Brother, Can You Spare a Decade?

Perspective – Liberty Magazine – May 2009

Brother, Can You Spare a Decade?
by Mark Skousen

Few things other than a New Deal can be more painful than an economic depression. But few eras were more vital and enjoyable than the private side of the last one.

One of the rare books in my financial library is “I Like the Depression,” by Henry Ansley, the “Jackass of the Plains.” This amusing little volume was published by Bobbs-Merrill in 1932, and the price was a buck fifty.

Ansley, a newspaperman from Amarillo, Texas, described a prosperity in the 1920s that wasn’t that great. He burned candles at both ends, became a financial hotshot, and ultimately overextended himself. Then the depression hit: “Good-by twin beds, frozen salads, indigestion, credit and swelled head. Hail to the old-fashioned nightgown, buttermilk, sow bosom [a kind of food], comfort and cash.” He lost his job but found happiness by rediscovering leisure, friends, and neighborliness. Hard times taught him the value of a dollar and not to take things for granted: “My dog is my pal again; my wife my lover and my Dad my advisor.”

Ansley’s book was never a bestseller, but it started me thinking. Can the worst of times also be the best of times? The history books are replete with the evils of the 1930s — soup lines, bank closings, Hoovervilles, dustbowls, bear markets, demoralizing despair. It’s all been retold countless times, in such books as Milton Meltzer’s “Brother, Can You Spare a Dime?,” John Steinbeck’s “The Grapes of Wrath,” and most recently Amity Shlaes’s “The Forgotten Man.” The Great Depression brought us Nazi Germany, the New Deal, Keynesianism, and, some say, World War II.

Not surprisingly, everyone from Wall Street to the halls of Congress is worried that the current recession will turn into the dreaded D, and has seized on desperate rescue measures. But was the Great Depression all bad? Did anything good come out of the 1930s? I started doing some research and was amazed to find a bright side to the gloomy ’30s — a lower cost of living, great new inventions and other technological advances, new forms of entertainment, more sports and reading, and a return to sober social behavior.

Start with leisure. Henry Ansley describes the free time he had during the depression. Indeed, millions of Americans had a lot more leisure time. Before the depression, almost everyone worked a six-day week. In the 1930s, the five-day work week became commonplace. “Spread the work!” was the rally cry. By 1937, wage earners in 57% of all manufacturing companies enjoyed a five-day week. Saturday was now a free day, and the Saturday rush hour was replaced by the Friday rush hour.

As a result, there was a tremendous increase in sports and leisure-oriented jobs. People began getting out into the sun and open air and taking a greater interest in golf, tennis, skiing, roller skating, and bicycling. Softball became a national pastime; by 1939, there were nearly half a million teams and 5 million players of all ages throughout the country. Expensive private club golf courses withered, but inexpensive public courses grew. Miniature golf was all the rage in the early ’30s. Bobby Jones became the first and only person to win the Grand Slam of golf in 1930. And black athletes became national idols for the first time, Joe Louis in boxing and Jesse Owens in track and field.

Americans traveled more. House trailers became a very big business. Camping, canoeing, and other inexpensive outdoor activities increased in popularity. People took their cameras with them, and photography became a craze of remarkable dimensions. Americans took tons of pictures with their small German cameras. Life and Look — big, glossy picture magazines — became popular.

Dancing, all the rage in the ’20s, continued to rage in the ’30s. Americans would dance their way out of the depression! Young people everywhere danced the swing, the jitterbug, and the boogie woogie to the music of Benny Goodman, Tommy Dorsey, and Louie Armstrong.

Indoors, parlor games such as bridge and the ingenious “Monopoly” were popular. People read more, and circulation at local public libraries increased. Kids loved comic books, especially “Superman,” the world’s first comic book superhero. Books “condensed” by Reader’s Digest saved time and money. There was an intense interest in epic novels — Pearl Buck’s “The Good Earth,” A.J. Cronin’s “The Citadel,” Margaret Mitchell’s “Gone with the Wind” — as well as such how-to books as Dale Carnegie’s “How to Win Friends and Influence People.” (1937, with 17 printings right away).

In the same year, Lin Yutang, the Chinese-American Taoist, published “The Importance of Living,” which was to become especially popular among libertarians. It encouraged Americans to stop worrying and start “letting go.” One chapter was entitled “The Art of Loafing.” “I am quite sure,” Lin wrote, “that amidst the hustle and bustle of American life, there is a great deal of wistfulness, of the divine desire to lie on a plot of grass under tall beautiful trees of an idle afternoon and just do nothing.” Whether fortunately or unfortunately, in their own opinion, millions of Americans got to live Lin’s upbeat message of idleness.

