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Krugman channelling his inner Piketty. They're not wrong though. The greatest growth did come when there was the least inequality, and the gilded age wasn't e

by Mikeb85 11y ago

Krugman channelling his inner Piketty. They're not wrong though. The greatest growth did come when there was the least inequality, and the gilded age wasn't exactly a time of phenomenal economic growth...

randyrand 11y ago
There was equality but not mandatory equality. There is an important difference.
- Mikeb85 11y ago
  Not actually true. Tax rates on high incomes were much, much higher in the 1950s and 1960s. http://www.businessinsider.com/history-of-tax-rates-2012-5 http://www.businessinsider.com/history-of-tax-rates-2012-5 http://s158.photobucket.com/user/OnlyObvious/media/Tax_Rates/TopTaxBracket_TaxRate.jpg.html http://s158.photobucket.com/user/OnlyObvious/media/Tax_Rates...
  - gozur88 11y ago
    That seems more relevant than it is. The US tax code used to be riddled with loopholes - nobody actually paid the top rates.
    - Mikeb85 11y ago
      The effective tax rates back then were still higher than today. You're right, they weren't 92%, but they were higher.
      - gozur88 11y ago
        I wonder if that's actually true. It was far, far easier to hide income back then. This is before currency transaction reporting and "currency smuggling" laws. You could get on a flight to Zurich with a duffel bag full of cash and it wasn't something anyone had to report to the government.
    - MaysonL 11y ago
      used to be?
      - gozur88 11y ago
        Yes. Prior to 1986 it seemed like everyone you knew had a money-losing chinchilla farm or something they could write off. If you tried to do that today the IRS would laugh at you.
        MaysonL 11y ago
        As opposed to the present, when there are no tax loopholes.
        gozur88 11y ago
        In relative terms, that is correct.
icebraining 11y ago
the gilded age wasn't exactly a time of phenomenal economic growth... Wasn't it? n the quarter century following the war, America’s economy grew at the fastest rate ever in the history of the country. In the half century between 1870 and 1920, the number of Americans employed in manufacturing jumped almost 450%, climbing from 2.5 million to 11.2 million. This created a vacuum that encouraged immigration and, during the same period, 27.5 million immigrants came to the United States. In order to support the country’s burgeoning population, farmers increased the number of acres under cultivation by an astonishing 234% http://www.saylor.org/site/wp-content/uploads/2011/05/HIST312-Industrialization-and-Economic-Growth-FINAL.pdf http://www.saylor.org/site/wp-content/uploads/2011/05/HIST31...
- Mikeb85 11y ago
  > n the quarter century following the war, America’s economy grew at the fastest rate ever in the history of the country. This is exactly my point. Fastest ever growth. 1945-1970. > In the half century between 1870 and 1920, the number of Americans employed in manufacturing jumped almost 450%, climbing from 2.5 million to 11.2 million. This created a vacuum that encouraged immigration and, during the same period, 27.5 million immigrants came to the United States. In order to support the country’s burgeoning population, farmers increased the number of acres under cultivation by an astonishing 234% This is simply population growth. Economic growth, as a metric that actually matters to quality of life, is defined as Real GDP per person. http://arxiv.org/pdf/1205.5671.pdf http://arxiv.org/pdf/1205.5671.pdf If you look at the main chart in this paper, you will see the growth was, relatively speaking, rather flat throughout the gilded age, which was also characterized by wild swings in the economy. Growth becomes higher and more constant after WWII (largely due to the rather left-wing policies at play that started with the New Deal, and later the restrictions imposed during the war, and high tax rates immediately after the war).
  - icebraining 11y ago
    >This is exactly my point. Fastest ever growth. 1945-1970. They are talking about the Civil War. >This is simply population growth. Economic growth, as a metric that actually matters to quality of life, is defined as Real GDP per person. First, it's not just "simply" population growth. Try ferrying 27 million immigrants to current Southern Europe and see how the GDP fares. But more importantly, I just don't get the idea that GDP per capita inside the country is the only metric that matters to quality of life. Dozens of millions of people were able to increase their income by coming to the US, that doesn't count? What you're essentially saying is that if a country has ten people earning $100 each, and then ten more people who were earning $2 in other countries now join the first ten (whose income is unaltered) but earn only $5, the quality of life has been reduced. To me this is simply nonsense unless one doesn't care about the quality of life of immigrants.

by Mikeb85 11y ago

randyrand 11y ago

There was equality but not mandatory equality. There is an important difference.

