Social Question

ETpro's avatar

Big Lie politics. How long can the core lies last?

Asked by ETpro (34472points) June 2nd, 2011

Let me begin by saying that I’m not trying to indict any current political statement with this question. That is for separate discussions. I want here just to look at the Big Lie strategy itself. As the idiom states, ’‘Truth will out.’’ Truth is supported by evidence and facts. Lies are not. Lies will eventually be exposed, and truth will triumph.

Hitler’s propaganda henchman, Joseph Goebbels, the original proponent of Big Lie politics, warned that the lie can’t last. Goebbels said, “If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.” So what’s the half-life of the political Big Lie?”

Hitler’s central lie was the scapegoating of Jews. He wrongly claimed that all Germany’s problems were the fault of the Jews, and when the state solved “The Jewish Problem” all would be wonderful. This lie found sympathetic ears in the depth of the Great Depression and runaway inflation within the Weimar Republic. But if a political party ran on the same platform in today’s Germany, they would get nowhere. That lie is dead. How long does it take typically for the truth to trump a widely publicized and seductive Big Lie?

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34 Answers

flutherother's avatar

A skilful propagandist like Goebbels would not say truth is the enemy of the state and I doubt the authenticity of this quotation. Propaganda makes selective use of the truth and plays upon our emotions. When we have free access to information and when emotions have cooled we see more clearly but this can take decades.

ETpro's avatar

@flutherother The quote has been widely reported. I do not believe he said it publically. I believe it was in notes for the inner circle so that they were aware of how to conduct business when you are saying one thing but doing another.

Jaxk's avatar

John Edwards found it to be a fairly short period, Schwarzenegger fared a bit better. FDR’s new deal economics has lasted the best part of century. The Arabs have been blaming Jews for all evil for thousands of years. I guess it depends on what the lie is.

CaptainHarley's avatar

Until circumstances change so much that the “big lie” can no longer be sustained in the public mind.

HungryGuy's avatar

I agree that freedom of speech eventually outs all lies (that’s why I’m such a staunch advocate of absolute freedom of speech). So the degree that their lies last, is inversely proportional to the degree of freedom of speech in a society. Thus, societies that oppress freedom of speech can keep their lies up longer. There’s much fanatical religion in Muslim countries, so freedom of speech suffers there (as it suffers in a society where any fanatical religion is powerful, be it Christian or Muslim or something else), so they can make the Jewish lie last. Lies cant last long in western societies in Europe because of the high regard for free speech (and to a lesser degree in the USA as well) .

iamthemob's avatar

I agree with @Jaxk that it depends on what the lie is, but more with @HungryGuy that it’s about the strength of free speech that is central.

Complete equality in terms of access to the avenues of communication is what reduces the half life of the big lie. But that is undermined where the population does not understand where the information comes from and what is good information.

We now are at a middle point, I think, where we have generally equal access to the avenues of information but don’t know how to use them just yet. Once we do, responsible citizens will always have the means to counter the big lies very quickly.

Ron_C's avatar

“The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie.” I don’t think that’s true. Many of Hitler’s biggest lies are believed to day.

Speaking of big lies revealed, Reagan said that the tax breaks for the rich will “trickle down” in thirty years that has not happened but nearly half of the U.S. voters and almost half the voters in the U.K. are still waiting for the benefits. P.T. Barnum said “there’s a sucker born every day”. and they all seem to join the Tea Party.

flutherother's avatar

The above quotation appears to have originated in a text of Goebbels’s titled ‘Churchill’s Lie Factory’ where the big lie referred to was that of British propaganda rather than his own. Goebbels gave a very clear account of how he viewed propaganda in a speech given at Nuremberg in 1934. He never expected to be caught out by the truth as he used it in his propaganda until the very end of the Third Reich.

ETpro's avatar

@Jaxk You have a valid point that the half-life varies depending on the venuw. And it seems in modern times to be getting shorter. I find the inclusion of FDR’s New Deal comical, though, as the claim that federal spending made the depression worse is a ludricous big lie itself. It is easily disproved.

Jaxk's avatar

@ETpro

I did that on purpose. And it’s only disproved if you are very, very selective in you data. Of course even being selctive in your data won’t show that it did anything positive. Ten years of depression is pretty hard to conceal.

ETpro's avatar

@Jaxk The argument is between austerity restoring confidence, and government spending restoring markets. On that, once again, the comparison if data is like equating an ant hill to Mount Everest by quibbling about whether there aren’t a few more grains of sand in the ant hill, and whether a few feet of snow cap have melted off Mount Everest. Even if that’s all true, the ant hill is still 50 orders of magnitude smaller than Mount Everest.

