You may say: ‘the nation’s economy is weak, so we must deregulate further to stimulate business!’ To which I will reply: ‘Why? In fact, we should further regulate business, and further tax it. Tax it, and wealthy individuals and estates, much, much more. We had the strongest economy and middle-class our country has ever known between World War II and the ascendance of Saint Reagan, when the top income tax rate was between 70% and 94%; the top corporate tax rate constantly flirted with 50%; the long-term capital gains tax rate was between 25% and 40%; and the estate tax exemption was never higher than a lowly $147,000. (Today, these rates have all been garroted: top income tax rate – 39%; corporate – 35%; long-term capital gains – 15%; and the estate tax exemption increased to a whopping $5,000,000).
Now compare the successes of the post-WWII era with the preceding period, where we had massively deregulated markets – the period prior to the Progressive Era and the New Deal. For much of this period, we had no income taxes, no Federal Reserve, no minimum wage, no maximum hours, and no child labor restrictions. Women had to jump out of the Triangle Shirtwaist Factory, to their deaths, because their employers had locked them into the factory building to prevent ‘hooky’, and it caught fire. Bakers in New York City were dying at age 40 due to the incessant inhalation of flour while working eighty-plus hour weeks. Children were injured in industrial accidents. No OSHA then, remember. And income inequality was as high as it would ever be in our nation in 1929. Until 2008, that is, after a generation of undoing the palliative, redistributive tax rates we had established the last time such inequality occurred.’
About the strong economy after World War II, you may say, ‘but it was a fluke! The rest of the world’s manufacturing base had been leveled in a giant, continental war!’ To which I will reply: ‘That is an interesting hypothesis. But does factual reality support it? If our nation’s prosperity after World War II was only due to becoming the world’s temporary crisis manufacturer, then our exports as a percentage of our GDP should have been higher after WWII than before. Were they? Nope! In fact, not at fucking all! Our exports as a percentage of GDP were exactly the same in 1937 (a few years before we entered WWII) as in 1950 (a few years after we exited WWII). Exactly the same. Exports meant no more to our economy after the war than before, and therefore our prosperity was not due to becoming the world’s manufacturer. Sorry, nice hypothesis, but it is, in fact, bullshit.’
And about the terrible working conditions for average people before we instituted Progressive Era taxes and New Deal regulations, you may say: ‘but technology! Things certainly won’t be as shitty today as in the industrial revolution, because we are much more advanced – so we should deregulate!’ To which I will reply: ‘but, as someone speaking of economics, you should be well-aware of that field’s most basic precept: the law of supply and demand. And this simple precept shows us things will be worse, and not better, for average people if we further deregulate.
First, the world’s population in 1930 was only one (1) billion. Today, it is seven (7) billion. Seven times more. Second, we had tariffs on international trade even prior to the Progressive Era and New Deal, which protected us from direct competition with the rest of the world’s subsistence-wage-slaves. For instance, under the Payne-Aldrich Tariff of 1909, the average tariff on imports was over 19%. Smoot-Hawley raised this even further in 1930. Today, the average tariff, thanks to our self-chosen policies after 1980, is a mere 1.5%. We have taken the condoms off our infected global trade partners. And there are now seven times more of them involved in the gang-bang.
‘Technology’ is a word, not an analysis. Supply-and-demand, on the other hand, always provides an analysis, and we have both (1) less need for workers in the U.S. now thanks to our unprotected domestic market and global free trade, and (2) a seven-times-greater supply of global workers available to buy labor from. More supply equals lower price, and the price of labor is called ‘wages.’ Hence, lower wages for all. This is why deregulation, my interlocutor, is full-on-insane-head-up-your-ass bullshit. We must raise taxes to their pre-1980 levels to undo the damage we have done, and again prosper as a nation.’