New Entertainments

Idleness — and its companion, entertainment. People wanted to forget their troubles, and radio and motion pictures provided an escape. Radio really came of age during this period, with up to 80 million listeners on some evenings. There was a lot more to radio than FDR’s fireside chats. It was the way to hear worldwide news bulletins, good music, and such half-hour comedies as “Amos ’n’ Andy,” the first syndicated program, and “The Jack Benny Show.” In the late 1930s, NBC was carrying broadcasts of symphony orchestras, especially its own orchestra, conducted by the immortal Arturo Toscanini, to 10 million listeners every week. And who can forget the night of Sunday, October 30, 1938, when Orson Welles broadcast his version of H.G. Wells’ “The War of the Worlds”?

Hollywood blossomed during the ’30s. In one decade, the motion picture industry went from silent films to talkies in Technicolor. Films brought the American public together as never before. Gary Cooper, Fred Astaire, Ginger Rogers, Katharine Hepburn, John Wayne, Mickey Rooney, and Clark Gable were welcome alternatives to Adolf Hitler, Benito Mussolini, Josef Stalin, and other demagogues of the era. Many considered Shirley Temple a gift from God during the gloomy de-pression. The motion picture event of 1938 was the first full-length animated cartoon, Walt Disney’s “Snow White.” The same year saw one of the first films in Technicolor, the blockbuster “The Adventures of Robin Hood,” starring Errol Flynn. A burst of classic award-winning films came out the next year, including “The Wizard of Oz,” “Mr. Smith Goes to Washington,” and the greatest of all epic films, “Gone With the Wind.”

The ’30s was the era of the first great horror films, “Frankenstein,” “Dracula,” “Dr. Jekyll and Mr. Hyde,” and “King Kong.” For a dime, Americans could go to the Saturday matinee and see double features of cowboys, adventurers, and gangsters. The silver screen brought us science fiction, serial thrillers and the Singing Cowboy (Gene Autry). The theater was filled with humor — Laurel and Hardy, W.C. Fields, the Three Stooges. Americans would laugh their way out of the depres-sion! There were reasons why Chicago economist Robert Lucas, Jr., called the 1930s “one long vacation.”

New Technology

Alvin Hansen and other Keynesian economists developed their “stagnation thesis” in the late 1930s, arguing that the United States was indefinitely stuck in an economic rut. They claimed that there was no new technology, no new frontier to drive the American economy. They ignored the tremendous economic progress that took place throughout the depression — the invention of plastics, artificial fibers, plywood, the 2-cycle diesel engine, and lighter, tougher steels.

Ernst Ruska and Max Knoll invented the electron microscope in 1932. Howard Armstrong created FM radio in 1933. Wallace Carothers manufactured nylon, and Robert A. Watson-Watt discovered radar in 1935. Hans Pabst von Ohain developed the jet engine in 1937 and the first jet airplane in 1939. Chester Carlson originated xerography in 1938. Igor Sikorsky made the first practical helicopter in 1939. Several people, including Philo T. Farnsworth and Isaac Shoenberg, developed television in the 1930s. CBS and NBC began broadcasting TV during this decade.

Manufacturers weren’t idle in getting new technology to market. New household products included electric mixers, pop-up toasters, vacuum cleaners, refrigerators, and irons. For the first time, consumers enjoyed sliced bread and packaged frozen foods. Union Pacific came out with fancy new streamlined, air-conditioned trains. Mass-market automobiles could now accelerate to 60 mph, carrying passengers along new highways with underpasses and cloverleafs. The dirigible, a new form of air transportation, appeared in 1936 (but disappeared with the fiery destruction of the Hindenberg a year later). The Douglas DC3 came out in 1936, traveling at 200 mph, compared to the 1932 passenger airplane speed of 110 mph. Coast-to-coast travel in overnight air sleepers was now possible. New ocean liners, such as the Queen Mary, appeared in a crowded New York harbor. Everyone came to witness the building of the 102-story Empire State Building and the Rockefeller Center (the only skyscraper group to rise in the 1930s). And who could not marvel at the Golden Gate Bridge, opened to traffic on May 28, 1937?