From 1929 to 1934 under Hoover, the GDP plummeted, losing nearly half its value. Most major and minor banks failed and shuttered their doors with depositors losing everything they had in the bank. Unemployment skyrocketed. From 1934 to 1945, all those metrics improved steadily except for the one period in 1937 when FRD yielded to Republican pressure to scale back spending, and we got the recession within the depression. How you spin that to conclude that FDR made things worse is a mystery, but I am sure you will do it.

We both agree that WWII truly ended the depression. Was that a private sector effort? No! It was government spending on a scale that had never been seen before. Spending went from $9.7 billion in 1940 to $72.6 billion in 1944. And Con men conclude from that the government spending always makes things worse. That comes pretty close to a big lie in my book.

I am actually not the ideologue here. If anyone can show me how cutting taxes, refusing to invest in the future, gutting education, and letting the poor twist in the wind and keeping my money in my own pocket assures a rosy tomorrow, I will sign up in a heartbeat. I do NOT love to pay taxes. I just haven’t seen any indication that right-w9ing ideology really works.

ETpro's avatar

@CaptainHarley With advances in news gathering and information access, that half-life is growing ever shorter.

@HungryGuy ery true. And authroitarian groups immediately set to work limiting freedom of speech, keeping tight control on talking points and publically dumiliating or even expelling any who dare to speak their own mind. Pass the ideological litmus test or else.

@iamthemob That’s a very upbeat assessment. I think you have a very valid point there. I certainly hope that we get there sooner rahter than later.

@Ron_C I think tha tafter this last financial crisis, there are a growing number of citizens of modest means who realize that after 30 years, the only thinkg that’s trickling down is the piss from all the Dom Perignon we are buying the rich.

@flutherother Have you references to that. It doesn’t sound quite right.

flutherother's avatar

@ETpro It came from this article published in 1941.

Ron_C's avatar

@ETpro there are still a number of citizens that are completely deluded and believe that unrestricted capitalism is the only way out of this depression. They lay all the blame on civil service and government spending. No amount of truth and logic will divert the corporate paid tea party from their goal of insuring that all poor, immigrant, and middle class people are punished for their circumstance and the ultra rich are enabled to pass their riches on to their children, in perpetuity.

Jaxk's avatar

@ETpro

I don’t want to derail the question but I do believe uncovering the truth about New Deal Economics is pertinent. Many of the tricks used to validate this theory are the same tricks used in validating many of the big lies throughout history. It also is a good example of how some lies live on while others quickly die.

The first thing you do is to get everyone to focus on a single issue. You narrowly define that issue to show the results you want and ignore everything else going on. Kind of like the old magicians trick of getting you to focus on his right hand while working his magic with the left. The second thing you need is a charismatic leader. Someone the general public can identify with and believe. And if you want the lie to last, you need a way to ingrain this thought into the minds of the general public. Make them believe it so that it takes enormous effort to dislodge it. The schools are an excellent vehicle for this. Teach them from an early age to except your premise and they will believe throughout their life.

Now there are few few other things that are used to promote the Big Lie, such as discrediting your opponent personally so that his arguments are discounted before they’re made. But these are more transient and don’t have as much impact over the long term.

Now, I think we can all agree that FDR was a charismatic leader. Right or wrong he had a way of connecting with the people so that believed him. I see no dispute here. Likewise the schools I think are a given. If anyone was taught that New Deal Economics didn’t work, I’d be interested to hear it. It has been integrated into our classrooms since the 50s despite the overwhelming evidence that we remained in recession for a decade. So how do they do that, how do they make an obvious failure look like an overwhelming success?

So how did Hitler do do it? How did he get the German population to believe that Jews were the cause of their economic woes? Isolate a few facts and draw a conclusion. According to Ralph Georg Reuth almost half of all German private banks were Jewish owned,” “the stock exchange was dominated by Jewish stockbrokers, and almost half of the nation’s newspapers were Jewish run as were 80 per cent of chain stores. Connect the dots, Jews must be responsible for the bad economy (this sounds eerily familiar to what’s happening today without the Jews part). Isolate some facts, ignore everything else, and put forward your conclusion.

Now to create the illusion of a successful New Deal, proponents need you to focus on spending and GNP. Let’s broaden that a little and look at unemployment and taxes as well. Also in order to show anything positive, they need to limit our view of the numbers to the 1933 to 1945 time frame (in other words the trough to the peak). Let’s broaden that to include the late twenties so that we can see where we started as well as where we went. In other words, let’s see what the other hand is doing.

