Why did the economy boom during the 1950's when the top tax rate was 91%?

[GunnyFreedom]

And the reason they eliminated housing and switched to rent, was because home prices were climbing too much to maintain a low CPI. Problem is that home inflation was generated by the Federal Reserve and the "Too Big To Fail" banker oligarchy, to pad their own bottom lines, and led directly to the housing crisis. If home prices HAD stayed in the CPI, then even these Keynesians maybe would have spotted the Housing Crisis in advance like we all did.

Not to mention that the actual price of homes have an actual effect on the lives of people on the ground, and deserve to be considered.

[Zippyjuan]

Actually in the CPI calculations, they don't use the selling price of houses but what a comparable home would rent out for. They have done this for decades- it isn't any recent change.

Each item in the CPI is given a weighting based on the percent of income that the average person spends on that item and category (over 60,000 items are examined). Food takes about eleven percent of the average person's income so it counts as 11% of the CPI. If the CPI is 100 and the price of food doubles while all other prices remain the same, then the overall rate of inflation would be 11% (the index increases by 11- the weight given to food since food was 11 and doubled to 22). But we notice the price of food more than other things since we buy it more often so it may seem like overall price inflation is higher.

Energy is counted too. Since there are multiple CPI figures, some believe that food and energy do not count. That is wrong. In the Core CPI (which is the usual figure cited and the one used in calculating say cost of living increases) they do count.

As for Shadowstats, the CPI is a basket of goods the average person buys. That changes over time (you could not get a LCD TV 20 years ago and don't buy a transistor radio today for examples). The basket gets updated every ten years (based on surveys and info from the US Census). ShadowStats is still using the 1980 basket of goods. Sony Walkmans and VCRs instead of computers and cell phones.

[oyarde]

Well I am a newbie, but I have looked at a lot of older posts dear Generalissimo.

Jumbo Shrimp was my favorite ....

[erowe1]

Jumbo Shrimp was my favorite ....

I kind of liked Debbie Downer.

[GunnyFreedom]

I kind of liked Debbie Downer.

Debbie Downer was kind of an ass, actually. I think he lets his usernames go to his head.

[angelatc]

But me and the economics proffesors in Harvard and Princeton all accept the CPI. And you say I should remove my screen name because of it.

Appeal to authority fallacy. It is clearly established that some of us do not agree that the CPI is accurately calculated. We do not dispute that some, maybe even all, nationally known economists disagree.

But at least one of us has laid out the reasons he disagrees with the calculation, being summarized by me as the fact that it simply seems to randomly exclude anything that would skew it dramatically.

I think at some point we would agree that taking the cost of a horse and buggy out of the equation would be sensible. But at that point, the onus was on you to explain why those experts believe the methodology is in fact more accurate than one that includes costs of housing and energy.

If you can't do that, you're in over your head.

[oyarde]

I think a better thread would be the reasons why the economy will not boom again......

[Todd]

Appeal to authority fallacy. It is clearly established that some of us do not agree that the CPI is accurately calculated. We do not dispute that some, maybe even all, nationally known economists disagree.

But at least one of us has laid out the reasons he disagrees with the calculation, being summarized by me as the fact that it simply seems to randomly exclude anything that would skew it dramatically.

I think at some point we would agree that taking the cost of a horse and buggy out of the equation would be sensible. But at that point, the onus was on you to explain why those experts believe the methodology is in fact more accurate than one that includes costs of housing and energy.

If you can't do that, you're in over your head.

He can't...

He apparently bought into that false notion that Ivy league schools actually produce the best and the brightest who are uniquely qualified to be the only experts on Economics.

[NorthCarolinaLiberty]

"The economist." LOL.

Yeah, I played in the majors last year and hit 40 home runs.

[NorthCarolinaLiberty]

So the proffesor of Harvard and Princeton economics classes...

But me and the economics proffesors...

Professor is spelled with one f. --The Etymologist


(See, I can be a dick too; just the like person who joins a forum and doesn't want to learn anything.)

[GunnyFreedom]

Professor is spelled with one f. --The Etymologist


(See, I can be a dick too; just the like person who joins a forum and doesn't want to learn anything.)

You forgot an even more glaring (to me) issue:

"...but the economic professors and I..."

[NorthCarolinaLiberty]

You forgot an even more glaring (to me) issue:

"...but the economic professors and I..."

Yeah, that also made me laugh. Probably more a narcissism thing than bad grammar. Dip$#@! probably has his very own Bloomsbury Group, too.

[Occam's Banana]

Professor is spelled with one f. --The Etymologist

And two of 's' - thus, "professor" and not "proffesor."

[GunnyFreedom]

Yeah, that also made me laugh. Probably more a narcissism thing than bad grammar. Dip$#@! probably has his very own Bloomsbury Group, too.

