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More Right Wing Lies – Now As In The Roaring 20′s

Amity Shlaes, the disinformation bunny, is still going.  In the latest issue of Imprimus, a publication of Hillsdale College, is a transcript adapted from a recent talk she gave there during a conference on the Income Tax, sponsored by Hillsdale’s own Center for Constructive Alternatives and the Ludwig von Mises Lecture Series.  Right away, you know this is going to be good.  The Title of her contribution is Calvin Coolidge and the Moral Case for Economy.  Of course, by economy, she means austerity.

There is so much wrong here it’s both impressive and depressing.  Rather than give her the full FJM treatment, which would take more time and energy than she deserves, I’ll just hit on a couple of the lowlights.  Here is her opening paragraph.

With the Federal debt spiraling out of control, many Americans sense an urgent need to find a political leader who is able to say “no” to spending.

Here we go. Her first sentence is an exercise in made-up right-wing talking point mythology.  I’ve already exploded the ‘Obama is a profligate spender” myth, here, here, and here. Further, we have just lived through three years when federal spending was close to flat line, as Graph 1 shows.  

 Graph 1 – Flat Federal Spending Under Obama 

There is only one comparable period in post WW II history, 1953-56, during Eisenhower’s first term, as shown in Graph 2.   Still, over Ike’s full term, spending grew by about 30%.

 Graph 2  Not So Flat Spending Growth Under Eisenhower (’53-’60)

To suggest that federal dept is now  “spiraling out of control” due to excessive spending is not merely disingenuous.  It is a sign that either Shlaes has no earthly idea what she’s talking about, which in an alleged journalist, is unforgivable, or it’s a bare-faced lie, which is unforgivable for anybody.  And if many Americans are feeling the urgent need to curtail government spending, it’s because they have been lied to so repeatedly and often that they have no idea what the truth is.  As Krugman recently put it: “And I have to say, it’s extremely telling that conservative Republicans don’t seem able to make their case without resorting, right from the beginning, to obviously dumb fallacies.”  The truth is that if we have a debt problem, it is due to a shortfall in revenues.

Yet they fear that finding such a leader is impossible.

Its not clear who made Shlaes the spokesperson for this sorry, disenfranchised segment of the population, nor that this is indeed what they fear.  Perhaps we should introduce Shlaes and the rest of these Real Americans to the real President B. Hoover Obama.

Conservatives long for another Ronald Reagan.

This is probably correct, though as Shlaes goes on to demonstrate, conservatives in this way – and, alas, right-wingers almost always – are rather badly disconnected from reality.

He was of course a tax cutter, reducing the top marginal rate from 70 to 28 percent.  But his tax cuts – which vindicated supply side economics by vastly increasing federal revenue – were bought partly through a bargain with Democrats who were eager to spend that revenue.

Wrong again.  The reality is that Revenue growth under Reagan was the worst of any 20th century President, post Eisenhower, except for the unfortunate Bush, Sr. under who’s recession plagued regime Reagan’s buzzards came home to roost. And was it really the Democrats who spent that anemic revenue stream, or did it go to Reagan’s Star Wars fantasy?

Reagan was no budget cutter.  In fact, the federal budget grew over a third during his administration.

Here, she finally gets something right, if by “federal budget” she means Total Outlays, and by “over a third” she means over 80%  [as measured from 1980 to 1988.]

Things get really egregious further on in the section titled “The Purpose of Tax Cuts.”  She informs us that President Coolidge and Treasury Secretary Andrew Mellon campaigned to lower top rates from the 50′s to the 20′s.

Mellon and Coolidge did not win all they sought.  The top rate of the final law was in the forties.  But even this reduction yielded results – more money flowing into the treasury – suggesting that “scientific taxation” worked.  By 1926, Coolidge was able to sign legislation that brought the top marginal rate down to 25%, and do so retroactively.

I was surprised to learn that Coolidge and Mellon had anticipated the Laffer curve by 6 decades.  Let’s have a look at how more money flowed into the treasury. In 1922 and ’23, with a top marginal rate of 56%, tax revenues were $2.23 and 1.69 billion respectively. [Per FRED, 1923 was a recession year]  In 1924, with a top rate of 46%, total revenues were $1.79 billion.  This is what Shleas calls “more money flowing into the treasury.”  Here’s a bigger picture look.  In 1920, when the top marginal rate was 73%, receipts were slightly over $4 billion.  In 1925, when the top marginal rate was 25%, receipts were $1.7 billion, less than half of the 1920 value, and by 1929 had only increased to 2.23 billion.  Graph 3 shows revenues per year [Coolidge's term highlighted in red,] and belies Shlaes’ assertion.

 Graph 3 Income Tax Revenues, 1915-1930

Graph 4 shows a scatter plot of this same data, with revenues as a function of top marginal rate, Coolidge years are again highlighted in red.

Graph 4 Top Marginal Rate and Tax Revenues, 1915-1930

A best fit straight line is included.  There’s lots of scatter, for a variety of reasons, but the upward trend – the exact opposite of Shleas’ assertion, is obvious.

So here’s the reality.  A decade of tax cutting and deregulation led us into the Great Depression, the worst economic collapse of the 20th century. [You might note that the following decades of high tax rates and robust regulation were free of these horrible events.]  And what happened most recently?  A decade of tax cuts and deregulation – the end game of three decades of this supply-side approach – led to the greatest economic collapse since the Great Depression.  Significantly, the major deregulations of big finance, including the repeal of Glass-Steagall came at the end of Clinton’s term, less than a decade prior to the financial melt down.  Last Friday on his radio show, Thom Hartmann pointed out that prior to the regulations put in place in the 30′s, the U.S. had never gone for more than 15 years without a major financial collapse.  So this result should have been expected.

The extraordinary thing isn’t that right wingers lie.  The simple reality is that they can’t make their case without lying, because it has no merit.  The extraordinary thing is that their lies are so easily rooted out and refuted, in the era of free and easily accessible information, but so few people will take the required few minutes to go ahead and do it. Sadly, whenever the truth comes up against a cascade of lies, the liars have a significant tactical advantage

Shlaes’ presentation is just one more manifestation of the right wing ploy of denying reality.   Sadly, it works, because you really can fool a lot of the people a lot of the time.

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Graph That Explains Everything About Amity Shlaes

by Mike Kimel

Thanks to Linda Beale, I headed over here:

The George W. Bush Institute announced today that Amity Shlaes has been named director of the 4% Growth Project, a key part of the Institute’s focus on economic growth. Miss Shlaes will open the project’s office in New York. The aim of the project is to illuminate ideas and reforms that can yield faster, higher quality growth in the United States, and to underscore the importance of growth in America’s future. Part of that work involves finding ways to make growth and economics generally accessible to more Americans, especially younger Americans. The program will conduct and sponsor research on all aspects of economic growth, host conferences, as well as partner with other institutions in such endeavors.

The following graph, I think, illustrates you need to know about Amity Shlaes:

OK. I lied. The graph is actually missing something. See, we only have official data going back to 1929. And the Great Depression began very, very early in Hoover’s term. And Hoover had been a cabinet secretary under Coolidge, and ran for office under a platform which essentially called for continuing Coolidge’s policies. And Shlaes’ forthcoming book is in praise of Calvin Coolidge. It should be noted that the economy was in recession during over 38% of the months in which Coolidge took office, which makes much of the Coolidge era a dry run (so to speak) for the monster that would come in 1929.

Put another way… Shlaes is part of a movement to praise policies responsible for a lousy economy culminating in the Great Depression (i.e., those of Coolidge and Hoover). Shlaes is also part of a movement to praise the policies responsible for a lousy economy culminating in the start of the Great Recession and the mess we’re in today. (Yes, the Great Recession started in 2007, and no, Obama hasn’t made any substantial changes on taxes or regulation from the way GW Bush ran the country.) Conversely, Shlaes is a well-known critic of the policies that produced the fastest period of peace time economic growth this country has seen.

To me this feature of economics is kind of odd. For some reason, policies that have failed spectacularly over and over continue to have adherents. Policies that have worked spectacularly have critics. Debating the merits of a cavalry charge into the teeth of an armored column was barely excusable in August of 1939, but at least that debate was put to a rest by the German blitzkrieg. Its been generations since anyone argued that horsemen can go toe to toe with tanks.

Which leads me to a hypothetical. Say we lived in a parallel universe where Shlaes was a quisling, a real villain whose goal was to harm this country as much as she could by convincing the nation to commit economic suicide. How would the graph above and the two paragraphs that followed it look any different?

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Amity Shlaes: Sarah Palin with puffed up academic credentials

by divorced one like Bush

Professor Krugman has been having problems with a person named Amity Shlaes. Well, actually he’s having a problem more with what she is professing. Amity is talking about The Great One’s relationship to today’s sickly economy and prescribing a plan of treatment. Doctor Krugman is noting the errors in Amity’s examination findings and her plan of treatment. All I can say is, Paul, you’re arguing with Sarah Palin here. Amity’s not even a nurse, never mind a doctor. Let me expound.

