Did FDR End the Depression?

The economy took off after the postwar Congress cut taxes

http://online.wsj.com/article/SB1000...046893848.html

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'He got us out of the Great Depression." That's probably the most frequent comment made about President Franklin Roosevelt, who died 65 years ago today. Every Democratic president from Truman to Obama has believed it, and each has used FDR's New Deal as a model for expanding the government.

It's a myth. FDR did not get us out of the Great Depression—not during the 1930s, and only in a limited sense during World War II.

Let's start with the New Deal. Its various alphabet-soup agencies—the WPA, AAA, NRA and even the TVA (Tennessee Valley Authority)—failed to create sustainable jobs. In May 1939, U.S. unemployment still exceeded 20%. European countries, according to a League of Nations survey, averaged only about 12% in 1938. The New Deal, by forcing taxes up and discouraging entrepreneurs from investing, probably did more harm than good.

What about World War II? We need to understand that the near-full employment during the conflict was temporary. Ten million to 12 million soldiers overseas and another 10 million to 15 million people making tanks, bullets and war materiel do not a lasting recovery make. The country essentially traded temporary jobs for a skyrocketing national debt. Many of those jobs had little or no value after the war.

No one knew this more than FDR himself. His key advisers were frantic at the possibility of the Great Depression's return when the war ended and the soldiers came home. The president believed a New Deal revival was the answer—and on Oct. 28, 1944, about six months before his death, he spelled out his vision for a postwar America. It included government-subsidized housing, federal involvement in health care, more TVA projects, and the "right to a useful and remunerative job" provided by the federal government if necessary.

Roosevelt died before the war ended and before he could implement his New Deal revival. His successor, Harry Truman, in a 16,000 word message on Sept. 6, 1945, urged Congress to enact FDR's ideas as the best way to achieve full employment after the war.

Congress—both chambers with Democratic majorities—responded by just saying "no." No to the whole New Deal revival: no federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.

Instead, Congress reduced taxes. Income tax rates were cut across the board. FDR's top marginal rate, 94% on all income over $200,000, was cut to 86.45%. The lowest rate was cut to 19% from 23%, and with a change in the amount of income exempt from taxation an estimated 12 million Americans were eliminated from the tax rolls entirely.

Corporate tax rates were trimmed and FDR's "excess profits" tax was repealed, which meant that top marginal corporate tax rates effectively went to 38% from 90% after 1945.

Georgia Sen. Walter George, chairman of the Senate Finance Committee, defended the Revenue Act of 1945 with arguments that today we would call "supply-side economics." If the tax bill "has the effect which it is hoped it will have," George said, "it will so stimulate the expansion of business as to bring in a greater total revenue."

He was prophetic. By the late 1940s, a revived economy was generating more annual federal revenue than the U.S. had received during the war years, when tax rates were higher. Price controls from the war were also eliminated by the end of 1946. The U.S. began running budget surpluses.

Congress substituted the tonic of freedom for FDR's New Deal revival and the American economy recovered well. Unemployment, which had been in double digits throughout the 1930s, was only 3.9% in 1946 and, except for a couple of short recessions, remained in that range for the next decade.

The Great Depression was over, no thanks to FDR. Yet the myth of his New Deal lives on. With the current effort by President Obama to emulate some of FDR's programs to get us out of the recent deep recession, this myth should be laid to rest.

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Originally Posted by DarrinS

The economy took off after the postwar Congress cut taxes

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I'd say the fact that WW2 left the United States as the only industrialized nation on earth also played a part. Pre WW2 it was the U.S., Japan and Europe. Then we spent half a decade blowing up all the industry in Japan and Europe. Don't get me wrong, I like low taxes as much as the next guy but let's not forget the HUGE inherent advantage the United States had at that particular moment in history. To chalk up the U.S.' recovery as a result of tax policy is misleading.

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Originally Posted by coyotes_geek

I'd say the fact that WW2 left the United States as the only industrialized nation on earth also played a part. Pre WW2 it was the U.S., Japan and Europe. Then we spent half a decade blowing up all the industry in Japan and Europe. Don't get me wrong, I like low taxes as much as the next guy but let's not forget the HUGE inherent advantage the United States had at that particular moment in history. To chalk up the U.S.' recovery as a result of tax policy is misleading.

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That makes sense. But I do think lowering the top marginal rate from 90% to 38% did some good too. I had no idea it was that high.

Funny column.

The course is clear: start bombing Germany and Japan again. Everyone loved us for it the first time around.

