lec 4 at cloud recordings  2/3/25

Alan Blinder makes the case in “Shore Up the Social Safety Net With ‘Predistribution’” (op-ed, June 7) that the U.S. is a rich enough nation to afford expanding benefits. He writes that “22.7% of U.S. gross domestic product is social spending, compared with 31.6% in France.”

In 1980, France’s GDP per capita was higher than America’s ($12,739 versus $12,575). Today, France’s is slightly more than half of America’s ($44,408 versus $81,632).

Mr. Blinder believes those numbers reinforce that we’re rich enough to increase social spending. Perhaps there’s a connection he isn’t seeing between benefit levels and how the wealth got created in the first place.

Jon Banks

Pacific Palisades, Calif.

While I have a great deal of respect for Prof. Blinder, the flaw in his distributionist logic is staring him in the face. He complains that government social spending targeting the nation’s low-income households, elderly, disabled, sick, unemployed and youth is a lower proportion of GDP in the U.S. than it is in France and Germany.

But U.S. GDP per capita far exceeds those of France and Germany, so that the amount of U.S. social spending per person surpasses that of both these traditionally redistribution-focused nations—over $19,000 in the U.S. versus than $15,000 in Germany and France. (If the GDPs are compared under purchasing power parity, social spending per capita is closer in the three countries but the U.S. still comes out ahead.

Distributionists (whether re- or pre-) focus so intently on making sure that everyone’s slice of pie is identical that they neglect the most important factor in the human condition: How much pie is everyone actually getting? History shows that policies that focus too heavily on equity result in there being far less to go around over time, and the most vulnerable suffer from this greater scarcity. As Milton Friedman liked to say, “There’s nothing that does so much harm as good intentions.”

Prof. Jason Taylor

Central Mi

November 2003
Why Do Americans Work
So Much More Than Europeans?*
Edward C. Prescott
Federal Reserve Bank of Minneapolis
and Arizona State University
ABSTRACT
______________________________________________________________________________
Americans now work 50 percent more than do the Germans, French, and Italians. This was not
the case in the early 1970s when the Western Europeans worked more than Americans. In this
paper, I examine the role of taxes in accounting for the differences in labor supply across time
and across countries, in particular, the effective marginal tax rate on labor income. The population of countries considered is that of the G-7 countries, which are major advanced industrial
countries. The surprising finding is that this marginal tax rate accounts for the predominance of
the differences at points in time and the large change in relative labor supply over time with the
exception of the Italian labor supply in the early 1970s.
____________________________________________________

 Period Country Actual Predicted Less Actual) Tax Rate � Output (c/y) 1993–96 Germany 19.3 19.5 .2 .59 .74 France 17.5 19.5 2.0 .59 .74 Italy 16.5 18.8 2.3 .64 .69 Canada 22.9 21.3 –1.6 .52 .77 United Kingdom 22.8 22.8 0 .44 .83 Japan 27.0 29.0 2.0 .37 .68 United States 25.9 24.6 –1.3 .40 .81 1970–74 Germany 24.6 24.6 0 .52 .66 France 24.4 25.4 1.0 .49 .66 Italy 19.2 28.3 9.1 .41 .66 Canada 22.2 25.6 3.4 .44 .72 United Kingdom 25.9 24.0 –1.9 .45 .77 Japan 29.8 35.8 6.0 .25 .60 United States 23.5 26.4 2.9 .40 .74 

Marginal tax rates on labor, including payroll taxes

1993 dash 96 Germany 59% france 59% italy 64% canada 52% UK 44% japan 37% US 40%

1970 to 74 Germany 52% France 49% Italy 41 per cent Canada 44 per cent UK 45 per cent Japan 25 per cent US 40%

__________________

Pinker

The starting point for understanding inequality in the context of human progress is to recognize that income inequality is not a fundamental component of well-being. It is not like health, prosperity, knowledge, safety, peace, and the other areas of progress I examine in these chapters. The reason is captured in an old joke from the Soviet Union Links to an external site.. Igor and Boris are dirt-poor peasants, barely scratching enough crops from their small plots of land to feed their families. The only difference between them is that Boris owns a scrawny goat. One day a fairy appears to Igor and grants him a wish. Igor says, “I wish that Boris’s goat should die.”

The point of the joke, of course, is that the two peasants have become more equal but that neither is better off, aside from Igor’s indulging his spiteful envy. The point is made with greater nuance by the philosopher Harry Frankfurt Links to an external site. in his 2015 book On Inequality Links to an external site.. Frankfurt argues that inequality itself is not morally objectionable; what is objectionable is poverty. If a person lives a long, healthy, pleasurable, and stimulating life, then how much money the Joneses earn, how big their house is, and how many cars they drive are morally irrelevant. Frankfurt writes, “From the point of view of morality, it is not important everyone should have the same (I would go a step further. A society where everyone has the same is not a moral society. Some people save and invest, others spend and consume; some households have one earner or less and other households have two or more; some people complete many years of education and training, others do not; some people work 60 hours a week or more, others work 20 or less; some jobs carry great risk, either physically or in variation earnings, others are secure with great amenities.  DC). What is morally important is that each should have enough.” Indeed, a narrow focus on economic inequality can be destructive if it distracts us into killing Boris’s goat instead of figuring out how Igor can get one.

The confusion of inequality with poverty comes straight out of the lump fallacy—the mindset in which wealth is a finite resource, like an antelope carcass, which has to be divvied up in zero-sum fashion, so that if some people end up with more, others must have less. As we just saw, wealth is not like that: since the Industrial Revolution, it has expanded exponentially Links to an external site.. That means that when the rich get richer, the poor can get richer, too. Even experts repeat the lump fallacy, presumably out of rhetorical zeal rather than conceptual confusion. Thomas Piketty Links to an external site., whose 2014 bestseller Capital in the Twenty-First Century Links to an external site. became a talisman in the uproar over inequality, wrote, “The poorer half of the population are as poor today as they were in the past, with barely 5 percent of total wealth in 2010, just as in 1910.” But total wealth today is vastly greater than it was in 1910, so if the poorer half own the same proportion, they are far richer, not “as poor.”

A more damaging consequence of the lump fallacy is the belief that if some people get richer, they must have stolen more than their share from everyone else. A famous illustration by the philosopher Robert Nozick Links to an external site., updated for the 21st century, shows why this is wrong. Among the world’s billionaires is J. K. Rowling Links to an external site., author of the Harry Potter novels, which have sold more than 400 million copies and have been adapted into a series of films seen by a similar number of people. Suppose that a billion people have handed over $10 each for the pleasure of a Harry Potter paperback or movie ticket, with a tenth of the proceeds going to Rowling. She has become a billionaire, increasing inequality, but she has made people better off, not worse off (which is not to say that every rich person has made people better off). This doesn’t mean that Rowling’s wealth is just deserts for her effort or skill, or a reward for the literacy and happiness she added to the world; no committee ever judged that she deserved to be that rich. Her wealth arose as a by-product of the voluntary decisions of billions of book buyers and moviegoers.

Steven Pinker, author of ‘The Language Instinct: How the Mind Creates Language,’ poses for a portrait reading a tabloid, the Sun, with the headline, ‘Baby Born Talking Describes Heaven,’ on March 10, 1994. (Michele McDonald/The Boston Globe via Getty Images)

To be sure, there may be reasons to worry about inequality itself, not just poverty. Perhaps most people are like Igor and their happiness is determined by how they compare with their fellow citizens rather than how well-off they are in absolute terms. When the rich get too rich, everyone else feels poor, so inequality lowers well-being even if everyone gets richer Links to an external site.. This is an old idea in social psychology, variously called the theory of social comparison, reference groups, status anxiety, or relative deprivation. But the idea must be kept in perspective. Imagine Seema, an illiterate woman in a poor country who is village-bound, has lost half her children to disease and will die at fifty, as do most of the people she knows. Now imagine Sally, an educated person in a rich country who has visited several cities and national parks, has seen her children grow up, and will live to eighty, but is stuck in the lower middle class. It’s conceivable that Sally, demoralized by the conspicuous wealth she will never attain, is not particularly happy, and she might even be unhappier than Seema, who is grateful for small mercies. Yet it would be mad to suppose that Sally is not better off, and positively depraved to conclude that one may as well not try to improve Seema’s life because it might improve her neighbors’ lives even more and leave her no happier. In any case, the thought experiment is moot, because in real life Sally almost certainly is happier. Contrary to an earlier belief that people are so mindful of their richer compatriots that they keep resetting their internal happiness meter to the baseline no matter how well they are doing, we will see that richer people and people in richer countries are (on average) happier than poorer people and people in poorer countries.

But even if people are happier when they and their countries get richer, might they become more miserable if others around them are still richer than they are—that is, as economic inequality increases? In their well-known book The Spirit Level Links to an external site., the epidemiologists Richard Wilkinson and Kate Pickett claim that countries with greater income inequality also have higher rates of homicide, imprisonment, teen pregnancy, infant mortality, physical and mental illness, social distrust, obesity, and substance abuse. The economic inequality causes the ills, they argue: unequal societies make people feel that they are pitted in a winner-take-all competition for dominance, and the stress makes them sick and self-destructive.

The Spirit Level theory has been called “the left’s new theory of everything,” and it is as problematic as any other theory that leaps from a tangle of correlations to a single-cause explanation. For one thing, it’s not obvious that people are whipped into competitive anxiety by the existence of J. K. Rowling Links to an external site. and Sergey Brin Links to an external site. as opposed to their own, local rivals for professional, romantic, and social success. Worse, economically egalitarian countries like Sweden and France differ from lopsided countries like Brazil and South Africa in many ways other than their income distribution. The egalitarian countries are, among other things, richer, better educated, better governed, and more culturally homogeneous, so a raw correlation between inequality and happiness (or any other social good) may show only that there are many reasons why it’s better to live in Denmark than in Uganda. Wilkinson and Pickett’s sample was restricted to developed countries, but even within that sample the correlations are evanescent, coming and going with choices about which countries to include. Wealthy but unequal countries, such as Singapore and Hong Kong, are often socially healthier than poorer but more equal countries, such as those of ex-Communist Eastern Europe.

Most damagingly, the sociologists Jonathan Kelley and Mariah Evans have snipped the causal link joining inequality to happiness in a study of two hundred thousand people in sixty-eight societies over three decades Links to an external site.. Kelley and Evans held constant the major factors that are known to affect happiness, including GDP per capita, age, sex, education, marital status, and religious attendance, and found that the theory that inequality causes unhappiness “comes to shipwreck on the rock of the facts.” In developing countries, inequality is not dispiriting but heartening: people in the more unequal societies are happier. The authors suggest that whatever envy, status anxiety, or relative deprivation people may feel in poor, unequal countries is swamped by hope. Inequality is seen as a harbinger of opportunity, a sign that education and other routes to upward mobility might pay off for them and their children. Among developed countries (other than formerly Communist ones), inequality made no difference one way or another. (In formerly Communist countries, the effects were also equivocal: inequality hurt the aging generation that grew up under communism, but helped or made no difference to the younger generations.)

The fickle effects of inequality on well-being bring up another common confusion in these discussions: the conflation of inequality with unfairness. Many studies in psychology have shown that people, including young children, prefer windfalls to be split evenly among participants, even if everyone ends up with less overall. That led some psychologists to posit a syndrome called inequity aversion: an apparent desire to spread the wealth. But in their recent article “Why People Prefer Unequal Societies,” Links to an external site. the psychologists Christina Starmans, Mark Sheskin, and Paul Bloom Links to an external site. took another look at the studies and found that people prefer unequal distributions, both among fellow participants in the lab and among citizens in their country, as long as they sense that the allocation is fair: that the bonuses go to harder workers, more generous helpers, or even the lucky winners of an impartial lottery. “There is no evidence so far,” the authors conclude, “that children or adults possess any general aversion to inequality.” People are content with economic inequality as long as they feel that the country is meritocratic, and they get angry when they feel it isn’t. Narratives about the causes of inequality loom larger in people’s minds than the existence of inequality. That creates an opening for politicians to rouse the rabble by singling out cheaters who take more than their fair share: welfare queens, immigrants, foreign countries, bankers, or the rich, sometimes identified with ethnic minorities.

In addition to effects on individual psychology, inequality has been linked to several kinds of society-wide dysfunction, including economic stagnation, financial instability, intergenerational immobility, and political influence-peddling. These harms must be taken seriously, but here too the leap from correlation to causation has been contested. Either way, I suspect that it’s less effective to aim at the Gini index Links to an external site. as a deeply buried root cause of many social ills than to zero in on solutions to each problem: investment in research and infrastructure to escape economic stagnation, regulation of the finance sector to reduce instability, broader access to education and job training to facilitate economic mobility, electoral transparency and finance reform to eliminate illicit influence, and so on. The influence of money on politics is particularly pernicious because it can distort every government policy, but it’s not the same issue as income inequality. After all, in the absence of electoral reform the richest donors can get the ear of politicians whether they earn 2 percent of national income or 8 percent of it.

Economic inequality, then, is not itself a dimension of human well-being, and it should not be confused with unfairness or with poverty. Let’s now turn from the moral significance of inequality to the question of why it has changed over time.

—

Adapted from ENLIGHTENMENT NOW

_____________________________________

 from my paper this summer:

The results, below, indicate that a one standard deviation increase in the percent
of zip code income going to the top quintile is associated with an increase in two bedroom home sale values in the zip code by about $11,000, or 6% of the mean.
I conclude from these results that the location decisions of home buyers of two bedroom homes are not adversely impacted by income inequality in favor of the well off in the community. In fact, they may have a slight preference for locations in communities where high quintile households receive a greater share of community income, not less.
  ______________________

“Members of a community containing many who are rich enjoy, in fact, a great
advantage not available to those who, because they live in a poor country, do not
profit from the capital and experience supplied by the rich (Hayek 1960).”

This is why the employee pays all the payroll tax. Is not split with the employer suppose a worker can be employed by a baseball bat firm and can make 10 baseball bats per day. The employer pays the worker two baseball bats per day wages and takes the eight baseball bat margin as profit. This is a Marxian analysis where the employer steals the surplus value of the worker. But if a worker getting paid two baseball bats equivalent per day can produce 10 in the factory, competitive firms will try to hire him away, say at a wage of, Three baseball bats per day. Her new firm can still make a seven baseball bat profit from stealing this worker from a competitor. If you have to pay $3, I mean three baseball bats per day to make a seven baseball bat per day profit you will do this every day, even every minute. Sooner rather than later, the baseball bat maker will see his wage bid up to about nine baseball bats per day equivalent, because the factory owner can still make A1 baseball bat per day profit from hiring the workers. Suppose as a baseball bat factory owner you observe that a competitor is paying a worker 8 baseball bats per day and the worker is producing 10. Why not hire this worker at 9 baseball bat wages and take the one baseball bat profit. Would you pay 90 cents for a dollar if you had the chance. Answer, yes I would buy a dollar for 90 cents every minute if I had the opportunity.

Bottom line, baseball bat makers will get paid the equivalent of nine baseball bats per day because they're producing 10 and they are in a competitive labor market. Ok, we have established that, in competitive industries, baseball bat workers will get paid very close to the output they produce. So a baseball bat maker's wages the equivalent of nine baseball bats. Now let's introduce a Social Security tax where the employer pays 1/2 and the employee pays one half. The tax is the equivalent of four baseball bats in wages. The cost of the employee is now his nine baseball bat wage plus two baseball bat Social Security contribution. Remember, the new tax is paid two baseball bats per day by the employer and two baseball bats per day by the employee.  The employer must then reduce the employee's wages from nine baseball bats per day to seven baseball bats per day. The cost of the employee has risen by 2 baseball bats per day but the employees wages is as high as they can possibly before the tax be so they must be reduced By the amount of the employer's tax obligation for the employee to deliver profit.  Review: the government has instituted a Social Security tax of four baseball bats per day wage equivalent, where the employer pays half and the employee pays half. Before the tax the employee got a wage of nine baseball bats per day equivalent because the competition for his services. After the tax, the employees cost to the employer has gone up to the equivalent of 11 baseball bats per day, nine in wages plus 2 in tax. The employer cannot hire the employee if the employee costs more than his production. So the employer reduces the wage to seven baseball bats per day which means the total cost to the employer is 7 plus the two baseball bat tax for a total of 9, just as it was before. But the employee now has a seven baseball bat wage plus the employee has to pay a 2 baseball bat wage to Social Security. Thus, the employees take home is now five baseball bats per day when before Social Security his take home was nine baseball bats per day. So who pays the payroll tax? The employee payes the whole thing in a competitive labor market, All four baseball bats  .

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Yes, Paul Samuelson did forecast a recession following World War II, based on Keynesian economic theory, but contrary to his prediction, the post-war period saw a significant economic boom instead of a major downturn; this is often cited as an example of how economic models can sometimes be inaccurate in predicting real-world events. 

Key points about Samuelson's post-WWII prediction:

• Expected large unemployment:

Samuelson believed that the end of wartime production would lead to a massive wave of unemployment due to a sudden drop in government spending. 

• Keynesian model:

His prediction was based on the Keynesian economic model, which emphasizes the role of government intervention in stabilizing the economy. 

• Wrong prediction:

However, the actual post-war period experienced a strong economic expansion, largely due to pent-up consumer demand 

me:  There was a recession immediately after World War II. Factories had to shift from wartime production to peacetime production. It seems almost a miracle that this recession was so brief and the economy so flexible. Note also, below, government spending fell roughly 80%,1946-47.  Note also that the 48 – 49 recession  was mild in terms of lost output. So the post ww2 1940s were pretty robust in the face of big decline in government spending.  

The V-Day Recession: February 1945–October 1945

• Duration: Eight months

• GDP decline: 10.9%9

• Peak unemployment rate: 3.8%10

• Reasons and causes: The 1945 recession reflected massive cuts in U.S. government spending and employment toward the end and immediately after World War II. Federal spending fell 40% in 1946 and 38% in 1947 while the private sector's output grew rapidly.11 The severity of the downturn remains open to question because much of the eliminated spending represented wartime production that did not serve to increase living standards.12

AEI. "When the U.S. Really Did Try Austerity, It Worked!"

 The elimination of price controls in 1946 artificially depressed output as adjusted for inflation, while the unemployment rate remained low in part because women left the workforce in large numbers (and often unwillingly).131415

The Post-War Brakes Tap Recession: November 1948–October 1949

• Duration: 11 months

• GDP decline: 1.7%16

• Peak unemployment rate: 7.9%17

• Reasons and Causes: The first phase of the post-war boom was in some ways comparable to the economic recovery from the COVID-19 pandemic. Amid a backlog of consumer demand suppressed during the war and a shortage of production capacity, the collapse of wartime price controls fueled an abrupt surge of inflation by mid-1946.18 The annualized inflation rate rose from 3.3% in June 1946 to 11.6% two months later and 19% at its peak in April 1947.19 Policymakers only responded in the second half of 1947, and when they did their efforts to tighten credit ultimately led to a relatively mild recession as consumers and producers retrenched.20

In 1923 the U.S. Supreme Court in the Adkins case struck down a federal minimum wage law legislated for women in Washington D.C.  Excerpts from that opinion remain relevant to today’s debates over minimum wages at the federal, state, and local levels (“Election pay day: Five states adopt higher minimum-wage laws,” Nov. 5)..

"Included in the right of personal liberty and the right of private property … is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment.  If this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the long-established constitutional sense. The right is as essential to the laborer as to the capitalist, to the poor as to the rich; for the vast majority of persons have no other honest way to begin to acquire property, save by working for money.  An interference with this liberty so serious as that now under consideration, and so disturbing of equality of right, must be deemed to be arbitrary… we cannot accept the doctrine that women of mature age require or may be subjected to restrictions upon their liberty of contract which could not lawfully be imposed in the case of men under similar circumstances.”

Women were disadvantaged by the legislation because they could not offer their labor at levels below their statutory minimum if competing against men who could. Today, low skilled workers can be similarly disadvantaged if they can't make wage offers below statutory minimums when competing against higher skilled workers for entry level, career building jobs.

Douglas Coate

Professor of Economics

Rutgers University, Newark

  The Waltham system took advantage of the low female wages in agriculrure and household service in the New England area, but rapid advances in productivity in the mills raised the value and earnings of the women working there. The initially low female-to-male wage ratio rose as industries dominated by female labor experienced above average productivity increases from 1815 to 1860. During these 45 years, female earnings rose from about a third to nearly half of male wages. In short, low-cost female labor contributed significantly to the initiation of industrialization, and in rum women's earnings in New England rose relative to men's in the antebellum period because of industrialization. Moreover, by drawing women away from agriculture in the North, the Waltham system and other female work opportunities in industry increased the relative value and earnings of women who remained in farming. The weekly wage of farm women and hired farm "girls" more than doubled from 1830 to 1860. 

--

A market economy is relatively more efficient for three reasons: It makes the incentives of participants compatible with the generation of economic value; it exploits fully the localized knowledge available only to participants in separated decentralized circumstances; and it allows maximal scope for the creative and imaginative talents of all participants who choose to act as potential entrepreneurs.   James Buchanan (courtesy D. Boudreaux, Cafe Hayek)

https://www.c-span.org/video/?152627-1/president-f-roosevelt-fireside-chat     on banking

‘Boutwell’ Review: A Man Ahead of His Times

America’s first IRS commissioner helped raise the vast sums needed to wage the Civil War and was a strong advocate of racial equality.

By Harold Holzer

Feb. 10, 2025 2:17 pm ET

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It took not a village of historians but a lone descendant to rescue George S. Boutwell from the dustbin of American memory. Viewed by many in his own time as both radical and rigid, “hiding in plain sight” since the post-Civil War period, Boutwell has long deserved resurrection. He was—cue the fast-approaching debate over tax cuts—America’s first IRS commissioner.

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Boutwell: Radical Republican and Champion of Democracy

By Jeffrey Boutwell

W. W. Norton & Company

368 pages

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Now comes Jeffrey Boutwell—a cousin several generations removed and the author of previous books on security issues—to argue that George Boutwell ranks as “the most consequential public figure Americans have never heard of.” This commendably balanced and well-researched biography demonstrates that his kinsman is indeed worth remembering.

Born in Brookline, Mass., in 1818, George Sewall Boutwell worked on the family farm, apprenticed with a village postmaster, studied law, advanced to the state legislature, was governor at age 33 and later served as both a congressman and a U.S. senator. His greatest role was helping raise the vast sums of money needed to wage the Civil War—a staggering million dollars a day by 1862.

To collect it, Boutwell recruited and managed the largest workforce in the government: a civilian army of some 4,000 clerks and agents. Although Treasury Secretary Salmon P. Chase earned the lion’s share of recognition, Boutwell created the unprecedented revenue department. He became Treasury secretary himself during Ulysses S. Grant’s first term; afterward, some believed Boutwell should have been more alert to the graft festering under the old general’s nose, though the corruption came to light only after Boutwell had left the administration for the Senate. Boutwell never deserved Henry Adams’s harsh judgment that he was a “somewhat lugubrious joke,” though the book’s claim that his name was once as well-known “as that of any other government figure in America, save the president,” seems a stretch.

What certainly merits renewed attention are Boutwell’s remarkably advanced positions on slavery, civil rights and an assortment of then-fringe positions that marked him not only as ahead of his time but as fully “woke” at a moment when most Americans were still unconscious.

Boutwell favored a shorter workweek, the secret ballot, penal reform, female education (though not suffrage), progressive taxation and Electoral College reform. Unlike some of his fellow New England abolitionists, he believed in racial equality. He fought longer than most to extend Reconstruction, hoping black citizenship would take hold in the former Confederacy. He advocated tirelessly for the constitutional amendments guaranteeing birthright citizenship and ballot access. And Boutwell led the failed effort to remove the racist Andrew Johnson from the White House.

It is hard to account for Boutwell’s enlightened attitudes; he was hardly a born reformer. Modestly educated, Boutwell had his political awakening when he witnessed the horrors of slavery firsthand: Fugitives, seeking haven in Massachusetts, were hunted down and returned to bondage. In his nourishing private life, Boutwell was rewarded with a daughter who remained single and doted on her father; Jeffrey Boutwell ably mines her witty letters and journals to animate their intense bond.

Originally a Democrat even as the party began veering from its embrace of immigration to a greater tolerance for slavery, Boutwell won his second race for governor by forging a coalition with the antislavery Free Soilers. Assuring his constituents that he remained opposed to the “moral, political, social and industrial evil” of slavery, he also vowed to enforce existing laws—the Fugitive Slave Act included. Abolitionist poet John Greenleaf Whittier lamented, “May God forgive us for permitting his election!”

In the mid-1850s, Boutwell joined other antislavery Democrats in realigning with the nascent Republicans, rejuvenating his political career. After organizing the wartime revenue service, Boutwell won a House seat as a supporter of both the president and his then-controversial Emancipation Proclamation.

Boutwell proved an adroit (but not flamboyant) legislator, a competent (if uninspiring) orator and a thoroughly reliable ally. The White House sat across the lawn from the Treasury building; during his two tours there, Boutwell skillfully navigated the short distance to forge enduring friendships with both the loquacious Lincoln and the tight-lipped Grant.

As a policy wonk and good listener, Boutwell possessed qualities that cement relationships but not necessarily reputations, and when Jeffrey Boutwell focuses on his relative’s legislative and bureaucratic work, the effect can be numbing. The biography soars only after Lincoln’s death, when Boutwell spearheads the impeachment drive against Johnson, takes up black rights and late in life serves as president of the American Anti-Imperialist League, quixotically opposing U.S. annexation of the Philippines.

The author ventures some convincing explanations for Boutwell’s posthumous obscurity, which has withstood even a mention in Joshua Cohen’s Pulitzer Prize-winning novel, “The Netanyahus” (2021). When the “Profiles in Courage” view dominated in the mid-20th century—suggesting that the Johnson impeachment was unhinged and unpatriotic—Boutwell tumbled into historical purgatory. Boutwell’s friendship with Grant did him little reputational good either, especially during the long period of disfavor that preceded the recent Grant renaissance. Even when the Radical Republicans enjoyed their own rehabilitation, firebrands like Charles Sumner and Thaddeus Stevens obscured grayer men like Boutwell. As for Boutwell’s fin de siècle anti-interventionism (easier to appreciate today), it put him at odds not only with Theodore Roosevelt’s popular “Big Stick” muscularity but also with the robust globalism of the post-World War II era.

Yet Boutwell’s erasure likely owes the most to his brittle Yankee personality. While some contemporaries acknowledged his honesty and work ethic, critics found him “cunning” and “too much of a scold.” Such characteristics often earn grudging respect, but seldom affection. Jimmy Carter, who often rubbed people much the same way, would probably have loved George Boutwell.

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Why was the US willing to move to socialist policies under FDR in the 1930s?  Why was FDR so loved? In fact, why do many of these policies continue to today? reason 1:In the history books and in K-12 education you are taught that the Great Depression represented a failure of capitalism. The roaring 20s were capitalism's golden age, but perhaps capitalism no longer worked by the 1930s?  The Progressives had been arguing since the late 1800s that you should not rely on the market price system to allocate resources in an economy but that you should assemble the best and the brightest to steer the economy away from market outcomes, if warranted.  Woodrow Wilson, President of the US, 1913 - 1920, previously governor of New Jersey and president of Princeton University was a leader in the progressive movement. If you allow the market price system to allocate resources, you are giving a vote to many not so bright people in terms of how they spend their dollars. (but under capitalism those with below average skills play a critical role in matching supply and demand and determining market prices, both as members of  supply chains, and as demanders of final goods and services. We can't all be above average . Technological advances have made the less skilled to be more productive. Walmart is a testimony to this, as is bar codes, container shipping, the automatic transmission , GPS, and sophisticated cash registers.  When I was a kid the cashiers had to be able to make change.  Let me repeat this point from an econ talk podcast. Walmart enables many low skilled Americans to increase their marginal product and their wages. )   The progressive movement was part of the eugenics movement (or vice versa) where the not so bright would be marginalized, And Heaven forbid if they'd be allowed to reproduce.  This continues to be the case.  (Supreme Court Justice Ginsburg favored abortion because of her concern that black Americans were having too many babies. Let me backtrack I am not a student of Ginsburg's feelings on abortion and how they relate to black birthrates. I will provide a selective quote

“Yes,” Ginsburg said, “the ruling [Harris v. McRae] about that surprised me. Frankly I had thought that at the time Roe was decided, there was concern about population growth and particularly growth in populations that we don’t want to have too many of. So that Roe was going to be then set up for Medicaid funding for abortion. Which some people felt would risk coercing women into having abortions when they didn’t really want them. But when the court decided McRae, the case came out the other way. And then I realized that my perception of it had been altogether wrong.”

Ginsburg’s comments set off a lively discussion in the blogosphere, with many wondering: Did she really mean that?

“So Ginsburg thought the court wanted a method of eugenics that the government could use to reduce growth in certain … populations … that we didn’t want expanding? No wonder she has occasionally admitted that Roe was a bad decision,” Ed Morrissey wrote in the HotAir.com conservative blog.)  

2.  More importantly, the command economies of the Soviet Union and of Germany, Austria, Italy,   seemed to yield impressive results in the 1930s. That is  if you take a communist country or a fascist country, where both feature extensive government control of resource allocation, you see that these command economies came out of the depression much faster than the US. So maybe we in the US should copy the models of the communists and fascists, which are government control of resource allocation, not the market price system based on supply and demand.  

3.  So if command economies work, we should move in that direction. Example, control agricultural production, control industrial production. (aaa, NIRA)

We are now moving on to a discussion of the Great Depression of the 1930s. The 1920s was a great decade of economic progress. Marc Andreessen, in the link I sent to you for optional reasoning reading, is big on the 1920s as America’s greatest decade. We’ve discussed this a little bit before. But beginning about 1930 the economy collapsed. It did not recover until World War ii. It was a decade of very high unemployment and much misery. We have identified four causes of the Great Depression. These are the stock market crash of 1929, the Smoot Hawley Tariff of 1930 the collapse of the banking system as represented by the failure of 10,000 banks out of 25,000 banks before 1933, so what OK what’s the 4th and the fourth was the Hoover tax increase where the top rate was raised from 25% to 63% in 1932 and rates were raised across the board, meaning for all taxpayers. This occurred because Franklin Roosevelt was running for the presidency in 1932, the election of 1932, being his first presidential election. Roosevelt criticized Hoover for having a deficit in the budget. This is so the opposite of what we have today where our politicians just run up huge deficits and don’t give a **** piling debt on our future generations, IE you guys. There is no economic theory from those on the left or the right that argues that we should have deficits every year in good times and bad. This results from greedy politicians trying to spend money to buy votes. They don’t care about the long term and the destruction of the country, they care about power good drugs good sex that is their campaign platform. Now we’re going to listen to a talk by a history professor on President Roosevelt in the first term. Roosevelt championed two or three ambitious programs. For a same. But I just wanna get this down. Roosevelt thought the cause of the Great Depression was falling prices. So to increase prices he wanted to reduce agricultural production and also reduce industrial production. Because if there’s less supply there will be higher prices. That was a smart guy but he didn’t see through the logical conclusion. Less output means less income and less employment so his programs actually added to the depression. You can’t say   raise prices by eliminating 90% of the farms & eliminating 90% of the factories and then claim victory because prices have gone up but the people are starving. His two great initiatives after he won in 1932 assuming office in 1933, sort of late in the game as we will see later on, that is he assumed office long after he won the election. In any case he he passed the agricultural adjustment program or Triple A which took land out of farm production so as to reduce output and increase prices. Then he organized the US into about 500 geographic areas where cartels would establish how much would be produced what wages would be paved and so on. This is really the definition of fascism without connotations of race. Under fascism private property is maintained but government determines how the property is used. Meaning fascism and socialism are basically the same thing. So you can imagine a labor union leader a government bureaucrat and a private sector representative, for example, from the Chamber of Commerce sitting around in 500 different regions and deciding what wages will be who will produce what et cetera roosevelt’s economic program was a great calamity, a great display of ignorance and unconstitutional to say the least. But he was able to raise prices by destroying income and output. By the way, what I just said may not be supported by the facts. We will talk about this later.

But let’s review: the economy is in the what a deep dive. And employment is 25 per cent up from 3 per cent 1929 compared to 1932 or 1933. Roosevelt comes in in 1933, at the depths of the Great Depression. What is what is he going to do? He has two programs to reduce output and raise prices the agricultural Adjustment Act to take farm land out of production in order to reduce output and the national industrial Recovery Act, the NIRA, to organize output and reduce output in industry. Okay now we’re ready for a 30 minute video by Professor Burton Folsom so here we go.

Researchers from Harvard and University of Pennsylvania use the nber tax model within the last year to conclude that the trump tax cuts might have increased revenue?

Indeed, researchers from Harvard and the University of Pennsylvania have used the National Bureau of Economic Research (NBER) tax model to analyze the impact of the Trump tax cuts. Their findings suggest that the 2017 Tax Cuts and Jobs Act (TCJA) led to increased business investment, higher wages for workers, and ultimately more revenue for the U.S. Treasury. The study indicates that the dynamic feedback from labor and corporate tax revenue, driven by investment growth, helped offset the initial revenue losses from the tax cuts1.

However, it's important to note that there are differing opinions on the overall impact of the TCJA. Some researchers argue that while the tax cuts boosted investment and economic activity, they did not fully compensate for the substantial losses in corporate tax revenues, which have contributed to an increased deficit.

to expand all columns so that #’s don’t appear    in excel-

1.  Select all data   2.  Shift  right arrow   3.  Double click on column divider

le c 23,24   the movie, the big short  and the movie, too big to fail .