In 1929 Smoot Hawley Tariff (60% tariff on just about everything) gained enough votes to pass the senate. By 1930 it was passed in both houses. This was a massive increase in the cost of consumer goods and in the face of a depression. We’ll ignore the coincidental nature of the market crash of ‘29. Then the 1932 Revenue Act was passed in 1932 (thus the name) which increased taxes incredibly. This raised the top income tax rate from 25% to 63%, with increases on all incomes above $6,000. The estate tax rose to 45% from 20% and the corporate tax rate rose from 12% to 13.75%, and exemptions were reduced. Additionally excise taxes were increased by 51%. These policies of Hoover’s Republican administration deepened the depression making recovery even more difficult. My intent here is not to blame either Republicans not Democrats but rather the policies that were enacted. Proponents of the New deal would have you ignore the effects of tax policy.

By the 1st quarter of 1933, the depression had reached bottom. FDR implemented his ‘Bank Holiday’ which stemmed the tide of bank failures and they were no longer driving the economy down. The recovery however was incredibly slow in coming. Proponents of the New Deal, would have you look at growth from the bottom of the cycle and focus on economic growth and spending. Let’s broaden that a bit and look at unemployment and taxes well as broadening our view to include the late 20s as well. Again let’s see what the other hand is doing.

During the first term of FDR taxes remained high income, corporate, excise, estate, and tariffs. Virtually everything. In addition The Agricultural Adjustment Act of 1933 similarly
restricted production to keep prices high. This created an environment where growth was all but impossible. If we look at the normal unemployment cycle in a recession we can see that the rate spikes up, then spikes down to normal. That didn’t happen in the thirties. By 1937 unemployment was still at 14% while most of Europe was already recovering from the depression. The massive spending simply couldn’t counter the weight of the taxes. But by 1937 we had a glimpse of what might be a recovery.

In 1937, we fell backwards in our recovery. Those proponents of the New Deal would have you look at the spending and use that to account for all the problems, Let broaden that a bit and see what else was happening. Whereas we did see a rather modest decline in spending, The real numbers are in the tax. The top tax rate went from 63% to 79% and all rates above $50K were raised. Even more significant the Social Security tax was enacted which added 1% to employees tax and 1% for employers. An additional 2% to all wages. In addition it put a surtax on undistributed profits of up to 27%. Is it any wonder the economy again stalled?

Proponents of the New deal would have you look at economic growth fro 1933 til 1945. That way they can show a good growth rate. But realistically it was not until 1941 that we had unemployment and GDP back to the level it was in 1929. More than a decade of depression. It’s much like cutting your wages in half and it takes ten years to get back to the income you had. If you can focus on only the period since your wages were cut, you can show good growth. But if you look at the before and after, the picture looks dismal.

As for the 1941 to 1945 period, we put 12 million men in uniform. That had a temporary impact on unemployment. Full employment will drive the economy up and that is what is needed today. But putting them on the government payroll is temporary at best. Once they come out of the service they need real private sector jobs. It was the period after the war that provided that. The world was destroyed in the war. We were the only country with the industrial capacity to rebuild it. That rebuilding is what ended the depression and put us back to real full employment. During the 50s we generated fully half of the entire world’s Gross Product. Spending is transient and ineffective in creating real growth. We can use the narrowly defined pictures of the proponents of the New Deal or we can expand our view to see what really works. Keep an eye on what the other hand is doing or suffer through another prolonged recession. The magicians trick or the reality?

Ron_C's avatar

@Jaxk by your own description, the only way to fix a recession or depression is to increase employment. Unfortunately, first the Republicans, then the Democrats folded to a banking extortion scheme and tried to fix the problem from the top down. We would have been much better served if the trillion dollars spent on bailing out non-productive banks went to jobs programs and mortgage protection. How can you create jobs if you have no one to buy your goods. Frankly, the first reaction should have been to re-organize the investment banks in bankruptcy, start infrastructure projects to increase employment, and take medicine out of the hands of inefficient private insurance companies and establish a single payer insurance plan.

Further, we should have put Social Security in a lock box to prevent Reagan style raiding of our safety net. We should have begun bringing our highly trained soldiers home to provide leadership and training for our work force. They would be excellent teachers, foreman, and technicians. Fully trained and disciplined when we need them the most.

We should work on encouraging companies to return to American manufacturing by offering incentives for their return and increasing tariff on goods imported and don’t worry about countries establishing trade wars. Even if some happen they will be of little consequence. Sure prices will be a bit higher but workers will have more money to pay for products whose profits return to this country.

What is better, a few really rich people that can afford the best in foreign goods or middle class families that buy and sell American products?

The only real losers are our current oppressors and fat cats who can live very well on their accumulated wealth.

Jaxk's avatar

@Ron_C

Wow do I feel like I wasted my time or what. The first thing you propose is raising Tariffs which is exactly what Hoover did at the very beginning of the Depression. It didn’t work out too well. The first thing FDR did was to stabilize the banks thus ending the bank failures. One of the good things he did. You propose we let them fail.