Well, he sure as heck didn't write like educated people do. If he wanted to come off as though he were educated, he probably should have used proper spelling and grammar. I am sure the folks who come out of Princeton and Harvard mostly use proper spelling and grammar.

[Czolgosz]

Why did a particular $#@!ry, around 1776, become such a powerhouse and a beacon for prosperity?

Why is that same $#@!ry now a mediocre turd?

[oyarde]

"The economist." LOL.

Yeah, I played in the majors last year and hit 40 home runs.

Only home runs I ever hit were inside the park , I stole home more often, threw more no hitters ( some of which I actually lost, I walked a " few" )never went to an Ivy League school or played in the majors , I learned all the Ekonomics , lol ,I ever needed on the family farm before I was old enough to vote .

[oyarde]

Well, he sure as heck didn't write like educated people do. If he wanted to come off as though he were educated, he probably should have used proper spelling and grammar. I am sure the folks who come out of Princeton and Harvard mostly use proper spelling and grammar.

I dunno about that , but when I was younger , saw some pretty good basketball played @ Princeton and Football @ Harvard and Yale.....

[erowe1]

Only home runs I ever hit were inside the park , I stole home more often, threw more no hitters ( some of which I actually lost, I walked a " few" )never went to an Ivy League school or played in the majors , I learned all the Ekonomics , lol ,I ever needed on the family farm before I was old enough to vote .

All that pales next to the fame you've earned by making a mean can of ravioli, Chef B.

[osan]

This is a weakly oblique attempt at implying causal linkage between the two.

FAIL.

We're talking about the largest economy on the planet, inherently complex and along certain lines nonlinear. Once the number of variables under consideration in a complex system surpasses three or four, predictability drops rapidly and determination of precise relationships between any two factors becomes complicated on its best day.

You seem either a troll or in need of a lot of additional learning. Or both.

[osan]

Because the relatively new entitlement system had not yet sucked the life out of the economy.

This is a VERY big factor.

[osan]

The Fed is not to blame for the reduction in the savings rate. Inflation just a little higher then the period between 1955 and 1965.

In positive reality the CPI is a meaningless measure because the standard of measurement has been repeatedly altered.

That aside, the vast majority of inflation as we know it is due to currency devaluation and not scarcity issues. This is built-in inflation - it is engineered - part and parcel of the fabric of the currency and has NOTHING to do with the economy in the sorts of terms one would expect to discuss. Currency inflation is proof of that currency's unsuitability to the purpose for which it was to ostensibly serve as MONEY. It is neither durable nor a store of wealth. It is an atricle of exchange that sinks wealth away from the bearer in either absolute or relative terms. The best one can hope for with garbage currencies is to minimize losses, in most cases. Of course, if one has magical luck or some inside information, huge gains can still be had, but they will always be smaller than those that would be realized if one's transactions were made with real money. All else equal, real money does not lose value and the only inflation one experiences arises from increased relative scarcity of a given commodity.

[osan]

Brad Delong, Greg Mankiw, Ben Bernanke and Alan Greenspan accept the CPI. Are you saying they are too far ignorant to be economist?

One need not be clued-out to accept CPI.

How do you know they actually accept it, personally speaking? They may be advocates for any of a number of less-than-honest reasons. I will add that none of those reasons need involve explicit conspiracy. Going along to get along is a well proven formula for success, especially in fields of endeavor where being an outlier or even questioning the orthodoxy is most likely to result in career suicide.

[osan]

Says the "end the fed" guy.

Wow... such sweeping force of argument. Color me bowled over.

Jesus...

[osan]

But me and the economics proffesors in Harvard and Princeton all accept the CPI. And you say I should remove my screen name because of it.

Lots of "authoritative" figures also accepted the world as flat and that burning people at the stake was a good idea.

Methinks it's time to stop feeding this troll.

/thread

[NorthCarolinaLiberty]

And two of 's' - thus, "professor" and not "proffesor."

You know, I missed that he only had one letter S. Doh!

[Zippyjuan]

Marginal tax rate is the tax rate applied to the last dollar earned. But that does not apply to all dollars so the average tax rate on income is considerably lower. Dollars are not taxed if they are below a certain amount. Then deductions and exclusions further reduce taxable income. The 90% Marginal Tax Rate applied to less than one percent of the highest income earner's income. And this chart only shows the maximum marginal tax rate applied to the highest income earners. It says absolutely nothing about taxes actually paid by an average person so it doesn't provide any useful information. Last year, about 46% of all who filed tax returns owed zero in Federal Income taxes.

[Bryan]

Why did the economy boom during the 1950's when the top tax rate was 91%?

For the sake of argument, let's say you statement is correct, that the economy did boom when there was a top tax rate of 91%.