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Originally Posted by DarrinS

The economy took off after the postwar Congress cut taxes

http://online.wsj.com/article/SB1000...046893848.html

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Doesn't this say that the Congress lowered the highest income tax rate from 96% or so to 84 1/2 % or so? (I forgot to note the exact numbers). But I know that is the general area.

Corporate taxes were lowered to 38% or so, but individual income taxes were still astronomical by today's standards, even after the bi-partisan tax cut.

If today's tax rates were that high, we wouldn't have to worry about the deficits.

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Originally Posted by EVAY

If today's tax rates were that high, we wouldn't have to worry about the deficits.

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No, the opposite happens.

When people are squeezed too much, they find ways of hiding their income and assets. Then it's not spent in the economy, making things even worse.

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Originally Posted by Wild Cobra

No, the opposite happens.

When people are squeezed too much, they find ways of hiding their income and assets. Then it's not spent in the economy, making things even worse.

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So why did the economy grow when the richest were being squeezed to the tune of 85% of their income?

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Originally Posted by Wild Cobra

No, the opposite happens.

When people are squeezed too much, they find ways of hiding their income and assets. Then it's not spent in the economy, making things even worse.

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People on the whole will always find ways of hiding their income, and rich people will always be able to afford to find the most devious ways of protecting their bank.

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Originally Posted by admiralsnackbar

People on the whole will always find ways of hiding their income, and rich people will always be able to afford to find the most devious ways of protecting their bank.

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That's why we need a consumption based revenue system, not based on income and productivity.

We are punishing the productive people. We are making it undesirable to try to make extra money. When I was in the 31% marginal rate, my attitude was "why should I work more." I was paying 31% + 9% state + 7.65 SS/medicare of my extra wages. Wage increases didn't keep up with cost of living at those rates.

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Originally Posted by coyotes_geek

I'd say the fact that WW2 left the United States as the only industrialized nation on earth also played a part. Pre WW2 it was the U.S., Japan and Europe. Then we spent half a decade blowing up all the industry in Japan and Europe. Don't get me wrong, I like low taxes as much as the next guy but let's not forget the HUGE inherent advantage the United States had at that particular moment in history. To chalk up the U.S.' recovery as a result of tax policy is misleading.

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Just to add to your point, agencies like the WPA helped develop the infrastructure necessary to grease our way towards economic dominance even if they failed to create lasting jobs. Those who stopped working for the WPA did so because they began to have sustainable jobs to return to.

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Originally Posted by Wild Cobra

That's why we need a consumption based revenue system, not based on income and productivity.

We are punishing the productive people. We are making it undesirable to try to make extra money.

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Having nothing but a sales tax isn't something I'm entirely opposed to, but even that comes with a price: a spike in crime to supply the piracy which people will support in order to get goods for cheaper.

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Originally Posted by admiralsnackbar

Having nothing but a sales tax isn't something I'm entirely opposed to, but even that comes with a price: a spike in crime to supply the piracy which people will support in order to get goods for cheaper.

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There is a drawback to anything. Nothing is perfect. Look at how positive it would be to eliminate politicians control over the people by tax incentives. How about the major shrinkage of the IRS.

the tax could be very simple. Different rate for different goods if desires, and no tax on necessities. The poor would pay no tax this way, unless they had money to splurge on taxable items. The rich would have no need for tax shelters, and likely spend far more of their money. The price of goods would remain the same for most, and cheaper for basic necessities. there would be no need for earned income credits as the prices of items the poor need would fall.

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Originally Posted by admiralsnackbar

Just to add to your point, agencies like the WPA helped develop the infrastructure necessary to grease our way towards economic dominance even if they failed to create lasting jobs. Those who stopped working for the WPA did so because they began to have sustainable jobs to return to.

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The WPA was a far superior stimulus concept compared to what the current stimulus bill did. Not that I'm an expert in the field of economics, but from my limited understanding the WPA is the example of what the Keynesian approach is supposed to accomplish. The government spends money to create demand. What we've done though is basically just hand out money and hope that the demand creates itself. Just my layman's observations........

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Originally Posted by Wild Cobra

There is a drawback to anything. Nothing is perfect. Look at how positive it would be to eliminate politicians control over the people by tax incentives. How about the major shrinkage of the IRS.

the tax could be very simple. Different rate for different goods if desires, and no tax on necessities. The poor would pay no tax this way, unless they had money to splurge on taxable items. The rich would have no need for tax shelters, and likely spend far more of their money. The price of goods would remain the same for most, and cheaper for basic necessities. there would be no need for earned income credits as the prices of items the poor need would fall.

