{"id":430,"date":"2009-07-03T16:21:16","date_gmt":"2009-07-03T21:21:16","guid":{"rendered":"http:\/\/helian.net\/blog\/?p=430"},"modified":"2009-07-03T16:25:29","modified_gmt":"2009-07-03T21:25:29","slug":"supply-siders-redistributers-and-the-all-american-standard","status":"publish","type":"post","link":"https:\/\/helian.net\/blog\/2009\/07\/03\/history\/supply-siders-redistributers-and-the-all-american-standard\/","title":{"rendered":"Supply Siders, Redistributers, and the “All American Standard”"},"content":{"rendered":"

There are legions of sages on the Internet who all know exactly what needs to be done to cure the economy.\u00a0 Their theories are simple, easy to grasp, and certain to work.\u00a0 The only problem is, they don’t agree with each other.\u00a0 Half the sages<\/a> tell us to cut taxes and government spending.\u00a0 The other half calls for a bigger government <\/a>that would tax more and oversee a “just” redistribution of the loot.\u00a0 To sort things out, it sometimes helps to escape the narratives of today and have a look at those of days gone by.\u00a0 It turns out there have been a couple of quantum flips in the narrative(s) within living memory.\u00a0<\/p>\n

During the Great Depression, there were many converts to the narrative of the left, especially among the “well-informed” of society, and that narrative became quite extreme.\u00a0 Its adherents were, if anything, more cocksure they had a monopoly on the truth than those of either the right or the left today.\u00a0 In those days, opinions that would be considered dangerously radical today were a commonplace in the intellectual journals.\u00a0 The American Mercury <\/a>is a good example.\u00a0 Started in 1924, by H.L. Mencken<\/a>, the great sage of Baltimore, and his pal George Jean Nathan<\/a>, the Mercury was taken over by Charles Angoff<\/a> late in 1933, following Mencken’s resignation.\u00a0 As will be seen in his contribution below, Angoff was decidedly to the left of Mencken, and would steer the journal sharply in that direction.\u00a0 A similar, if less extreme, lurch to the left can be discerned in The New Republic, the Nation, Century, and many another “serious” publication of the day.\u00a0 Here are some examples, all from the Mercury.\u00a0 Remember, they appeared in a highly respected journal, and not some transient occupant of a socialist bookstore:<\/p>\n

\u00a0“Under the present economic system it is impossible for our farms and factories ever to absorb all the millions of unemployed… When the government can grant no more concessions to appease its hungry, then revolt on a national scale will be inevitable, with its ensuing chaos, during which some group, knowing what it wants to do, will seize control.\u00a0 At present the only political party which seems to know what it wants is the Communist Party.”\u00a0 John L. Spivak, “Bitter Unrest Sweeps the Nation,” August 1934.<\/p>\n

“The belief that capitalism is immortal is as superstitious as the belief in witchcraft…\u00a0 The world, as I have said, is moving in the direction of collectivism…\u00a0 As for Germany, the disillusionment of the people there with Hitler’s brand of Fascism is widespread and rapidly becoming more articulate.\u00a0 It is by no means impossible that soon after these lines reach your eye, the lunatic house-painter will be fleeing for his life.\u00a0 In a way, his insane regime will have done his country good:\u00a0 it will have hastened the coming of genuine socialization…\u00a0 What of the United States?\u00a0 The New Deal is bankrupt.\u00a0 It was impossible for it to succeed.\u00a0 Socialism cannot be made to work in a capitalistic society, as any schoolboy could have told Mr. Roosevelt.\u00a0 The New Deal will inevitably have to move in the direction of Fascism, however much Mr. Roosevelt personally may dislike the Mussolini-Hitler brand of governing.\u00a0 If the Republicans win in 1936, there will be no more camouflage.\u00a0 There will then be open and above-board Fascism.\u00a0 The Republican party, like the economic system it so well represents, will not give up the battle easily.\u00a0 But its brand of Fascism will be no more immortal than Mussolini’s or Hitler’s… \u00a0The Americans are in a rebellious mood…\u00a0 They will demand, and I believe they will get, some form of real collectivism.” Charles Angoff<\/strong>, “The End of an Epoch,” August 1934.<\/p>\n

“Collectivism has made the army and the navy of the United States.\u00a0 Why should the spirit that inspires it be anathema?”\u00a0 Ernest Boyd, “Drugged Individualism,” November 1934.<\/p>\n

Not everything that appeared in the Mercury would seem so novel today.\u00a0 Here are some remarks about taxes that have a decidedly modern ring:<\/p>\n

“But now the United States Federal government and most of the States and their subdivisions are confronted with another financial crisis in many ways more serious than the one we went through in 1917-18.\u00a0 Can we provide the revenue to meet the new social obligations which have been thrust upon us by the depression and avoid run-away inflation in the process?\u00a0 Can we find the ways and means of raising money which will help us out of the depression instead of pushing us further back into the mire.”\u00a0 Harold M. Groves, “Taxation in America and England,” June 1934.<\/p>\n