Question- does that make it right? Did the people being taxed 91% agree to this? One can presume they didn't, so what is the justification for this tax? Does the benefit to the whole ("the economy") make it morally and ethically acceptable to tax someone at 91%? What about 92%? Or 93%, 94%, ... 99%? Why not just take it all if it makes the economy boom? Why not, since that is the objective here.

So let's say that the people being taxed 91% didn't agree to this, but were fine paying for services they utilized such that they helped pay for the roads they use, they pay for local fire and police protection, patent filling fees, court costs and such. Let's say this voluntary exchange doesn't come close to 91%, should the rest still be taken? Can you explain how it makes it right for a group of people to lay claim to the wages and earnings of someone else in this case? Remember, the government is nothing more than a group of people.

Another question- if one person doesn't have the right to do something to someone else, how could a group of those same people have the right? It doesn't make sense, does it? One person can't, two people can't, three can't, and so on, there is no magic number that suddenly makes it OK. Regardless of the group size, taking from others violates the principle of self-ownership, which is that you own yourself and the product of your work. Other people do not own you, or the fruits of your labor, just like you do not own theirs. Many consider the principle of self-ownership as a natural right.

Again, for augments sake, let's say that you wanted to take the 91% anyway, we'll end up with some questions similar to other situations:

- Assuming someone is running their own business, how would you propose that these taxes be collected?
- Would you expect for everyone to comply and pay their taxes, at whatever rate the group decides they owe?
- Would you support going door to door to confiscate the tax money if people did not pay?
- Would you support breaking into peoples homes if they did not answer the door?
- Would you support using aggressive measures against individuals to separate them from their money within their homes?
- Would you support killing people to get their tax money, if that's what it took?
- Do you support an ideology that generates war? If you answer "yes" to the previous question you are in fact foresting war. As well, if you're willing to fully disregard what others consider as a natural right, you're fostering war.


Let's say you're willing to brush off the principle of self-ownership anyway and establish a suitable collection / punishment structure to get the taxes, and so now you're getting the 91% rate. Are all the problems solved? Not quite, since with taxing at 91% you'll run into other issues. As a simple example, say we're considering a tomato grower and for every 10 tomato plants they grow the collection system took 9 of them, why would this person want to continue to grow tomatoes? Do you think that they may decide it's too much work for what they get and just give up, or maybe they'll start to hide their production, thus requiring a larger collection / punishment structure to prevent cheating the system? So, really, where are you going to draw the line? Can you see there are consequences for violating the principle of self-ownership?

So what can be done if you're not happy about the status quo, and see thing as the rich getting richer? Plenty can be done. Here, let's consider a three step process:

1. Understand and respect the natural rights bestowed upon us as related to the issue.
2. Devise good government policy (which does not violate step #1).
3. Devise an effective personal social policy.

So for step one, we can see that the principle of self-ownership prevents the taking of others earnings. Step two is where things start to get interesting, and is at the heart of the "rich getting richer" issue in that government policy / law is quite often manipulated by the elite wealthy class for their own self serving interests. This is what needs to stop, and it can be done. There are some clear and obvious examples of this such as corporate handouts, special privileges that only corporations enjoy, manipulation of regulations to benefit big corporations, manipulation of trade agreements and so on. These need to stop.

There is one major root problem however, the Federal Reserve System, which puts the control of our entire money supply into the hands of seven people. Seven. We tend to be feed information that these board members are looking out for the best interests of the country but many here say they end up serving the interest of the elite banking class allowing for easy profits of countless billions a year. Talk about the rich getting richer...

Consider the possibility that the seven board members, who are each serving 14 year terms, pre-plan out the highs and lows of interest rates for the next 8 years, a road-map of sorts, and only share that with an elite few. Do you have any idea how much that information would be worth? That's just the beginning of the problems with the Federal Reserve System, I highly recommend doing some research if you haven't, here is a 42 minute video I would suggest for starters: https://www.youtube.com/watch?v=YLYL_NVU1bg

On to step 3, effective personal social policy. If at any point you see an individual / company that is manipulating the system, or they are using business practices that you morally object to (such as laborers in poor working conditions, not paying a living wage, predatory business practices) you can always boycott the business and/or raise social awareness to the problems. Government force isn't needed to solve all issues and these solutions can work with a morally outstanding society, which is what I think we are both working towards.

Please let me know of any questions. Thanks.

[Origanalist]

Professor is spelled with one f. --The Etymologist


(See, I can be a dick too; just the like person who joins a forum and doesn't want to learn anything.)

I always thought it was spelled perfessers.

[Cutlerzzz]

People in this thread believe that trading with poorer countries creates more economic growth than trading with wealthier advanced countries. That trading with Victorian Britain, the Roman Empire, and Nigeria would be more advantageous and create more growth than trading with the Jetsons and Futurama.

[Barrex]

I come here to read what "other" people think and you scare them away.


You are the reason I dont have new members on this forum to mess with.