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Right, but what I'm saying is there would also be a vast, unregulated black market that encouraged criminality at every level of the culture. Prohibition caused an epidemic of violent crime revolving around a product that only, say, %70 of people wanted. Imagine what would happen if you extended that percentile to %100... electronics, cars, etc. It would be more than a little drawback, no?

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Originally Posted by coyotes_geek

The WPA was a far superior stimulus concept compared to what the current stimulus bill did. Not that I'm an expert in the field of economics, but from my limited understanding the WPA is the example of what the Keynesian approach is supposed to accomplish. The government spends money to create demand. What we've done though is basically just hand out money and hope that the demand creates itself. Just my layman's observations........

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We are absolutely on the same page on this.

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Originally Posted by ChumpDumper

So why did the economy grow when the richest were being squeezed to the tune of 85% of their income?

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No the opposite happens.


Sincerely,

All who suck talk radio/ fox news cock

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Originally Posted by admiralsnackbar

Right, but what I'm saying is there would also be a vast, unregulated black market that encouraged criminality at every level of the culture. Prohibition caused an epidemic of violent crime revolving around a product that only, say, %70 of people wanted. Imagine what would happen if you extended that percentile to %100... electronics, cars, etc. It would be more than a little drawback, no?

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It would never happen to that degree. You really think the underground market can supply enough goods at a better price to matter?

The economy was coming back on its own until FDR plunged it into a "second" depression in 1937.

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Originally Posted by Wild Cobra

It would never happen to that degree. You really think the underground market can supply enough goods at a better price to matter?

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Trust me... I know it can. Ever been to Mexico? :lol

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Originally Posted by admiralsnackbar

Trust me... I know it can. Ever been to Mexico? :lol

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Take half the money saved by shuttering the IRS and buy more cops. I am 100% in favor of a consumption tax.

Edit: 98.5% actually. My only concern is how the Federal Government would continue to operate when the economy goes into recession and there is no consumption to tax?

No, I think Hitler, Musolini, and Hirohito did that...

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Originally Posted by Drachen

Take half the money saved by shuttering the IRS and buy more cops. I am 100% in favor of a consumption tax.

Edit: 98.5% actually. My only concern is how the Federal Government would continue to operate when the economy goes into recession and there is no consumption to tax?

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You kinda hint at the seeds of the problem, maybe -- if and when the black market removes a significant-enough amount of revenue from the govt, the government begins to get diminishing returns while crime strengthens in an inverse proportion. As for cops being able to quash the organized crime that would spring up, I again point to present day Mexico and their drug conflict, or even present-day copyright issues here in the US revolving around downloadable goods... there is simply too much demand for these goods for law enforcement to possibly keep up after awhile.

WW2 industrialization

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Originally Posted by The Reckoning

WW2 industrialization

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That coupled with the billions spent rebuilding markets in Europe and later Asia and also the Bretton Woods Agreement and GATT's lowering tariffs pretty much worldwide.

yup Marshall Plan, business cycle theory, GI bill, baby boom, etc

so if you lower taxes that also requires you taking out the competition with nukes? cool .

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Originally Posted by ChumpDumper

So why did the economy grow when the richest were being squeezed to the tune of 85% of their income?

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That's just what the liberal elitest want you to think.

Besides... Reagan won WWII, and don't tell me that the dates don't add up because they do in my history book.

1. Germany took off economically when restrictions on their industrial complex were lifted.

2. Marshall Plan in terms of effectiveness has been much debated; and the long-term ramifications of the Plan (in terms of policy formation) have not been positive.

3. Japan grew without any sort of Marshall Plan intervention. Japan cut taxes and encouraged spending yes, but they also pushed their manufacturing industry.

4. Post-WWII the US had a massive industrial and production complex that could be harnessed; that does not exist today (because of the policies of free trade).

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Originally Posted by admiralsnackbar

Trust me... I know it can. Ever been to Mexico? :lol

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First off, they don't have the same degree of government as we do across their country, they have an income tax, 35% corporate tax, and 16% sales tax. Our businesses have more accountability. If a large influx of people started going to a warehouse size store, it would be found. The black market saves the corporate and sales rates. If we have no corporate tax, the consumption tax wouldn't be large enough to make a large black market viable.

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Originally Posted by Drachen

Edit: 98.5% actually. My only concern is how the Federal Government would continue to operate when the economy goes into recession and there is no consumption to tax?

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That is how governments hurt the economy. They increase tax rates when if anything, tax rates need to be temporarily reduced. Take more money from those who earn it, and now you have even less consumption yet. Right now, we have an indirect consumption tax. We consume goods, profits are made, and revenue comes from those profits. Either way, no consumption = no revenue.

I have always maintained that the government should not run a deficit except during wars or recessions. That is when we can either print more money or borrow.

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Originally Posted by L.I.T

3. Japan grew without any sort of Marshall Plan intervention. Japan cut taxes and encouraged spending yes, but they also pushed their manufacturing industry.

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The Korean War helped quite a bit.

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Originally Posted by L.I.T

1. Germany took off economically when restrictions on their industrial complex were lifted.

2. Marshall Plan in terms of effectiveness has been much debated; and the long-term ramifications of the Plan (in terms of policy formation) have not been positive.

3. Japan grew without any sort of Marshall Plan intervention. Japan cut taxes and encouraged spending yes, but they also pushed their manufacturing industry.

4. Post-WWII the US had a massive industrial and production complex that could be harnessed; that does not exist today (because of the policies of free trade).

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5. Throughout history, Japan, Taiwan (Hong Kong), Korea, China, etc have prospered as we started letting them manufacture goods for us. All these decades, the USA's average citizens have been falling behind. We continue to lose manufacturing jobs and our supply and demand of the skilled working class continues to lower real wages.

They tax consumption, we tax production. US goods effectively get taxed twice, imports goods effectively zero. We need to stop taxing production, and set a level playing field in the global market.

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Originally Posted by ChumpDumper

The Korean War helped quite a bit.

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That it did. But, they also implemented protectionist economic policies...ironically modeled after the American System based on Hamiltonian economics and Abraham Lincolns policies.

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Originally Posted by Wild Cobra

5. Throughout history, Japan, Taiwan (Hong Kong), Korea, China, etc have prospered as we started letting them manufacture goods for us. All these decades, the USA's average citizens have been falling behind. We continue to lose manufacturing jobs and our supply and demand of the skilled working class continues to lower real wages.

They tax consumption, we tax production. US goods effectively get taxed twice, imports goods effectively zero. We need to stop taxing production, and set a level playing field in the global market.

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Picking up from the quote above, I find it seriously ironic that as the US abandoned the economic system (in the 1970s) that drove them to prosperity (Hamiltonian economics/American system) in favor of free trade, Asian countries (and lately the prosperous developing nations) studied the American School and adopted it to their use.

From national experience here, in the early 1990s the Philippines adopted freely the free trade system and subsequently our manufacturing sectors collapsed. Other nations, like Japan/Korea/Malaysia, maintained Hamiltonian policies and have remained fairly stable economies.

On the bright side, for the US, they still have that massive productivity edge, so it's just a matter of them harnessing it.

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Originally Posted by L.I.T

On the bright side, for the US, they still have that massive productivity edge, so it's just a matter of them harnessing it.

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Would you agree or not that overhauling our tax system from productivity based to consumption based would improve the number of our manufacturing industries?

I am a firm believe that we can compete in the global market with such a change.

Do conservatives support the GI Bill? Just curious.

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Originally Posted by LnGrrrR

Do conservatives support the GI Bill? Just curious.

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I'm sure people on both sides do. I don't know the details, I have never used any of the services available. If you would like my comment on a specific aspect of it, this could make an interesting new thread. Just give me a program specific I can look up rather than the whole thing. I'll bet I will be for some aspects, but not others.

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Originally Posted by Wild Cobra

I'm sure people on both sides do. I don't know the details, I have never used any of the services available. If you would like my comment on a specific aspect of it, this could make an interesting new thread. Just give me a program specific I can look up rather than the whole thing. I'll bet I will be for some aspects, but not others.

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Hmm... good idea. I'll look at posting the new GI Bill that got approved a year ago or so.

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Originally Posted by LnGrrrR

Do conservatives support the GI Bill? Just curious.

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Why wouldn't we?

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Originally Posted by DarrinS

Why wouldn't we?

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Technically, I guess you could call it an entitlement program, since taxpayer money is used to fund it. *shrug*

I wasn't trying to start something; I was just genuinely curious if any conservatives were against it.

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Originally Posted by LnGrrrR

Technically, I guess you could call it an entitlement program, since taxpayer money is used to fund it. *shrug*

I wasn't trying to start something; I was just genuinely curious if any conservatives were against it.

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"Provide for the common defense"


And I wouldn't equate the GI bill with welfare. The recipient has to make a sacrifice to their country to get it -- they have to do something more than fog up a mirror.

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Originally Posted by DarrinS

"Provide for the common defense"


And I wouldn't equate the GI bill with welfare. The recipient has to make a sacrifice to their country to get it -- they have to do something more than fog up a mirror.

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I agree Darrin except I think some veterans get too good a deal who may have only served a term and got out. I am all for the benefits for those who stayed in during possible military actions, and through military actions that still served honorable. I just have a feeling some get far better than they should, but i don't know enough detail either.