And if nothing else the New deal program shows that infrastructure programs will not create a recovery. FDR did that in spades and the depression lingered on. When FDR finally did get unemployment under control it was by putting 12 million men in uniform. You propose we we take them out of uniform. I’m not sure what we do with them. we don’t have jobs for the teachers, foremen or technicians we already have out of work. As for Reagan, there never was any Social Security lock-box. That fund has been raided by congress from the beginning. Other than a cheap shot at Reagan, I have no idea what point you making.

You say sure prices will be higher but workers will have more money. How the hell does that work? They don’t even have jobs let alone more money. And what incentives are you talking about to bring manufacturing back to the US. Our excessive regulation already virtually doubles the cost of everything and our tax structure is pathetic. Every government action I’ve seen only serves to drive manufacturing away. Raising taxes does not incent companies to bring manufacturing back.

ETpro's avatar

@flutherother The quote in question is nowhere in that article. Nor would it make any earthly sense in the article you linked to. Goebbels would not have encouraged Churchill to use all his power to suppress dissent and to consolidate power as quickly as possible in the hands of that state—that being the English state. I did some addition searching, and Wikiquotes lists the quote as a probably misattributed to Goebbels and drawn from his private writings on the use of Big Lies to forward the interests of a totalitarian state. Whatever the case, ithe supposed quote is entirely consistent with how the man handled propaganda.

@Jaxk You’d like to hear about schools teaching that the New Deal didn’t work. Liston to the Chicago School of economics, now widely propoted arounf the world. Listen to all of Milton Friedman’s laissez-faire acolytes. Listen to any right-wing charter school. Listen to the entire Republican Party constantly deriding Keynesian economics and claiming FDR made the depression worse, when the numbers show such a ridiculously opposite picture it is utterly laughable to make such a claim.

The fact the economy remained in recession for a decade is a lie. Look up the definition of recession. Look at the curve of the GDP. Claiming we were in recession for a decade is plain wrong. We were hurting. Lots of people still needed jobs. But 14% unemployment is better than 25%. And when you break something really, really badly; it may take time to fix it. That’s no good reason to turn control back over to the group that broke it to start with.

The important thing is that after 1933, the numbers started going in the right direction. That’s both GDP and unemployment numbers. The only time they reversed was during the recession within the depression, and that is the time when Republicans temporarily got their way and the New Deal spending was scaled back.

As to the wrong-headed moves leading up to the depression, and in the early days of it, I completely agree with you. The Smoot-Hawley Tariff Act made the impact of the 1929 stock market crash far worse. I further completely agree that raising personal tax rates during that deep a recession was wrong headed when Republicans did it and wrong headed when Democrats did it. The take away I get from that is that FDR, because he probably didn’t have the political clout (or possibly the vision) to do it, didn’t spend nearly enough and taxed too much from 1934 to 1941. The massive uptick in federal spending when we had to enter WWII is what brought us back to full employment. So my take-away message is we should have spent like that in 1934. We’d have been in a far better position to fight WWII had we done so.

flutherother's avatar

@ETpro This is what Randall Bytwerk had to say about your quotation. He is an expert on Nazi propaganda and he can find no evidence that Goebbels ever said it.

Jaxk's avatar

@ETpro

I would agree that by definition the depression was over in 1933. I think that would be of little comfort to those that lived through the thirties. Just as our current recession was over in 2009. Also of little comfort to those still suffering from the impact. The end of the depression and when the economy has recovered are quite different.

Apparently we agree (based on your argument) that spending is a very transient thing. It only provides a benefit as long as you are spending. Once stopped things revert. They don’t really have a long term impact on recovery. At least that’s what I glean from your comment that when FDR slowed the spending we went back into recession. So it would seem that we need to look for things that actually have a long term impact on economic growth. I think we would agree that it’s better to have an economy that growing without the massive influx of government spending (correct me if I’m wrong on that). Just as a side note I find it interesting that you would agree that the tariffs and tax hikes had a detrimental affect on the economy when the Republicans did it but ignore the impact of the same sort tax in 1937.

I find it amazing that you refuse to credit the post war boom for having played any part in our recovery while putting all the credit on the war spending. With that reasoning our best solution would be to simply put the 6 million unemployed on the government payroll and our problem would be solved. That of course ignores the transient affect of spending and further ignores any downside to spending.

Finally I will leave you with this question. Did it or did it not take us more than a decade to recover from the Great Depression? If it did, how on earth can you credit spending or the New Deal, for solving the problem? I’ll let the idea that ‘if it didn’t work we should have done more of it’ to your individual judgement.

ETpro's avatar

@flutherother Reread my post immediately above yours, I noted that there is no proof that Goebbels actually said it. There is proof he did it, and there is proof that Churchill did not.

