty much all of that and make many of the same points in my upcoming post! The Fed should have grown M/MV at a constant rate to close the output gap, and the president should have just sat on his hands and said we have nothing to fear but big government!
Good post.
I posted with trepidation as this is something I have only an economist's general view on, nothing in my personal expertise.
From today's NYT:
Educational costs; no spread reduction benefit. Paywalled for me but hopefully some reader will open and see if the reports discuss how/why the error was made. https://nl.nytimes.com/f/newsletter/gDT3PezyvtcZy2zbip1Hpg~~/AAAAAQA~/RgRn2tgUP0TiaHR0cHM6Ly93d3cubnl0aW1lcy5jb20vMjAyNC8wMy8xOC91cHNob3QvcGFuZGVtaWMtc2Nob29sLWNsb3N1cmVzLWRhdGEuaHRtbD9jYW1wYWlnbl9pZD0yOSZlbWM9ZWRpdF91cF8yMDI0MDMxOCZpbnN0YW5jZV9pZD0xMTc4Nzgmbmw9dGhlLXVwc2hvdCZyZWdpX2lkPTU4NDE0NTQ4JnNlZ21lbnRfaWQ9MTYxMDk1JnRlPTEmdXNlcl9pZD1iNjViYmU0OThlMGQ1MWIyNzJkMmIxMjcyOGY2MmI1YVcDbnl0Qgpl4hRT-GViNLyJUhh0aHV0Y2hlc29uMjAwMEB5YWhvby5jb21YBAAAAAM~
https://archive.ph/llWrT
Thanks. Substack does not have sustem of noting when responses come it. I just say this 09-02!
Hi Thomas, oh yes it does have a system of noting when responses come in...
The little bell icon (on my laptop screen at top right corner next to the orange [Subscribe] button) shows "Activity" - your comment popped up there.
All the best.
Good post!
I have a blog post tomorrow morning, and then three upcoming blog posts on the Great Depression, the Great Recession, and COVID. If I had to give the short answer to why I'm a libertarian, I would cite these three events.
I think they should make you a Radical Centrist. :) Did you see my comment on FDR on Slow Boring?
“And in the "Roosevelt, warts and all spirit" it should be recognized that not all of his economic legacy is positive when "unfairly" judged in present 20/20 hindsight.
The Agricultural Adjustment Act which encouraged reducing agricultural production was just a bad idea and the system of subsidies that replaced it after it was properly declared unconstitutional is still with us. Likewise the National Industrial Recovery Act permitted cartelization and industrial price fixing at scale. Both were misguided attempts (as were increases in minimum wages) to deal with lack of aggregate demand stemming from too-tight monetary policy that created the Depression in the first place, policy which Roosevelt, to his immense credit, subverted by substantially raising the price of gold. [If only Obama had been able to do something similar against the Bernanke Fed policies!]
Although completely understandable, it was also a mistake to finance the new Social Security system with a tax on wages instead of a (not yet invented) VAT. That not only created a distortion between the cost to the employer of employing a worker and the wage they receive but, becasue a wage tax was (and is) politically more difficult to manipulate, creates demographically driven cycles of deficit and surplus that throw more of the burden on other taxes to adjust (or counter adjust as at present!)
It was also a mistake to set very high marginal income tax rates [No, I'm not going to ding FDR for taxing income rather than consumption. :)] with enough loopholes and exceptions that no one but the occasional sports figure ever had to pay them. In particular the tax increases of 1937 (remember, the Fed was not actively managing aggregated demand at the time) triggered a recession that interrupted the fast, investment led, recovery that began in 1932.“
I agree with pretty much all of that and make many of the same points in my upcoming post! The Fed should have grown M/MV at a constant rate to close the output gap, and the president should have just sat on his hands and said we have nothing to fear but big government!