Wednesday, October 27, 2010

Was the New Deal Responsible for American Prosperity?

Harold Meyerson makes the case:

"In fact, the New Deal order produced the only three decades in American history -- the '50s, '60s and '70s -- when economic security and opportunity were widely shared. It was the only period in the American chronicle when unions were big and powerful enough to ensure that corporate revenue actually trickled down to workers. It marked the only time in American history when, courtesy originally of the GI Bill, the number of Americans going to college surged. It was the only time when taxes on the rich were really significantly higher than taxes on the rest of us. It was the only time that the minimum wage kept pace (almost) with the cost of living. And it was the only time when most Americans felt confident enough about their economic prospects, and those of their nation, to support the taxes that built the postwar American infrastructure."

I'm not so certain about cause-and-effect here. Meyerson notably omits that three decades he cites above were when the United States had a head start on the rest of the world that either had been devastated by World War II (Western Europe) or wasn't positioned for economic growth (Eastern Europe). Prosperity is easy to come by when you're the only guy on the block capable of making things.

That said: I agree with Meyerson that it's shameful that America's economic gains during the last 30 years have accrued almost entirely to the rich. And I realize that an 800-word column isn't the place to do extended economic analysis. But I suspect that the prosperity of mid-century America was about more than high tax rates for the wealthy.

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