@Jaxk It appears to me that we hit the first two full quarters of GDP growth in mid 1934. That would be the end of recession by the classical definition. But I totally agree that it didn’t feel like the end to those living through it. My parents were among them, and they told me vivis stories of the pain and fear those days brought.

But looking at this graph it is clear that the first two quarters of GDP expansion (the technical definition of the turn-around from recession) occurred in 1934 and real growth hit in 1935.

Spending is transient, but if wisely done, can build infrastructure and develop industries that deliver massive growth after the spending. NASA is a good example. Tax cuts are most stimulative when you have a supply-side problem, Tax cust directed to low and middle-class workers are stimulative in a demand-side failure, but not as much so as spending. Tax cuts for the wealthy are utterly useless ina demand side failure. The rich are not going to invest the largess in US industry when nobody can afford to buy its products. They instead invest in jobs in China and India. And the serious downside of tax cuts as a stimulus is that they are so VERY hard to take back once the economy starts roling again. Stimulus spending is easy to stop. Tax cutting is not.

One more time, let’s review the graph of the national debt as a percent of GDP. We are in the fiscal mess we are in today almost entirely thanks to GOP don’t-tax-just-spend ideology. What spending Obama has had to do has been directed at repairing the monumental damage 3 decades of that did to the US economy..

Jaxk's avatar

@ETpro

C’mon, Again tricks and slight of hand. Don’t look at the broader economy but let’s focus in a few hand selected points and limit the time frame. Look at it like this. Say your making $20/hr and due to the depression it’s cut in half. Now for the next three years you get really good raises say 10%. How are you doing? Your boss tells you how good you’ve got it because he was able to get you 10% three years running. Unfortunately you were making $20/hr, now you’re making $13.30. Can we just look at the growth or do we need to see the broader picture. And keep in mind the bigger the drop the easier it is to show higher growth rates.

So Let’s look at the broader picture GDP did not recover until 1941. And unemployment lingered in the high teens throughput the thirties. Because spending does not stimulate the economy. If you spend a million on a infrastructure project and put 100 men (and/or women) to work. Once the project is done they are laid off. If you want to keep them employed, you must continue to spend. It just doesn’t make any fundamental change. Tax cuts however, have a long term effect. As business retains more money they invest in upgrades, expansions, and new products. The people hired are not transient but rather durable long term employees. Tax cuts create an initial dip in government revenues but the revenues quickly bounce back as they did in the 80s (note the tax cut was in ‘83)and again in the 2000s (note the tax cut was in 2003). In each case the economy rebounded, unemployment rebounded and tax revenue rebounded precisely with the tax cuts.

Now if spending were the solution we’d be out of this recession already. Obama has spent more than $8 trillion in his short tenure (unfortunately we only collect $4 trillion in revenue) and the recession lingers on. Just like it did in the 30s.

Now for you political chart. I’m not sure what to make of it other than a distraction. You say you want spending yet the spending of the 80s and 2000s are the problem (at least you seem to think so). Spending went up under Reagan. I don’t defend that. It was the spending that created the debt. Spending went up under Bush, I don’t defend that either. But as we’ve seen by the above charts, Government revenues rebounded quickly, that wasn’t the problem Spending was. So if you think Reagan and Bush over spent, why would you think it is a good idea for both FDR and Obama. Let’s get a little consistency here.

ETpro's avatar

@Jaxk If you poo-poo all facts except those that support your right-wing ideology, there is no point trying to discuss anything with you. No matter how compelling the facts, you dismiss them with arm waving about their being only a part of the picture. The reason spending was slow to stimulate the economy is there wasn’t enough spending, and taxes were increased too much. When we transitioned to spending 10 times as much in the war effort, we suddenly rocketed into full employment. And yes, we ran up debt, but we were able to pay it down after the war.

There is no magic money. Money is totally fungible. You can inject money into consumes’ hands via tax cuts or spending. Either way, it is stimulative. However, in a demand side collapse, it is utter insanity to slash taxes for the rich and raise them on the poor and middle class. That would only make sense in a supply side crisis, and we have never had such a crisis.

And again, tax cuts are almost impossible to roll back when times improve. Spending is much easier to reign in. The statistical evidence that all this is true is overwhelming. Republicans refuse to face facts, because ideology matters more than facts to them and campaigning on giving free money is sooooo popular. But tax cuts build deficits just like spending does. Too much or too little of either one is disastrous.