Social historian Frederick Lewis Allen, author of “Only Yesterday” (1931), a bestselling history of the 1920s, summed it up best when he wrote in a sequel, “Since Yesterday” (1940), “the American imagination was beginning to break loose again.” At the end of the decade, the New York World’s Fair had as its theme “The World of Tomorrow.”

Society and Economics

The depression brought about a change in American social trends. People attended church more. Many retreated from the sexual revolution of the roaring ’20s. The mood was more somber and prudent, even after Prohibition was repealed in December 1933. (By the end of the decade, Alcoholics Anonymous was founded.) There was greater approval of marriage and family life. The divorce rate dropped sharply, by 23% from 1929 to 1932, though so did the marriage rate and the birth rate — possibly because marriage and children cost money.

Not all economic news was bad. The most favorable statistic was the decline in the cost of living. During the period 1929–32, retail prices dropped by an average 24%, wholesale prices by 31%, farm prices by 51%, and raw commodity prices by 42%. Of course, wages, salaries, dividends, and other forms of income declined as well, but for those who kept their jobs and held onto their assets, the loss of nominal income was offset by sharply lower prices for all consumer products. “Everything was all right in those years,” said a woman quoted in Amity Shlaes’ book, “but only if you had a job.”

Unemployment reached 25% and higher in some regions at the depths of the depression, causing enormous hardship for millions of Americans. But see it in another light: three out of every four people were employed in the worst parts of the depression. Total employment rose after 1932, reaching 90% by the end of the decade. In a sense, the Democrats were right: happy days were here again!

Businesses adjusted to the new deflation by downsizing, cutting costs, and implementing labor-saving devices. Even the farming industry mechanized. By 1936, despite persistent unemployment, real national output had nearly recovered to pre-depression levels. Auto sales exceeded all previous years except 1928–29. The steel industry was operating at close to capacity. Even the building industry was climbing briskly. Miami was having its best season since the collapse of the Florida land boom. The race tracks were crowded, lavish debutante parties flourished in the big cities, and the night clubs were full.

For bulls and bears alike, the 1930s was the most fantastic period in stock market history. Stock prices collapsed between 1929 and 1932, losing an average 88%, but industrial, rail, and utility stocks all shot up from their lows in the summer of 1932, anticipating the end of hard times. Few bull markets have ever equaled the rocket performance of the summer of 1932, when the rails tripled within eight weeks and the utility averages doubled. Wall Street went on a rampage for the next four years. The Dow rose 67% in 1933, 4% in 1934, 38% in 1935, and 25% in 1936. After a sharp 32% correction in 1937, the market re-sumed its upward trend until war broke out in Europe in September, 1939. There were also plenty of speculative opportunities on the long side of gold and other natural resource stocks during the ’30s. In sum, the bulls, not just the bears, had plenty of chances to make money in the 1930s.

There’s an old saying, “It is the irritation in the oyster that forms the pearl.” The Great Depression was an irritation that most people didn’t expect. A few people couldn’t take the hard times and jumped out of windows, but most responded to the challenge. Adversity often demonstrates the virtue and creativity of humankind. Bad news often creates good news and opportunities to learn and advance. The 1930s were no exception.

Mark Skousen is the author of Economic Logic, now available in its second edition.

More Recent Articles by Mark Skousen

This April 15 is finding a lot of people taking a good hard look at the economy and the country. I’ve made some controversial observations in a few of my most recent articles. Please take a look!

“Start Your Own Tax Revolt — Without Getting Into Trouble”
Human Events Online
April 15, 2009

“Was the Great Depression Good for Us?”
Human Events Online
April 14, 2009

“Brother, Can You Spare a Decade?”
Liberty Magazine
May 2009

As always, yours in liberty, AEIOU,

Mark Skousen

After the Tea Party, What Comes Next?

FREEDOMFEST 2009

“The World’s Largest Gathering of Free Minds”
July 9-11, 2009, Las Vegas

“So good I changed my schedule to attend all 3 days!” — Steve Forbes

Dear fellow libertarians and free-marketers,

Every year FreedomFest grows and grows. We were up 42% last year to 1400 attendees, because our private conference is different from all the others.

Here are three reasons why FreedomFest is creating a lot of buzz:

1. Speakers stick around and mingle with the attendees. At most conferences, big-name speakers fly in, give a speech, sign a few books, and then leave. But at FreedomFest, the vast majority of speakers (over 100) genuinely enjoy the conference themselves, attend the sessions and socialize with everybody.