Fast forward 18 years.\u00a0 The Soviet purge trials <\/a>and a World War had intervened to upset the apple card for the sages of 1934.\u00a0 Prosperity had, after all, returned, and a new hubris pervaded society.\u00a0 Now it seemed, we were marching forward to a bold new capitalist future, moderated by unabashed redistribution of wealth, in which the gap between rich and poor was shrinking, and becoming increasingly insignificant.\u00a0 Class economic standards were falling by the wayside, and would be replaced by what Frederick Lewis Allen<\/a>, a sociologist of that era, called “The All-American Standard.”\u00a0 Allen caught the spirit of the times in his book, “The Big Change.”\u00a0 \u00a0After reviewing statistics on the distribution of wealth and income at the time, he wrote:<\/p>\n

\u00a0“What do these figures mean in human terms?\u00a0 That millions of families in our industrial cities and towns, and on the farms, have been lifted from poverty or near-poverty to a status where they can enjoy what has been traditionally considered a middle-class way of life:\u00a0 decent clothes for all, an opportunity to buy a better automobile, install an electric refrigerator, provide the housewife with a decently attractive kitchen, go to the dentist, pay insurance premiums, and so on indefinitely…\u00a0 At the top of the scale there has likewise been a striking change.\u00a0 The enormous lead of the well-to-do in the economic race has been considerably reduced…\u00a0 Let us see what has happened to the top five per cent of the population, income-wise…\u00a0 According to the elaborate calculations of Simon Kuznets of the National Bureau of Economic Research, during the period between the two wars the people in this comparatively well-off group were taking a very big slice of the total national income – no less than 30 per cent of it, before taxes; a little over 28 per cent after taxes.\u00a0 But by 1945 their slice had been narrowed from 30 to 19.5 per cent before taxes, and from 28 to 17 per cent after taxes.\u00a0 Since 1945 this upper group has been doing a little better, relatively, but not much…\u00a0 A question at once arises.\u00a0 Have we, in reducing the slice received by these upper classes, and increasing the slice received by lower groups, simply been robbing Peter to pay Paul?\u00a0 The answer is that Peter has been getting a smaller relative slice of a much larger pie.\u00a0 Even after one has made allowance for rising prices, one finds that the total disposable income of all<\/em> Americans went up 74 per cent between 1929 and 1950.\u00a0 That is a very considerable enlargement.\u00a0 So that although the well-to-do and the rich have suffered relatively<\/em>, it is much less certain that they have suffered absolutely<\/em>.”<\/p>\n

Here is supply side economics turned on its head!\u00a0 Instead of wealth trickling down from the upper classes, Allen sees it trickling up to them from the classes below.\u00a0 Allen continues:\u00a0<\/p>\n

“Much more impressive, however, than the narrowing of the gap in income<\/em> between rich and poor has been the narrowing of the gap between them in their ways of living<\/em>…\u00a0 the rich man smokes the same sort of cigarettes as the poor man, shaves with the same sort of razor, uses the same sort of telephone, vacuum cleaner, radio, and TV set, has the same sort of lighting and heating equipment in his house, and so on indefinitely…\u00a0 The differences between his automobile and the poor man’s are minor…\u00a0 What has been responsible for this convergence between the ways of living of rich and poor?\u00a0 The causes are numerous and complex…”<\/p>\n

That is certainly true, and the keepers of the narratives in our own day would hardly agree on them.\u00a0 Allen wrote those words in 1952, when the upper bracket tax rate had been hovering between 88 to 90 percent for some time.\u00a0 Still, US manufacturing and productivity were both at unprecedented levels, and showed no sign of turning back.\u00a0 The expected post-war recession that had been a feature of WWI had not materialized, and there seemed to be no turning back for the economy.\u00a0 High taxation seemed nearly irrelevant to economic expansion.<\/p>\n

\"income31\"<\/p>\n

Come our own day.\u00a0 As the graph taken from Visualizing Economics <\/a>shows, the gap between rich and poor began widening again shortly after Allen had published his book, and the “All American Standard” is a thing of the past.\u00a0 The explanation for this in our own day will vary, of course, by which flavor of the narrative the explainer prefers.\u00a0<\/p>\n

And the moral of the story?\u00a0 Narratives change.\u00a0 Facts, events, and experience render old ones obsolete, and bring new ones to the fore, and that in relatively short order, depending on how quickly real economic and social conditions, the facts on the ground, or “experiment,” if you will, changes perceptions.\u00a0 Old certainties become new delusions.\u00a0 We learn, if we have the capacity to learn, that we are not as smart as we thought we were.<\/p>\n

\n\t\t\t\t\tTweet<\/a>\n\t\t\t\t<\/div><\/div>","protected":false},"excerpt":{"rendered":"

There are legions of sages on the Internet who all know exactly what needs to be done to cure the economy.\u00a0 Their theories are simple, easy to grasp, and certain to work.\u00a0 The only problem is, they don’t agree with each other.\u00a0 Half the sages tell us to cut taxes and government spending.\u00a0 The other … Continue reading “Supply Siders, Redistributers, and the “All American Standard””<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[27,35,8,21],"tags":[],"class_list":["post-430","post","type-post","status-publish","format-standard","hentry","category-communism","category-economics","category-history","category-the-media"],"jetpack_publicize_connections":[],"jetpack_shortlink":"https:\/\/wp.me\/pwEq0-6W","jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/posts\/430","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/comments?post=430"}],"version-history":[{"count":4,"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/posts\/430\/revisions"}],"predecessor-version":[{"id":436,"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/posts\/430\/revisions\/436"}],"wp:attachment":[{"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/media?parent=430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/categories?post=430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/helian.net\/blog\/wp-json\/wp\/v2\/tags?post=430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}