I have noted on numerous occasions when we have this fight that if tax cuts are always stimulative, let’s set taxes to minus 100% and eliminate the deficit overnight while sending the economy into the stratosphere. You know that doing something so irresponsible would destroy the economy and bring on a total collapse of governance in America. We’d be like Somalia in a year or two. But you have never answered that point. Instead you continue to harp on tax cuts as an eternal, magic elixir you can never take too much of. Well, we were doing pretty well in America till Reagan came along and worked his Voodoo Economics, slashing the top tax rate by 60%. Thirty years in, where are the jobs? And the answer is offshore. Apparently, the GOP strategy is that we have to cut taxes massively for the rich and let our billionaires invest offshore until everyone else on earth has a job, then maybe Reagan’s Voodoo will begin to trickle down here.

Ron_C's avatar

@ETpro and @Jaxk I would submit that a targeted tax cut on business could improve the economy.

The target would be for U.S. based companies only. Tax cuts to international corporations do little good. They may build or improve U.S. facilities but they have no obligation to do so. Further the cuts, since Reagan seemed to do the opposite. They freed up funds to make it easier to move operations to countries with fewer environmental laws and cheap labor.

Even if a U.S. company does not reinvest the savings into the business, the owners will likely use that money buying things in the U.S., at least we’d get some sales tax money.

Remember off-shore profits return to their off-shore owners and there is absolutely no benefit to our country when this happens. Toyota, for instance builds plants in the U.S. and buys parts from U.S. companies but the profits aways return to Japan.

I am not saying it is wrong for foreign companies to make a profit here, I am just saying that giving them tax breaks equal to those of U.S. companies provides no benefit to our economy except in incidental ways.

Jaxk's avatar

@ETpro

Yes you have argued the -100% tax before and I still don’t know why. It is a ridiculous distraction with that serves no purpose other than divert attention from the issue at hand. Hell put everyone on the government payroll and we’ve solved the unemployment problem. Or do you contend that is a reasonable solution? Tax cuts are always stimulative but they reach a point of diminishing returns (the Laffer Curve).

Your argument about supply side is flawed in that your assuming (I think) that investment in plant and equipment is based on increasing demand. That’s only part of the picture. For instance I have a couple of freezers that I should replace. They are not as energy efficient as I could get and they breakdown on a frequent basis. If I upgrade that equipment it wouldn’t be based on selling more product but rather reducing cost of both maintenance and electricity (plus possibly inventory loss). But that takes some confidence in the future. I need to know that other costs aren’t going up and eating away at my cash reserve. It becomes even more attractive if the government is taking less of my money thereby freeing it up for this investment. The same holds true for any plant or equipment upgrade. Yes they may provide more capacity but that is only one of the considerations and may not be the driving force. I may choose to buy a bigger freezer if I think volume will go up but that’s not the driving force right now. By the way I’ve chosen to put off the upgrade. Can you guess why?

Now let’s address the psychology of taxes. There are two points I’d like to make. One I think you will agree with (I could be wrong) and the other you may not. On is the actual percentage you pay in taxes and the other is loopholes, incentives, and credits. Both will tend to either increase or decrease the incentive to use tax lawyers (or accountants or lobbyists) to limit you exposure to taxes. The higher the rate the more lucrative the deductions. The more loopholes the more incentive to find and use them.

Let’s take the loopholes first. When Reagan slashed taxes, he also closed a lot of loopholes. Closing those loopholes creates a double benefit. If you are on the cusp of your tax guy paying for himself, say your paying him $50,000 and he’s saving you $60,000 he’s worth the money. but if you close a couple of the loopholes he’s using you may only be saving $40,000 and he’s costing you $50,000. He’s no longer worth the money. It is cheaper to just pay the whole tax ($60K) than to pay him ($50K) for the work to beat the government out of $40,000. So assume the government closed loopholes for a net gain to them of $20,000 but what they receive is a net gain of $60,000 (the $20K + $40K). What makes this even sweeter is from the business perspective, the $20,000 in tax change only cost the business owner $10,000. originally he was paying $50K to save $60K net $10K. Now he’s simply paying the $60K, his only loss is the $10K of savings. The only loser here is the tax guy (or lobbyist or whatever) and I have little sympathy there.

The tax rate will have a similar effect but without the compounding. The higher the tax rate the more incentive there is to find loopholes. When talking about deductions they come off the top and virtually always reflect your top rate. In the days of the 80% bracket each dollar of deduction saved 80 cents in real cash. When rates are 25% it only saves 25 cents in real cash. Ergo less money available for tax consultants.

There is one last point I’d like to make. Both the loopholes and the higher tax rate have a negative effect on the overall economy. If there are loopholes or if the tax rates are high, business owners tend to manage thier business based on taxes. If you do one thing it increases you taxes but if you do it differently it lowers you taxes A clear example is the solar industry. If you’ve ever looked at solar for your house the whole business case is based on tax credits. The size of the system, type of system, even the payback period is based on your tax bracket.