Steve Forbes is a perfect example. Last year his secretary Jackie called to tell us that Mr. Forbes had other obligations and couldn’t stay. He could spend only a few hours and would have to leave. But after reviewing our great line-up of speakers, debates and panels, Jackie called me back and said Mr. Forbes had changed his schedule and would attend all 3 days. He did, and he loved it.

Attendees were amazing seeing a famous billionaire attending sessions and walking around the exhibit hall.

Last week I spent an hour with Mr. Forbes in his office in New York. He expressed deep concern about where our country is headed and the government’s attack on our free-enterprise system through inflation, taxation, and regulation. When I told him about this year’s program at FreedomFest, including our World Economic Summit, his eyes lit up. “I can’t wait — sign me up. I’ll be there for the entire conference.”

In addition to giving a keynote address, Mr. Forbes will join us for the always popular “Libertarian Enterpreneurs Panel.” He will also be presenting the Free Market Hall of Fame at Saturday night’s gala banquet.

Attendees take notice. We got a call today from one of last year’s attendees. He said he couldn’t believe his fortune last year. “I had lunch with Charles Murray, chatted for 10 minutes with Steve Forbes in the exhibit hall, and sat next to John Mackey in one of the sessions.”

“Sign me up for this year!” he said.

John Mackey, CEO of

is another example. He is an extremely busy executive of one of the fastest growing businesses in the world — natural foods — yet he sets aside every year 3 days to attend FreedomFest.

“I love FreedomFest–wonderfully interesting people and non-stop intellectual stimulation. The debates are great–Keep doing them. I’m really looking forward to FreedomFest 2009.”

We are having nine debates this year, and John Mackey is doing one of them: “Randian Capitalism vs. Conscious Capitalism.” He and his colleague, Michael Strong (FLOW), will be debating two libertarians from the Objectivist Center. The sparks will fly.

Other debates include “Ideal US foreign policy–isolationist or imperialist?”….”Wal-Mart, Good or Bad for America?”….“Abe Lincoln: Best or Worst President?”…..”Austrian vs. Chicago economics: Which is Best to Solve the Financial Crisis?”….”China, Friend or Foe?”…..”Should Hard Drugs be Legalized.”

2. FreedomFest is perfectly suited for free-thinking individualists. Most conferences have a “one style fits all.” Everybody meets in one big hall and you hear one speaker after another. It’s the same conference for everyone. But the interests of our attendees are vastly different.

At FreedomFest, you create your own conference, and everyone’s experience is different. We have a few general sessions, but most of the time you choose between 6-7 breakout sessions, where you choose your favorite topic, speaker, debate, panel…..It’s incredibly diverse.

Choose between sessions on philosophy, history, geo-politics, science & technology, art and literature, economics, healthy living, and investing. You make the decision…..and it’s incredibly fun. Many attendees bring their friends and split up, and compare notes at the end of the day.

Don’t worry. We also record all the sessions, and sell the CDs during the conference, so nobody misses anything.

3. FreedomFest is the most expansive “mind blowing” experience ever achieved at a single conference. Other conferences have specific themes — for investors and stock market traders, political junkies, computer nerds, science fiction devotees, love & relationships, etc.

But FreedomFest has something for everyone. It’s a Renaissance weekend that explores a wide range of topics — we offer a World Geo-Political and Economic Summit, a 3-day investment conference, and special sessions, panels and debates on science, technology, religion, philosophy, art & literature, and healthy living.

One attendee put it this way: “Freedom Fest is like having access to all the greatest intellectual food in the world and you just can’t eat fast enough to sample it all! I can’t remember an event in my life that was more gratifying.” (Jerry Cameron, St. Augustine, Florida)

“Imagine the Possibilities”

This year’s FreedomFest theme is “Imagine the Possibilities.” Here’s the latest update:

Douglas Casey Larry Kudlow Stephen Moore

O World Economic Summit (theme: “Clear and Present Danger”) and comprehensive 3-day investment conference with top experts from around the world, including Larry Kudlow, Steve Forbes, Dan Mitchell, Steve Moore, John Fund, Charles Gasparino (CNBC’s top reporter), Rick Rule, Keith Fitz-gerald, and many other experts.


O
“All-Star Prediction Panel: Gurus who Predicted the 2008 Crisis — What are They Predicting Now?” with Peter Schiff (EuroPacific Research), R. E. McMaster (“The Reaper”), Prof. Fred Foldvary (Santa Clara University author of “The Depression of 2008″), and Dennis Slothower (On the Money). Moderated by Mark Skousen, editor of “Forecasts & Strategies” and producer of FreedomFest.

