The ‘Secret History Of American Prosperity’ Needs To Become A Lot Less Secret

Tuesday, November 1st, 2016

The Secret History of American Prosperity needs to become a lot less secret, Nathan Lewis suggests:

While we generally remember the 1950s as a time of economic good health — as indeed it was, compared to what we have become used to since 1971 — it was actually rather mediocre compared to the astonishing performance of the German or Japanese economies of the time, or the U.S. expansion of the late 1960s. Faced with four debilitating recessions in eleven years, Kennedy focused on creating 5% real GDP growth in his 1960 election campaign.

But how? Following the advice of Paul Samuelson, he assembled the leading lights of academia, who told him that he needed easy money and spending projects to take care of the unemployment (the solution John Maynard Keynes had recommended in 1936) and high taxes to prevent inflation. His Treasury Secretary Douglas Dillon, however, was a wealthy Wall Street businessman wise to the workings of the real economy, and also a Republican. Dillon supported the extensive research of the little-known Stanley Surrey, a member of the faculty of the Harvard Law School — not, it should be noted, an “economist,” although he was later called “the greatest tax scholar of his generation,” with twenty books to his credit.

Surrey argued that the 91% top income tax rate of the time was a “phantom rate” that nobody paid: as inevitably happens wherever high nominal rates are found, lobbyists had been hired to punch extensive loopholes in the tax code. Lower rates, he argued, would change incentives and produce more growth. Kennedy actually experimented with the advice of his academics, before disregarding them for the path shown by Dillon and Surrey. The result was a tax reform that lowered the top rate to 70% and all other rates proportionally; and the best economic boom of the 1950s and 1960s.

The first Reagan tax reform of 1982 was basically an exact copy of Kennedy’s 1964 tax cut. This was deliberate, to help raise the needed support in the Democrat-controlled Congress.


  1. Toddy Cat says:

    There’s a lot of truth to this as far as it goes, but most people who lived through both the 1950′s and late 1960′s remember the former fondly, while the latter was a nightmare, due to riots, skyrocketing crime, racial conflict, soaring divorce, and a savage, winless war. Reagan Conservatives like Kudlow would do well to remember that there is more to “prosperity” than low taxes and high GDP growth.

  2. Ross says:

    Dilley presaged Laffer, was it?

  3. Lucklucky says:

    I don’t think black people would remember the 50′s that fondly.

    The same can be applied today when they realise they are instrumentalized as part of the Media-Democratic Party Plantation.

    I think it is one more testament that culture defeat laws — including the US Constitution, in how it was not applied to a part of its population.

  4. Purpleslog says:

    Tax rates are easy to see. In many ways, regulations are stealth taxes. With the massive growth in regulations, how much of a drag on the economy are those? Are there any good, easy, public metrics to show or measure these over time per capita?

  5. Toddy Cat says:


    I said most people. Most people are not black, then or now. In addition, I’m sure that at least some black people do remember the ’50′s with fondness; crime and family dysfunction were much lower for the black community then, as for the white community. The late 1960′s were a nightmare for blacks, in any case.

    I love the fact that whenever you mention the fact that something might have been better pre-1965, you always get somebody spluttering about black people, whether the thing in question has anything to do with civil rights or not. Crime, divorce, and social dysfunction were lower in the 1950′s, for everyone, despite mediocre economic indices. Where Rosa had to sit on the bus is hardly germane to these points.

  6. Jehu says:

    If you were a 50th percentile status black guy in the 1950s, you could expect to marry a black woman who wasn’t overweight. What percentile of social status do you need as a black man now to get that?

  7. Alrenous says:

    In 1950 blacks were more likely to be married than whites. The rate at which blacks never marry has more than doubled. The bastardy rate has quadrupled – presumably reflecting how many enjoy fatherhood, not merely sperm donation. Less than half of black women are married at any given time.

    There’s several post-Lincoln memoirs that fondly recall slavery, written by blacks. Generally, it’s good to let folk speak for themselves, rather than speaking for them.

    There’s numerous reports of blacks saying they still experience racism daily. It’s not clear all this anti-racism has helped their subjective experience. Maybe try asking one.

  8. Lucklucky says:

    It is strange that after all this time people reason like I am seeing here.

    So the fact that the US Constitution, just the most important rule book of the Republic, wasn’t applied to everyone does not bother some here.

    The fact that some blacks prefered slavery to the uncertainty of life, or that they felt inadequate to modern life, doesn’t make that a significant consideration to extract from slavery? The significance is that they didn’t have a choice. And that lack of that choice was a Constitutional violation.

    Today everyone is free to be a slave, today some people still act like they are, but those people have a choice. In the past they didn’t have a choice.

  9. Bomag says:

    The significance is that they didn’t have a choice.

    Rather oblique, considering American Blacks wouldn’t even exist if not for slavery, and there wasn’t much for better options at that place and time; the point above was that some former slaves were able to reflect on the choices available and suggested politically incorrect results.

    Slavery has been a human institution since forever, yet we are supposed to believe that the American South woke up one day and decided to start the institution purely for racial animus.

  10. Lucklucky says:

    So putting a part of the US population outside the Constitution is something oblique now?

    I don’t care what the reasons are for slavery. That is beside the point. Much of racism in any direction is just a political justification for resource control rather than real racialism. History shows us that many racists had no problems doing long-term deals with the racial enemy when it suited them.

    The point is that most of the southern population and a big part of the northern had no care for the Constitution. And this Constitutional denial went up to the middle of XX Century.

  11. Bomag says:

    … had no care for the Constitution. And this Constitutional denial went up to the middle of XX Century.

    So things have become demonstrably better since that epochal moment, over what would have happened anyway? Do tell!

    When someone starts telling me that we have to follow the Constitution; the Bible; or the Koran, I suspect they are a little fey on all the factors that make a society work. Hint: personnel is policy.

    As far as the Constitution gives the larger society some semblance of justice; domestic tranquility; common defense; general welfare; and hope for a better future, slaves enjoyed a share of that right along with everyone else. The feedback of the current narrative leads us into imagining Black slavery as a worse and worse sin, and we need to dig ever deeper levels in Hell to accommodate the fervent emotional posturing of the Correct class.

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