Mikeb85 11y ago
Not actually true. Tax rates on high incomes were much, much higher in the 1950s and 1960s. http://www.businessinsider.com/history-of-tax-rates-2012-5 http://www.businessinsider.com/history-of-tax-rates-2012-5 http://s158.photobucket.com/user/OnlyObvious/media/Tax_Rates/TopTaxBracket_TaxRate.jpg.html http://s158.photobucket.com/user/OnlyObvious/media/Tax_Rates...
- gozur88 11y ago
  That seems more relevant than it is. The US tax code used to be riddled with loopholes - nobody actually paid the top rates.
  - Mikeb85 11y ago
    The effective tax rates back then were still higher than today. You're right, they weren't 92%, but they were higher.
    - gozur88 11y ago
      I wonder if that's actually true. It was far, far easier to hide income back then. This is before currency transaction reporting and "currency smuggling" laws. You could get on a flight to Zurich with a duffel bag full of cash and it wasn't something anyone had to report to the government.
  - MaysonL 11y ago
    used to be?
    - gozur88 11y ago
      Yes. Prior to 1986 it seemed like everyone you knew had a money-losing chinchilla farm or something they could write off. If you tried to do that today the IRS would laugh at you.
      - MaysonL 11y ago
        As opposed to the present, when there are no tax loopholes.
        gozur88 11y ago
        In relative terms, that is correct.

icebraining 11y ago

the gilded age wasn't exactly a time of phenomenal economic growth... Wasn't it? n the quarter century following the war, America’s economy grew at the fastest rate ever in the history of the country. In the half century between 1870 and 1920, the number of Americans employed in manufacturing jumped almost 450%, climbing from 2.5 million to 11.2 million. This created a vacuum that encouraged immigration and, during the same period, 27.5 million immigrants came to the United States. In order to support the country’s burgeoning population, farmers increased the number of acres under cultivation by an astonishing 234% http://www.saylor.org/site/wp-content/uploads/2011/05/HIST312-Industrialization-and-Economic-Growth-FINAL.pdf http://www.saylor.org/site/wp-content/uploads/2011/05/HIST31...

Mikeb85 11y ago
> n the quarter century following the war, America’s economy grew at the fastest rate ever in the history of the country. This is exactly my point. Fastest ever growth. 1945-1970. > In the half century between 1870 and 1920, the number of Americans employed in manufacturing jumped almost 450%, climbing from 2.5 million to 11.2 million. This created a vacuum that encouraged immigration and, during the same period, 27.5 million immigrants came to the United States. In order to support the country’s burgeoning population, farmers increased the number of acres under cultivation by an astonishing 234% This is simply population growth. Economic growth, as a metric that actually matters to quality of life, is defined as Real GDP per person. http://arxiv.org/pdf/1205.5671.pdf http://arxiv.org/pdf/1205.5671.pdf If you look at the main chart in this paper, you will see the growth was, relatively speaking, rather flat throughout the gilded age, which was also characterized by wild swings in the economy. Growth becomes higher and more constant after WWII (largely due to the rather left-wing policies at play that started with the New Deal, and later the restrictions imposed during the war, and high tax rates immediately after the war).
- icebraining 11y ago
  >This is exactly my point. Fastest ever growth. 1945-1970. They are talking about the Civil War. >This is simply population growth. Economic growth, as a metric that actually matters to quality of life, is defined as Real GDP per person. First, it's not just "simply" population growth. Try ferrying 27 million immigrants to current Southern Europe and see how the GDP fares. But more importantly, I just don't get the idea that GDP per capita inside the country is the only metric that matters to quality of life. Dozens of millions of people were able to increase their income by coming to the US, that doesn't count? What you're essentially saying is that if a country has ten people earning $100 each, and then ten more people who were earning $2 in other countries now join the first ten (whose income is unaltered) but earn only $5, the quality of life has been reduced. To me this is simply nonsense unless one doesn't care about the quality of life of immigrants.