O JUST ADDED! Campaign for Liberty:  Special Friday night event with Congressman Ron Paul, Judge Andrew Napolitano, and NYTimes bestselling author Tom Woods.


O
Mini-Festival on Libertarian Science Fiction/Fantasy: Prof. Eric S. Rabkin (Michigan), Brian Doherty (Reason magazine), David Friedman (Santa Clara), and Stephen Cox and Drew Ferguson (Liberty magazine).


O
Sacred Text Project: Hear true believers talk about the Tulmad, the Koran, the New Testament, Tao Te Ching, etc. And join Sikh philosopher and yoga master Gurucharan Singh Khalsa in his yoga and breathing exercises.


O
Confirmed speakers include Charles Murray, Steve Moore, Michael Shermer (Scientific American), John Mackey (CEO, Whole Foods Market), Floyd Brown, R. Emmett Tyrrell, Jr. and Al Regnery (American Spectator), Don Hauptman (marketing guru), Richard Viguerie (American Target), Christopher Ruddy (Newsmax), Alex Green (Oxford Club), and Matt Goodman (founder, Blue Man Group).

O Back by popular demand, the world’s best emcee, Chip Wood! Plus Joe Bradley, editor extraordinaire of Investor’s Hotline.

O Prof. Socky O’Sullivan (Rollins College) on “How to Write A Classic Novel.” Always a popular speaker.

O World’s foremost tax author, Marshall Langer, on “Saving Tons on Taxes by Moving to Another State or Country.” Plus estate and tax planners Jeffrey Verdon, Vern Jacobs, and David T. Phillips.

O Big Box Debate: “Wal-Mart: Good or Bad for America?” pitting Ohio U. professor Richard Vedder, author of “The Wal-Mart Revolution: How Big Box Stores Benefit Consumers, Workers and the Economy” against Al Norman, author of “The Case Against Wal-Mart,” and top boycott organizer against Wal-Mart. Let the fireworks begin.


O Steven Watts, professor of history at U of Missouri, on two topics:
“Fantasyland, Walt Disney, and the American Dream”, and the second on “Playboy, Hugh Hefner, and the American Dream.” The first on juvenile fantasy in post-war America, and the second on adult fantasy in post-war America. (Prof. Watts has written a biography of Walt Disney, and more recently a bestselling biography of Hugh Hefner called “Mr. Playboy.”)

o Canadian French writers, Jean-Benoit Nadeau and his wife Julie Barlow, on their books “Sixty Million Frenchmen Can’t Be Wrong” and “The Story of French.” Fascinant et controversé!

O Liberty Editors Conference: The editors of Liberty magazine (Stephen Cox, Jo Ann Skousen, Bruce Ramsey, Doug Casey, Jim Walsh) back by popular demand.


O
World’s Largest Exhibit of Freedom Organizations. Previous exhibitors/sponsors have included: Cato Institute, Fraser Institute, Heritage Foundation, Reason Foundation, Hillsdale College, Goldwater Institute, Foundation for Economic Education, American Spectator, Antiwar.com, and many more. Laissez Faire Books is our official bookstore, and of course Eagle Publishing will be there as a platinum sponsor.


O
Gala Saturday night banquet, always the highlight of the conference. We will sing our theme song, “Freedom and Gold” (hear it at www.freedomfest.com), announce a new group of Free Market Hall of Fame winner, and be entertained by a surprise music group you will never forget. Inspiring talks by Larry Kudlow and Steve Forbes, and emceed by Chip Wood. (Last year’s entertainment, a George Bush impersonator, brought the house down.)

Last but not least, our big conference is held in the entertainment capital of the world. Conservatives meet in Washington DC, but we hate Washington and all it stands for. Washington DC is “death star,” as my friend Doug Casey calls it. We want to get away from it as much as possible. So instead, we chose:

7-11 in Vegas!

FreedomFest is scheduled this year July 9-11, 2009, at Bally’s/Paris, right in the middle of the Vegas Strip.

FREEDOMFEST 2009

“The World’s Largest Gathering of Free Minds”
July 9-11, 2009, Las Vegas

“So good I changed my schedule to attend all 3 days!” — Steve Forbes


The BUZZ


“So good I changed my schedule to attend all 3 days!” — Steve Forbes


“Run, do not walk, to FreedomFest! Where else can you meet and mingle with so many fellow travelers, and create the social bonds that can change the world?” — Mark Mullins, