Severe economic downturn could bring 1930s-style reform

Associated Press / Wall Street Journal

[LS]

We just disagree over the usefulness of tariffs, though you never once came to grips with my political favoritism arguments, which, for the most part, do not exist with a flat tax. Land sales DO NOT run out, because in theory as (government) land becomes more scarce, price goes up. But I can't imagine the government, with its bloated land appetite, "running out" of land through sales in the near future.

[LS]

Fine. We disagree. Every time your system has been tried, it produced disruption, depression, and internal dissention. When free markets are tried, they produce wealth.

[Willie Green]

Fine. We disagree. Every time your system has been tried, it produced disruption, depression, and internal dissention. When free markets are tried, they produce wealth.

My approach is to restore free markets and wealth production internal to our borders.

Your approach leaves the more oppressive forms of domestic intervention intact.

[Willie Green]

Land sales DO NOT run out, because in theory as (government) land becomes more scarce, price goes up.

Incorrect analysis.
Price remains stable with the real estate market in general as government land sales must compete with private land sales. In fact, release of large tracts of government land into the market may actually depress local, private real estate values under certain conditions.

[LS]

That didn't seem to bother Jefferson. The government should sell land---that should be a major form of income. A flat tax is the next preferale form. A tariff is the worst.

[LS]

There is no such thing as "wealth" confined within borders. Money goes where it is wanted and stays where it is cherished, and NO laws can force it in or take it out. The Spanish mercantilists found that out, as did we in the Great Depression.

[FITZ]

This country wont survive a major depression like the 30's.

I don't see how it could. There would be major rioting and violence if millions of people living off government programs see their welfare checks or food stamps cut back. I don't see how taxpayers in a depression could continue to pay for these many programs and the so-called poor in this country feel they are entitled to the good life no matter what.

[FITZ]

There is no such thing as "wealth" confined within borders.

Maybe not now after globalism but before there were third world countries where people lived in poverty and the US and some others where people lived much better.

[Willie Green]

Money goes where it is wanted and stays where it is cherished, and NO laws can force it in or take it out.

LOL! Taxes have a significant effect where money flows.
Money flees away from high taxation.
To outright deny that is absolutely absurd.
Raising tariffs and lowering other forms of internal taxation will increase the propensitiy for money to be retained and invested domesticly, where it is "cherished". Furthermore, lower internal tax rates would also attract more foreign investment into our domestic economy.

[LS]

Lower internal tax rates will not attract money if the products that are made are themselves taxed---if not by us as export taxes (prohibited in the Constitution) then as tit-for-tat from foreign governments when we impose tariffs. NO TARIFF is "free." Every tariff comes with foreign reciprocity. No sooner did Hawley Smoot go up than every country in Europe raised their tariffs to compensate, and prices on ALL goods for all consumers went up; sales went down; unemployment went up.

When I said that laws can't control money, I mean that you can pass all the tariffs you want, but money will flow right around them into other countries (without those barriers), into offshore "duty free" areas, into smuggling, and, most likely, into internet/electronic forms which can evade taxation. Of course laws INFLUENCE where money goes, and taxes do that all the time. But a tariff IS a tax. A bad tax, and a politically-oriented tax.

[LS]

Yes, but you make my point exactly. Forget globalism crap: poorer countries do not attract wealth. Why? Because they are poor? No. They are poor because of policies that chase wealth away---confiscation by governments, high taxes, import tariffs, corruption at the top levels, and instability in government.

That is the main reason we are rich and they are poor. Name me one poor country that has, substantially, a free market and open, genuine two-party (or more) democracy, and the rule of law. You can't, because there aren't any. However, you can find plenty of rich countries that are fairly repressive politically but still respect private property rights (Korea, Taiwan, for ex.)

[AAABEST]

You're right, tariffs are the stupidest thing in the world.

All they acomplish is not letting individuals and businesses get a superior product at a better price.

[Willie Green]

-if not by us as export taxes (prohibited in the Constitution) then as tit-for-tat from foreign governments when we impose tariffs. NO TARIFF is "free." Every tariff comes with foreign reciprocity.

I can't figure out why you'd interject some idiocy about "export taxes" into the discussion.
As you say, they're prohibited by our Constitution and don't even merit mention.

I disagree that tariff's are met with reciprocity, especially revenue tariffs (which are an indiscriminate, uniform, flat rate on ALL imports).

