Bill Moyersis a treasure. Yesterday (23 Feb 2013) he interviewed Richard Wolff, in an episode titled Taming Capitalism Gone Wild.
The show is worth watching, and I discuss it a bit more beyond the orange swirls, but one morsel, so precious, came out during the show: FDR, during his time of crisis, proposed a 100% tax rate on the rich.
Roosevelt’s debt ceiling battle actually began right after Pearl Harbor. The nation needed a revenue boost to wage and win the war.
FDR and his New Dealers wanted to finance the war equitably, with stiff tax rates on high incomes. How stiff? FDR proposed a 100 percent top tax rate. At a time of “grave national danger,” Roosevelt told Congress in April 1942, “no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year.” That would be about $350,000 in today’s dollars.
FDR "settled" for a marginal tax rate of 94%
Makes today's super-wealthy seem pretty whiny and greedy, doesn't it?
Back to the show with Moyers and Wolff (and some time devoted to the restaurant industry, which is well worth watching, but which I will not cover here). Wolff made some excellent points about our capitalist system:
1. In many schools, there are two Economics departments. One serves those who want theory; the other serves those getting degrees in business.
2. The ideas behind capitalism - the theory - are frequently not borne out by reality.
3. People are frequently not rational in their behavior. Even when an idea is not being borne out by reality, or especially when an idea is not being borne out by reality, they will cling to it all the more fiercely.
4. One major problem with the theories which support our capitalist system - such as "the invisible hand" - is that they absolve the powerful of any responsibility. They can claim that market forces compelled them to do what they did.
Some ideas and observations of my own:
There have been two counter-intuitive economic theories bandied about for the last several decades. One is Keynesian economics, in which governments should spend more, not less, to get their economies going. And I think we should recognize how counter-intuitive this is. The other is trickle-down economics, famously called "voodoo economics" by Bush I before he gave away another piece of his soul.
One major problem with our forecasts is that we tend to draw straight lines and never work in possible changes. The US economy did spectacularly in the latter half of the 20th century, and presumed that it would always be the world leader. And we still have plenty of resources. But there is nothing that guarantees us this position. Not only do we need to earn it, we need to understand that others are working hard too.
We should do more to expose the outrageous salaries being paid in industries that are broken. Health care is one; the university system is another.
Obama should remind people what the rich paid in the time of crisis: a 94% rate. If he throws that number around - if we throw that number around - it will make his negotiating position seem mild indeed.
Tired of politics? Need to escape? Try my Greek mythology based novels, either the story of Oedipus from the point of view of Jocasta, or a trilogy about Niobe, whose children were murdered by the gods - or were they?