Some of the bickering about the financial quagmire we are in at the moment reminds me of watching a movie we’ve seen before. We know the climax to this one. To regulate and tax more or maintain more or less the status quo on regulation and tax less are the opposing camps in broad strokes. When the topic of raising taxes arises the Dems so often talk about fairness and make a big issue of the 91% tax rate “under Ike” during the fifties. Then they claim that things did pretty well during that period. I saw that movie in real time, I don’t have to go to Youtube to watch a rerun.
They act like that tax rate was something that Ike imposed, promoted or campaigned on. Wrong. Just the opposite. This was a Democratic tax rate. The Dems had been in complete charge of all branches of government for decades by the fifties. They are the ones who had raised taxes to that level, not Ike. He opposed those rates and indeed proposed lowering tax rates. He had the House in Republican hands for only two years of his eight in office and the Senate was firmly in the grip of the Dems. That tax rate was also something of an illusion for the most part. If you think the lobbyists and lobbying are bad now you should have seen in then. The tax code at that time was littered with hundreds of special exemptions, deductions and exclusions so that people didn’t have to pay the confiscatory 91% rate. No one paid that rate, and no one really expected anyone to pay that except for the mentally challenged. You think the Kennedys paid that rate during that time? Guess again. The special interest groups got those deductions by, you got it, donating money to Democratic politicians in Washington. The rich created charities that they endowed with large sums which was fully deductible and then put themselves and their family members on the boards at a salary of course and just as importantly the charities could fly them around the world and put them up at swanky places all at the expense of the charity. They also created trusts for large sums of money which paid at a different rate and often held the equities they bought for a very long time to avoid paying taxes. People are clever and simply will not and did not then pay the confiscatory rate of 91%. Cars, vacations, fancy meals, employees were paid by others to avoid having to take income and then pay for them by taxpayers.
The airlines and transportation industry was regulated to the hilt during this period. The ICC, interstate commerce commission established tariffs and told them what they could and could not charge for their services whether to individual consumers or industry. The prices were high. Relative to today it cost a fortune to fly from say Dallas to New York. Likewise it was very expensive to ship a load of typewriters from Buffalo to Kansas City because competition was restricted do the level of regulation. It lead to terrible results where those who had lobbied hard with politicians and the ICC had received their “ticket” it was call, that is a permit to transport people or goods would oppose every new application submitted to the ICC. You had to show to a bunch of bureaucrats that your new company and service was in the best interest of the public good. Bureaucrats made these important decisions not the market place. If another entity already provided trucking in the area you wished to serve you had to essentially prove they couldn’t handle all the business there. How stupid was that. The only standard should have been can you operate your new business safely and then let market competition decide who offered the best service to the public. Remember that even if you could offer the same service for a lower price that was absolutely no guarantee that you would get your permit, indeed it was more often than not viewed as a negative because you were encroaching on the domain of the regulators who set the prices and thus your idea was an affront to their abilities and decisions. There was no free market, it was a market of government. The costs were high, the service fair at best and you sure couldn’t threaten to take your business elsewhere, there was no “elsewhere” thanks to the bureaucrats and the regulation.
Those are only a very few of the examples of the regulation overkill we lived under and managed to survive. It thwarted economic growth and lead to the stagnation of the ’70’s which Reagan rebelled against at long last. Those regulatory walls came tumbling down and now you can fly from Dallas to New York for much much less than it cost 35 years ago, considering inflation it is really low. If you think the regulators and the regulated on Wall Street work against you now wait until we get even more regulation. That will stifle competition and competition is what stokes the engines of commerce and makes for a fairer playing field for all of us. Please read the current financial regulatory bill or as much as you can stomach. It is a candy store for the bureaucrats and special interest groups and again will place too much power in Washington. Why do they need 500 million for that new agency to glean “data” from banks, credit unions and credit card companies about your personal account? It doesn’t say that explicitly but they can gather data and there is no limit on what it can be, it will include your personal data if those technocrats want it and they will otherwise how to they justify themselves and spend that 500 million. Why all of a sudden do the Feds have authority over corporate laws? The new shareholder provisions to empower the Greens and anti-globalists are an intrusion in the powers of the States to regulate corporations chartered in their States. That is no authorized under the commerce clause and is prohibited under the Tenth Amendment. Read and learn then make up your mind. Those who love a big, very powerful Federal government don’t need to because their minds are made up and they like that, everyone with qualms about the size of the Federals will take caution.
As a side note, at the end of Ike’s last term there was a mild recession. Kennedy defeated Nixon primarily on the economy and the so-called “missile gap” between the US and the Soviets. Kennedy then proceeded to lower the tax rates and didn’t change our missile strategy because in fact there was no “gap” which he knew from his briefings during the campaign but continued to shout about. Nixon couldn’t talk about our true missile strength because it would have jeopardized our security. http://www.olcranky.wordpress.com