From The Tom Woods Letter:
There’s still lots of talk about that 70% top marginal tax rate, and why it’s supposed to be a great idea.
Heck, they say, we had rates even higher before, and everything was fine!
I emailed you last week about that, and then I devoted episode #1314 of the Tom Woods Show — subscribe for free at TomWoods.com/iTunes — to further detail on the subject.
The (very quick) answer is that thanks to deductions and outright evasion, those high rates were essentially not paid.
Here’s how someone in my private group described the simpleton manner in which the topic is being discussed:
Unfortunately, that’s about the level at which people are taught to think about the vast bulk of American economic history.
No theoretical underpinning. Just some cute stories about well-intentioned presidents, with some post hoc ergo propter hoc fallacies thrown in.
And a lot left out.
Like: “laissez-faire capitalism” caused the Great Depression.
So the Federal Reserve System is to be left out of the discussion altogether, including the stated intention of the New York Fed President (who in those days was the key figure) to give a “coup de whiskey to the stock market.”
Or: the New Deal rescued the United States from the Great Depression!
That one eventually became such a howler that even FDR cheerleaders like historian Doris Kearns Goodwin had to walk it back, arguing instead that the president gave America “hope.”
Well, gee whiz.
The comic-book history of American labor unions they feed us isn’t much better. The fact is, American workers had higher wages and the eight-hour day sooner than their more heavily unionized counterparts in Europe, and unionization never exceeded one-third of the American labor force.
Economic problems in the nineteenth century? Why, they were the fault of — what else? — the “gold standard.”
All this is why I asked Jeff Herbener, one of my favorite economists (and who heads the department of economics at Grove City College, where the great Hans Sennholz taught), to create a course for LibertyClassroom.com on American economic history.
(The correct version.)
It’s our 24th course!
And yes, this is stuff they didn’t teach you in school.
Yes, I know it’s a novelty: a history and economics course taught by a non-insane person.
We’re celebrating its release with nice discounts on our secret coupons page.