We would be much better served by having businesses managed on business rather than taxes. IMHO

Ron_C's avatar

@Jaxk The main tax “loop hole” closed by Reagan was eliminating the deduction for credit card charges. That really helped the middle class tax dodgers.

Jaxk's avatar

@Ron_C

That’s not strictly true. Whereas the first round of cuts reduced both individual and corporate rates, the ‘86 tax bill closed corporate loopholes to the tune of $300 billion and raised corporate taxes by another $120 billion. As we can see, the closing of the loopholes was by far the bigger piece. Obama has spoken many times about closing loopholes but he seems to focus more on raising taxes. That may be just my perception but it is my perception.

As I stated above, closing the loopholes compound the government revenue without a corresponding negative effect on business. And closing the interest deduction didn’t hurt the middle class since their tax rate was reduced and you could only claim it by itemizing (read pay an accountant).

ETpro's avatar

”@Ron_C” Business tax cuts are a supply side solution as well. When consumers are tapped out and afraid of a layoff, they don’t spend. Giving millionaires money to invest in new domestic production (should they be stupid enough to put it there when inventory is already piling up and production workers are being laid off because inventories are too high) doesn’t work. Giving businesses tax breaks hits the same snag. They can’t sell what they have already produced. The last thing they will do with a windfall of cash is hire more workers and buy more warehouses to fill with goods they can’t sell. Trying to fix a demand-side crisis with supply-side medicine is as wrong-headed as treating a toothache by putting Dr. School’s foot pads in your shoes.

@Jaxk Thanks for finally acknowledging the reduction as absurdum of the negative tax rate. My point is that it is, just as you said, absurd to argue that tax cuts always produce increased revenue and prosperity. Would that such voodoo were true. Lord knows I’d love to get a tax check each year doubling my annual income, and have that fill the government coffers with unlimited revenues to invest in infrastructure and research. But we don’t live in a fairlytale world. In the real world, taxes can be set too high or too low, and both cause severe hardships on a nation. The US has the lowest income tax rate of any developed nation on Earth today, and we find ourselves the richest nation on Earth unable to provide our citizens the basics of care that every other developed nation is managing to provide their citizens. There is a reason why.

Thirty years ago, Reagan set out to defund government through tax cutting. His budget director, David Stockman, finally came clean about that. The intention was to produce an economic crisis in which the intended oligarchs of the Greedy Oligarch Party could convince Americans we can’t afford education—that’s just for those who can send their kids to private academies. We can’t afford social security. We can’t afford medical care. That’s just for those who can buy expensive private insurance. We can’t afford to repair our infrastructure. We have to transfer all our wealth as a nation to a handful of elite oligarchs who fund the Republican election efforts and the 50-state network of right-wing think tanks and PR firms who come up with the talking points to sell this to enough dupes that it gets done. The top 1% or so benefit, and they need 49 plus percent riled up by rhetoric, willing to cut their own nose off to spite their face, in order to pull it off. That is why Republican politics in particular has relied on the Big Lie so much over the past 30 years.

Ron_C's avatar

That is why Republican politics in particular has relied on the Big Lie so much over the past 30 years.

Therefore the only solution to any economic problem is to insure that the Republican block controls all three branches. They now control the supreme court, the house, block the Senate and have a President that thinks that he can compromise with oligarchs.

It is a shame that the Public School system has been under attack for thirty years and so many were “educated” or brainwashed by private schools. It is obvious that the Tea Party has no idea what they are supporting. It is a lot like Germany just before the fascists took over.

It won’t matter to me because I’m old but I can easily see the future where the military becomes the enforcement section of a government owned and operated by international corporate interests. Even now our soldiers are fighting, not to protect America but to insure that a pipeline can be built and protected in Afghanistan and oil interests are protected in Iraq. I hate the really big lie that our soldiers are protecting our freedom when, in fact, they are protecting our oppressors.

Jaxk's avatar

@ETpro

Wow good one. I assume you put that out there to help show show the Big Lie works. It is a good example so let’s look at the pertinent pieces.

First you ramble on with your absurd example of a -100% tax. The purpose being that if that absurd comment is true then all the other absurd comments must also be true. This serves a couple of purposes. First it disconnects everyone from reality. This is a good way to get people to ignore the facts since they’ve already agreed to a fantasy that doesn’t require any. Also it serves to gain the agreement and by inference will add help to get agreement on other points no matter how absurd they may be. Since you’ve already agreed with me once you must also agree with me now. Kind of a psychological trick.

So now you’ve got your audience both agreeing with you and completely disconnected from reality. Time for the next trick. Steer the debate away from any factual basis and attack the person. If you can impugn the person, make their motives suspect, then anything they say can be discounted. Now to the heart. You pick a topic like education and tell everyone your opponent is destroying it intentionally. You need no rationale for this argument because you already got them disconnected from reality and setup to look at motives rather than issues. Throw in a little class warfare and maybe a shill like @Ron_C to chant for you and you’ve run the gambit.