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Originally Posted by DarrinS

And I wouldn't equate the GI bill with welfare. The recipient has to make a sacrifice to their country to get it -- they have to do something more than fog up a mirror.

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I certainly find it useful myself! I already get TA from the Air Force... working on my degree, slowly but surely. And if I finish my Master's while I'm in, I believe the new GI Bill allows you to transfer it to your children.

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Originally Posted by LnGrrrR

I certainly find it useful myself! I already get TA from the Air Force... working on my degree, slowly but surely. And if I finish my Master's while I'm in, I believe the new GI Bill allows you to transfer it to your children.

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You can transfer whatever funds you don't use?

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Originally Posted by DarrinS

You can transfer whatever funds you don't use?

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I think that's true, and was intended because too often, military personal become too busy to use that benefit. Stying in the service they also have a hard time putting their kids through college. I have no problem if they make the military their career, but if they only serve a term or two, I say they have no reason not to use it themselves.

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Originally Posted by The Reckoning

WW2 industrialization

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This, plus the fact that there was so much pent-up demand in the U.S. after the war for durable goods and housing because people had actually been put to work during the war, earned money that they could not spend during the war, but were eager to do so after the war.

Plus, as someone else pointed out, the post-war world-wide reconstruction was primarily a boon to American trade, in part due to the Bretton-Wood deals in which America got better trading functions than Britain (including the re-focusing on American dollar as the primary trade currency rather than the British pound), which massively helped the American economy after the war and limited the British recovery to a slow crawl. The Americans insisted on the trade deals as part of the price of the lend-lease continuance after the War for Britain so that the British people wouldn't starve. The Brits were somehow less-than-impressed with the generosity of their 'ally'.

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Originally Posted by Wild Cobra

Would you agree or not that overhauling our tax system from productivity based to consumption based would improve the number of our manufacturing industries?

I am a firm believe that we can compete in the global market with such a change.

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I cannot speak specifically to the US situation (I am not as up-to-date on the complexities, but I will take a look), but I can speak from a policy perspective from this side of the pond.

We have had some success in reworking our domestic corporate tax structure vis-a-vis manufacturing and industry with some initial success. This has involved introducing economic zone-based tax and customs incentives (for importation of equipment and certain materials for assembly). The zones have been successful in maintaining domestic focused manufacturing in country. Another aspect of the zones is a dramatic short-term reduction in gross tax rates to help the businesses transition.

We have been experimenting with a VAT (on certain items, exempted necessities and medicines for the elderly) the last few years and in the period drew down personal and corporate tax rates. Later this year, the measures come up for re-evaluation. Superficially, they have helped increase stability in the corporate world and we were able to slide through the recent economic crisis relatively unscathed. Tax receipts also increased during the VAT period with no apparent negative social consequences.

This comes with some caveats though. We have a much higher recividism rate when it comes to tax evasion, and of course our poverty situation is strikingly different from yours. Along with our ever-present corruption issues.

The key component though that has yet to be addressed is the infusion of some protectionist policies into our trade framework. I believe that this, as opposed to internal subsidizing (outside of tax incentives) will help stabilize and develop local manufacturing and the agricultural industry (for an economy like ours they are twinned pillars).

The US has transitioned almost wholly to a service/consumption based economy though. I believe that they can recreate that manufacturing and industrial complex. To start though, they will have to revisit their free-trade policies; which I can tell you from personal experience with US ambassadors is not going to be easy. However, the US reversed long-standing trade policy in the 60s and 70s, so they can do it again. They have to allow manufacturing to re-develop: this will likely involve (as you say) rejiggering the tax structure; but again, I am not sure as to whether transitioning totally to a consumption based tax system is the solution.

What I would say is that the US will have difficulty recreating their manufacturing dominance. That being said, I think the US can, and should, refocus on "knowledge based manufacturing". As in software/computer-based technology that sort of thing. The US is still the unquestionable leader in innovation. The next step is making sure that the production stays within the US.

By the way, in the Philippines in terms of policy recommendations we've changed our focus away from income distribution (which ultimately fails as we've experienced time and again) to focusing on asset inequality and redistribution (but not in the socialist take from the rich give to the poor sense). Income distribution just doesn't capture a lot of the underlying problems. In relation to what we are focusing on here, this is not breaking down the top 1% of society, but figuring out ways to uplift the bottom 50% through targeted policies, education programs and cooperative programs.