Here is an article of Amity’s from 12/20/01 suggesting what is need to fix the sickly economy then:

The result of this labour flexibility is that the US has been able to sustain productivity growth at the outset of recession, something of which virtually no other developed economy is capable. Because US laws make it relatively easy to dismiss workers, companies do not have to waste negotiating time or cash on buying workers out of contracts.
When recovery does come, they will have more cash to invest. Because Ford can lose workers, it can also afford to bid for market share by selling cars interest-free. What is more, there will also be cash in the till with which to rehire workers.
There are lessons in this picture for all three countries. For the US, the message is: do not do anything to disturb the dynamism of the labour force. This means that the well intentioned plan to expand benefits for the unemployed in “economic growth and security” legislation is wrong-headed. For while nationally subsidised unemployment schemes may not target specific companies, they do throw sand into the gears of dynamic economies.
For Germany, or Japan, the message is: freer labour policies are crucial to future growth.
It is an old truth but worth remembering: “hire and fire” also means “fire to hire”. The best insurance for growth is creating a culture where workers believe that spring will come and, with it, a new job.

Hire and fire also means “fire to hire”? “You gotta be cruel to be kind in the right measure, cruel to be kind it’s a very good sign…”

In Amity Shlaes bio it is reported:

…2003, she spent several months at the American Academy in Berlin as the JP Morgan Fellow for finance and economy.

Here is the J.P. Morgan Fellows program:

The J.P. Morgan Fellows Program was established in 1996 to promote diversity in graduate business schools and in the Investment Bank. The Program provides half-tuition scholarships for up to 10 first-year MBA students at five of the United States’ top graduate business schools.

Now, this is very interesting in that wikipedia notes:

Shlaes graduated from Jonathan Edwards College, Yale University magna cum laude[1] with a bachelor’s degree in English in 1982 (with reference to Yale alumni directory)

Her bio does not mention this bit of education. It mentions nothing related to college at all! Nor does her bio at the Council on Foreign Relations
mention anything more than being an adjunct professor at NYU’s Stern School of Business. Yet, her career is full of editing jobs. So, is she teaching business? History?

Thus, we have a bachelor’s in english (obviously academically capable) receiving a fellowship for MBA students at the top business schools being used for a trip of “several months” to an academy for promoting German/American bonding. Via Source Watch:

The Academy’s web site states that it “presents an English-language public program at the Hans Arnhold Center [each semester]. The program is designed to present the work of fellows both to colleagues and interested members of the public …

The Academy’s fellowship is only one semester and “occasionally” a full year.

To be fair, at her book page it does state that her first book, the subject of which was Germany came about from her “studying and working in Germany starting in the fall of 1982.” It just does not describe the studying and working. Her bio at the CFR states she worked for the WSJ/Europe from 1986 to 1990 as the Editorial Features Editor.

The question: Is a bachelor’s in English with a lot of editing work experience editing editorials enough to get an MBA related fellowship to an Academy that gives English speaking lectures which then qualifies you to be a respected commentator of worldly proportions regarding today’s economic crap all put into an historical perspective? Not really, but…

I’ll accept a self taught historian, a self taught economist, but just as I’m a self taught guitarist of 40 years, I’m considered an amateur as should she be. There is nothing in Amity’s bio that suggests that all the honoraries she has received, both in job and awards, are related to anything more than the fact that she is very good with English language. She was an English major, she writes and reviews writing for God’s sake. Though, even in all of that writing there is no list of authorship within peer reviewed journals. None. So, how accurate is it to state at her bio page of the CFR this:

Expertise: Germany; Russia; history; economics; U.S. tax policy; relative competitiveness.

Is this expertise bestowed by peers in these subjects or is it expertise based on editing authorship of these subjects?

Professor Krugman, that’s it.

Here is thus the problem for Professor Krugman and anyone that is trying to correct the errors of Amity’s ignorance of her subject matter: You are arguing with Sarah Palin, the republican version of the valley girl voicing in a republican valspeak.
It’s the republican “brand”.

If there are poster children for the republican Stepford Wives
machine these 2 women are it. They are manufactured women for a specific male need.

Don’t believe me that we are dealing with 2 of the same? Then listen to the following with your eyes closed and tell me you do not hear Sarah in Amity’s speech, mind you, with more polish as one would expect from an English major. You do have to get to the points in the programs to where she is feeling comfortable.
Like this presentation with Charlie Rose. Go to 6:15 and start listening. Let it roll to the end of her answer.

There is this one which is what keyed me to this thought for today. I was eating breakfast yesterday morning with Cspan on. Catch her as she talks about Krugman at 2:50, but dig her talk regarding Hoover at 6:50. Can you handle that laissez-faire pronunciation? Did you catch the “aught not”?

Finally, this July 27, 2007 lecture, Foundation for Economic Education: Manipulating America. She starts speaking after the intro at 2:40. Listen for about 2 minutes.

Now here is Sarah’s acceptance speech.

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