Education however is a bit more complex than merely throwing a few derogatory comments. During the 50s and 60s we were the most educated country on earth. We had more high school grads, more college grads, and more innovation than anywhere else. And not surprisingly we were the engine that drove the world. During the 70s however something happened. Our high school graduation rate flattened and our college graduation rate actually declined. Meanwhile during the decade of the 70s our federal spending on education more than tripled ($9.6 billion in 1970 and $33.2 in 1980). That alone should be enough to question the federal involvement in our education. But let’s look back and see if there were other contributing factors.

The 70s marked the era of social justice. Something that should be taught in schools. Sex education. The schools began to take on the role of parents to instill morale values. Teachers unions became wide spread and gained enormous power. Both unions and government defining how ‘Tenured’ teachers were to be handled. We began to experiment with ideas like changing from a grading system to a less competitive model. Discipline was shunned in favor of less barbaric methods. The problem is that “Their schedules jammed with course work in self-esteem, personal safety, AIDS education, family life, consumer training, driver’s ed, holistic health, and gym, the typical American high school student spends only 1,460 hours on subjects like math, science, and history during their four years in high schools. Meanwhile, their counterparts in Japan will spend 3,170 hours on basic subjects, students in France will spend 3,280 on academics, while students in Germany will spend 3,528 hours studying such subjects – nearly three times the hours devoted in American schools.” It’s not clear exactly how much impact each individual change had on our education system but what is clear is the dramatic bend in our graduation rate. It would seem that trying to lay this at the feet of Reagan would be misguided.

It’s hard to figure some of the other rambling but the idea that Reagan set out to defund the government sounds particularly absurd. If that was his intent he failed miserably. His tax cut in 1983 revived the economy such that government revenue was at a record high by 1984 , and the growth rate had steepened. Such is the problem with the ‘Big Lie’, if you can get people to look at the real data, the larger picture, it falls apart.

The trick is to keep people distracted and amused by your rhetoric, lest the truth come out.

Ron_C's avatar

@JaxkIt’s not clear exactly how much impact each individual change had on our education system but what is clear is the dramatic bend in our graduation rate”. To say nothing of the tremendous increase in testing to satisfy government demands.

If you want to fix eduction, insist on parental involvement and take no excuses, get rid of “no child left behind” and all the other useless tests, go back to mid-term, and finals with quizzes written by the teacher in between.

Get rid of programs developed to increase self-esteem, restore discipline and back teachers. Make lawsuits applicable to only the most egregious offenses and insist on teacher retribution for nuisance suits.

There is nothing wrong with slamming a teenager against the wall to prevent him from harming other or school property.

It might also be a good idea to establish uniforms for public schools, there is definitely no reason to allow flip-flops, blue jeans, or shorts in school, those are play clothes. I believe that if you treat a school as your business instead of a social play event you have the right attitude to learn and you dress reflects your attitude.

Further we need more time devoted to math and science, art, music, and history. The only sex education kids need should be presented in health class followed by a rigorous gym period.

Above all parental involvement is the most important.

Jaxk's avatar

@Ron_C

I would pretty much agree with everything you’ve said. I’d probably have trouble with dress code but not because I thinks it bad.

Ron_C's avatar

Thank @Jaxk The reason I mentioned the dress code is because school dress in some schools has become so casual and overly sexy that kids are distracted to a tremendous degree. They are more concerned with their $125 sneakers and looking down the blouses of other 14 year-olds that they don’t even notice when some potentially interesting subjects are taught.

I also firmly believe that these kids are sold a bill of goods and are being degraded by big business advertising. If you go to school dressed for fun you are concerned only with the fun. If you are dressed in what I would call “business casual” you are in a better frame of mind to learn.

If a kid feels compelled to follow outrageous fashion, they are free to follow those concerns after school (business) hours. Schooling is no less of a career than the work your parents do to earn a living. That’s my humble opinion, taken from a lecture that I gave my oldest daughter when she decided to test her Principle’s limits.

Jaxk's avatar

@Ron_C

Again I don’t disagree with your reasoning. My concern would be a couple of things. Uniforms would be an added expense that opens up the debate again on whether the state should pay for low income uniforms. A simple dress code would be better but they are notoriously hard to enforce. Whatever the rules are, we push them to the limit. Even uniforms don’t completely solve it. If you’re allowed to were a simple cross, should you then be allowed to wear a burka. If you’re allowed to were a cross why not 10 crosses with gold chains and a huge medallion. Where ever you draw the line, someone will cross it and they will be on the news debating the merits.

It would make sense to use reasonable judgement but alas, no one seems to have it.

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