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Originally Posted by Wild Cobra

5. Throughout history, Japan, Taiwan (Hong Kong), Korea, China, etc have prospered as we started letting them manufacture goods for us. All these decades, the USA's average citizens have been falling behind. We continue to lose manufacturing jobs and our supply and demand of the skilled working class continues to lower real wages.

They tax consumption, we tax production. US goods effectively get taxed twice, imports goods effectively zero. We need to stop taxing production, and set a level playing field in the global market.

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C'mon, W.C., the Japanese model was as successful as it was because we absolutely took over their country at the end of the war, refused them any expenditure for military (therefore not having to use up any of their GDP in military) goods/services, and we by God we most certainly did rebuild their economy. We didn't call it a Marshall plan but the American taxpayer most certainly paid for it.

Finally, the Asian economies are based on what in America would be called 'slave wages'. American labor unions prevent that from happening, and the difference in wage costs between America and Asia, or America and most third world countries, has as much to do with jobs moving overseas as any tax policy in the world.

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Originally Posted by EVAY

C'mon, W.C., the Japanese model was as successful as it was because we absolutely took over their country at the end of the war, refused them any expenditure for military (therefore not having to use up any of their GDP in military) goods/services, and we by God we most certainly did rebuild their economy. We didn't call it a Marshall plan but the American taxpayer most certainly paid for it.

Finally, the Asian economies are based on what in America would be called 'slave wages'. American labor unions prevent that from happening, and the difference in wage costs between America and Asia, or America and most third world countries, has as much to do with jobs moving overseas as any tax policy in the world.

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1. Don't overlook the effect of neomercantilist policies implemented in the 1950s and a shift to an export based economy on finishing off the rapid Japanese economic improvement

2. I am a little offended by the term slave wages. I think that is the first time I have ever heard poverty and suffering cast as competitive advantage. I cannot speak to other countries, but our economy is not based on "slave wages." You are overlooking the impact of free trade policies that have decimated this country. Prior to Martial Law in the 1970s-1980s our economy was second to Japan in per capita metrics. With the advent of free trade policies in the 80s and 90s our manufacturing and agricultural industries have subsequently collapsed.

Of course the first statement off the plane by the new US ambassador was praising our "free" relationship. A not so subtle dig, that I do not take kindly too. As I tried to explain the complexities of these situations are not just tax policy or trade policy related.

But I would please ask you to not refer to the impoverished as slaves. They already suffer enough indignities as it is and do not need to be spit on by those luckier than them in life.

As someone who has dedicated his life to education and economic advocacies to help the impoverished I do not take appreciate it as well.

And thank you for reminding me why I do not venture in the Politics Forum that much.

I doubt EVAY meant it as a dig, LIT. The scare quotes may have been intended to highlight the dodginess of what for better and for worse is a commonly used cliche'.

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Originally Posted by L.I.T

1. Don't overlook the effect of neomercantilist policies implemented in the 1950s and a shift to an export based economy on finishing off the rapid Japanese economic improvement

2. I am a little offended by the term slave wages. I think that is the first time I have ever heard poverty and suffering cast as competitive advantage. I cannot speak to other countries, but our economy is not based on "slave wages." You are overlooking the impact of free trade policies that have decimated this country. Prior to Martial Law in the 1970s-1980s our economy was second to Japan in per capita metrics. With the advent of free trade policies in the 80s and 90s our manufacturing and agricultural industries have subsequently collapsed.

Of course the first statement off the plane by the new US ambassador was praising our "free" relationship. A not so subtle dig, that I do not take kindly too. As I tried to explain the complexities of these situations are not just tax policy or trade policy related.

But I would please ask you to not refer to the impoverished as slaves. They already suffer enough indignities as it is and do not need to be spit on by those luckier than them in life.

As someone who has dedicated his life to education and economic advocacies to help the impoverished I do not take appreciate it as well.

And thank you for reminding me why I do not venture in the Politics Forum that much.

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I assure you that I, at least, in no way intend to refer to impoverished persons as slaves. In fact, LIT, the reason that the term 'slave wages' was put in quotes was precisely to make a distinction between people and the wages that they make, and moreover, the point was very clearly made that we were talking about a comparison to wages in the U.S., which are protected by unions. You may disagree with my position that labor rates in the U.S. put the U.S. in an unfavorable trade position relative to some of our trading partners, but that is quite different than accusing me of attributing 'slave' status to anyone in any country anywhere.


I am trying very hard myself not to get a bit bent by what some others might see as an almost intentional level of professional victimization here.

Perhaps easing up on yourself and others might enable less heartburn on your part in this forum.

Gee, BTW, should I also apologize for the fact that you took umbrage at the the percieved slight from the new U.S. ambassador's comments?