But if foreign nations choose to "retaliate", so what? They're sovereign nations with every right to establish their own tax policies as they see fit in their own self-interests and that of their citizenry.

In fact, I think Commodore Matthew Perry should be vilified for steaming into Tokyo Bay and demanding that Japan open their market to trade at gunpoint. That's the behavior of a gangster, mobster, organized crime, the Mafia. No nation should be forced to trade if they don't want to.

Frankly, I'm glad our Constitution prohibits taxation of exports. Our merchants should be free to trade abroad if they so please. And I have no problems if our government sends out the Navy to protect peaceful merchants from the thievery of pirates on the high seas, etc. But that's where our Constitutional jurisdiction ends, merchants should be on their own when dealing within the sovereign jurisdiction of foreign nations.

We have our set of rules, they have theirs. No problemo.

[bimbo]

Back then we were a MORAL people as a whole. Today ? Revolution and civil war would engulf this country like an FAE explosion.

And back then, people trusted their elected officials to "do the right thing" for the country ...

[Aarchaeus]

In a nutshell: Increase of government control.

[LS]

Quite the contrary, every piece of evidence we have is that PROTECTED goods are the least competitive, worst goods. American steel did not get competitive, under Carnegie, until the tariffs were gone. Chrysler---now there is a real success story with tariffs. Remember the K-car? Harley Davidson is a somewhat different example, but it hardly is anything more than a niche product.

Nope, tariffs always were, and always will be, bad. Hamilton was right on a great many things, but not these.

[MARTIAL MONK]

To detour back on the thread a bit. . .

What was the real effect of the 1930's dam projects? Hoover had it's genesis in the 1903 Imperial Valley flooding. The government later realized that a flood control project could be self-financing through water/hydroelectric contracts. The dam was really a 1922 project which happened to be built in the 1930s. It was not a WPA project.

It was designed to be a quasi-public project ala The Salt
River Project. The Federal Government was the only entity which had the capacity to capitalize the $50 million cost of the project. That is not to say that the dam would not or could not have been built in 1941, 51, or 61 with private capital.

There were immediate benefits to a localized area but are those benefits outweighed by the forced confiscation of $50 million from the general market? Also the division between public and private was breached. The numbers eventually made sense in this case but it opened the door to other projects which were not as fiscally sound. Essentially the government was running parallel to and often disguised as a private entity.

I think the cost of Hoover Dam has to include the cost those unsuccessful projects which were rammed through because Hoover was sucessful. There will always be conflict in public and private projects because the underlying economic foundations are so radically different. Klamouth Basin is a good example. Property rights to the water and contracts aren't worth a hoot because the controlling entity is the government.

Despite the tangible successes of Hoover, the intangible costs may have made it a poor bargain.

[LS]

I am from Arizona. One of the WPA projects built in 1934 was Mill Avenue Bridge, which, in the 1970s when we had MASSIVE flooding that took out every other "modern" bridge, was the only one to remain.

I'm not saying every New Deal project was worthless, nor done poorly---many were exemplary. Dayton still has WPA sidewalks downtown, for example. BUT, as you say, let's regress: the point of the thread and the argument was that the New Deal prolonged the Great Depression in numerous ways. 1) It took private capital out of circulation. Although public projects were built, these ALWAYS came in lieu of other, private spending likely on other things. What things? We don't know---but that is the beauty of the market. Just for the hell of it, say that the money that went to Hoover and other Dams went to better air transportation, and that as a result something of a "boom" in air travel started in the late 1930s as opposed to early 1960s due to lower prices. Imagine, then, that due to that "boom," our Army Air Corps had more modern and efficient planes in 1941, and thus, let's say, WW II ends a couple of months sooner. All hypothesis, but the single fact of free market economics is that when the government is spending the money, the people aren't and a great deal gets wasted in the process.

Second, the argument was that the government via the Fed's massive deflation, even before 1929, and the high taxation, combined with the evil effects of Hawley Smoot (some economists think 5% of GNP after accounting for deflation), absolutely crushed any hope of recovery.

Third, acts such as Glass Steagall turned out to be both WRONG-HEADED and passed based on the WRONG lessons. The "securities affiliates" in fact strengthened the banking system by introducing diversity---another new study just out proves this yet again, as if there was any doubt. The min-wage law likely stopped cold a consistedn drop in unemployment prior to that law taking effect.

So I won't argue with you that some Hoover/New Deal programs didn't have temporary, or even long lasting benefits of some type---but at what cost?