Anything else while I'm at it? I have pretty broad shoulders, I'm told.

How you can interpet "what in America would be called 'slave wages' " into a statement that people from another country are slaves is almost too precious.

There are those economists who contend that had FDR been willing to employ greater and sooner deficit spending, then the country would have come out of the Depression more quickly.

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Originally Posted by ploto

There are those economists who contend that had FDR been willing to employ greater and sooner deficit spending, then the country would have come out of the Depression more quickly.

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There are also those economists (like Krugman) who insist that it was FDR giving in to the deficit-reduction insistence in 1937 that allowed a tax increase that raised taxes and is generally assumed to be the reason that the economy slipped again before WWII start.

I mean, really, the people in Germany gave Hitler credit for stopping the Depression in Germany in the 30's, when it was all due to war-time preparation and spending. It was WWII spending and industrialization that got most all of us out of the Depression.


And by the end of the war, deficit spending was more than 100% of GDP in the U.S.

Back to the OP - just because it appears in the WSJ doesn't make it so.

Nuking Japan ended the depression. Or was that the war?

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Originally Posted by EVAY

I assure you that I, at least, in no way intend to refer to impoverished persons as slaves. In fact, LIT, the reason that the term 'slave wages' was put in quotes was precisely to make a distinction between people and the wages that they make, and moreover, the point was very clearly made that we were talking about a comparison to wages in the U.S., which are protected by unions.

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You may disagree with my position that labor rates in the U.S. put the U.S. in an unfavorable trade position relative to some of our trading partners, but that is quite different than accusing me of attributing 'slave' status to anyone in any country anywhere.

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Actually, the line you used was: "Asian economies are based on what in America would be termed "slave wages"."

The way I interpreted that was saying Asian economies purposefully maintain an extremely low wage structure vis-a-vis the US to create a competitive advantage. Which is untrue.

Within a US labor context the wage structure would appear to almost criminally, or exploitively, low. Within our context, they are. But, the economic and regional trade realities conspire to keep basic wages well-below international poverty lines. It is not purposeful, which is why I was thrown off by the term "slave". It is just part of the realities of a developing nation.

Surprisingly, within our economy many of those below the poverty line are successful micro-entrepreneurs. They have to venture into micro-enterprise because manufacturing/industrial wages are so low; precisely because of inefficiencies brought on by regional and global free-trade policies.

With regards to the US wage structure, that is at least partially or wholly made up by the US's world-leading productivity, high-levels of education, technology and technological expertise. Notice that Asian car manufacturers have been opening factories in the US: reversing that trend. Efficiencies in delivery as well are areas to explore. The US remains the premier consumer market; for certain Asian companies it only makes sense to build factories that allow quicker and cheaper delivery of vehicles. For Hyundai, it has proved cheaper than manufacturing in Korea and shipping final product to the US. The issue is creating an environment attractive to US companies to bring back manufacturing.

We also have issues with unions; however ours are much more radical in nature.

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I am trying very hard myself not to get a bit bent by what some others might see as an almost intentional level of professional victimization here.

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I don't understand. Certain nuances in the English language escape me. Who is being victimized?

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Perhaps easing up on yourself and others might enable less heartburn on your part in this forum.

Gee, BTW, should I also apologize for the fact that you took umbrage at the the percieved slight from the new U.S. ambassador's comments?

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1. I was referring more to myself with regards to why I don't comment to much in the Political Forum: I've noticed that conversations/threads have a way of being quickly derailed. As just occurred with my comment. Apologies if that was not clear.

2. With regards to the new Ambassador, that line probably was a bit confusing. The prior US representative had opened a dialogue concerning dismantling certain domestically (Philippine side) trade policies to allow us an easier hand at improving the industrial and agriculture sectors. However, within the first lines of his welcome remarks the new Ambassador has already indicated that the US will be focused on maintaining those trade policies. So, yes, within that context I was piqued with the US stance (as the US is our largest trading partner and closest international ally).

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Anything else while I'm at it? I have pretty broad shoulders, I'm told.

How you can interpet "what in America would be called 'slave wages' " into a statement that people from another country are slaves is almost too precious.

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Never been called precious before. Thanks.

By the way, I did give an explanation (my work) so you could understand why I might react to the term "slave".

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Originally Posted by L.I.T

Actually, the line you used was: "Asian economies are based on what in America would be termed "slave wages"."

The way I interpreted that was saying Asian economies purposefully maintain an extremely low wage structure vis-a-vis the US to create a competitive advantage. Which is untrue.

Within a US labor context the wage structure would appear to almost criminally, or exploitively, low. Within our context, they are. But, the economic and regional trade realities conspire to keep basic wages well-below international poverty lines. It is not purposeful, which is why I was thrown off by the term "slave". It is just part of the realities of a developing nation.

Surprisingly, within our economy many of those below the poverty line are successful micro-entrepreneurs. They have to venture into micro-enterprise because manufacturing/industrial wages are so low; precisely because of inefficiencies brought on by regional and global free-trade policies.

With regards to the US wage structure, that is at least partially or wholly made up by the US's world-leading productivity, high-levels of education, technology and technological expertise. Notice that Asian car manufacturers have been opening factories in the US: reversing that trend. Efficiencies in delivery as well are areas to explore. The US remains the premier consumer market; for certain Asian companies it only makes sense to build factories that allow quicker and cheaper delivery of vehicles. For Hyundai, it has proved cheaper than manufacturing in Korea and shipping final product to the US. The issue is creating an environment attractive to US companies to bring back manufacturing.

We also have issues with unions; however ours are much more radical in nature.



I don't understand. Certain nuances in the English language escape me. Who is being victimized?



1. I was referring more to myself with regards to why I don't comment to much in the Political Forum: I've noticed that conversations/threads have a way of being quickly derailed. As just occurred with my comment. Apologies if that was not clear.

2. With regards to the new Ambassador, that line probably was a bit confusing. The prior US representative had opened a dialogue concerning dismantling certain domestically (Philippine side) trade policies to allow us an easier hand at improving the industrial and agriculture sectors. However, within the first lines of his welcome remarks the new Ambassador has already indicated that the US will be focused on maintaining those trade policies. So, yes, within that context I was piqued with the US stance (as the US is our largest trading partner and closest international ally).



Never been called precious before. Thanks.

By the way, I did give an explanation (my work) so you could understand why I might react to the term "slave".

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The critical part of your answer was that you 'assumed' what was intended.
You assumed incorrectly, and then went off on a tear about all the slights you perceive to have occurred.

You, my dear, are the one assuming the role of victimization by being so easily offended that someone who refers to 'slave labor' wages (and does so specifically in reference to the U.S. wage structure) is calling the people who toil in that environment to be slaves. Do you imagine that someone who has always lived in America has never committed themselves to eradicating ignorance or generally trying to 'uplift' the lives of others? Or that your unique experience leaves everyone else less committed to the welfare of others?

Slave wages can and are paid to people who are not slaves. That has been true in many instances, beyond the Phillippines.

By the way, being 'precious', is a term often used by people in England to refer to someone who too easily sees malintent where none is given. As you did. I lived there for a while and picked it up. It seemed apt.

Slaves and slave wages are very different realities in America.

For example, graduate students in the U. S. are often paid 'slave wages'. I was one for a lot of years, and certainly never considered myself a slave. I did, however, consider many of my major professors to be 'slave-drivers.'

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Originally Posted by EVAY

The critical part of your answer was that you 'assumed' what was intended.
You assumed incorrectly, and then went off on a tear about all the slights you perceive to have occurred.

You, my dear, are the one assuming the role of victimization by being so easily offended that someone who refers to 'slave labor' wages (and does so specifically in reference to the U.S. wage structure) is calling the people who toil in that environment to be slaves. Do you imagine that someone who has always lived in America has never committed themselves to eradicating ignorance or generally trying to 'uplift' the lives of others? Or that your unique experience leaves everyone else less committed to the welfare of others?

Slave wages can and are paid to people who are not slaves. That has been true in many instances, beyond the Phillippines.

By the way, being 'precious', is a term often used by people in England to refer to someone who too easily sees malintent where none is given. As you did. I lived there for a while and picked it up. It seemed apt.

Slaves and slave wages are very different realities in America.

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I believe I struck a chord, my precious dear.

And just to clarify, no I do not think that vis-a-vis all Americans. Curious, how you glossed over the explanation and went straight to the emotionality.

I explained that the line conveyed that Asian countries base their economies on slave wages to maintain competitive advantage. We do not. Your explanation makes sense. However, the initial line did not.

Sounds like a classic case of miscommunication.

Start over, LIT. EVAY isn't your enemy here. You guys can get past this. Terminology is a bitch. Maybe this fight isn't very important. If you and EVAY can't reason together, I doubt you have much business here.

Just my opinion, right?

Look at my post count. If you and EVAY can't get along, i might give up entirely.

No worries Winehole23.

Looking over the initial comments I think it was a classic case of miscommunication.

My apologies to EVAY for imparting a different meaning that what was intended. :toast

Online conversation can be tricky. It could happen to anyone. It has happened to me many times.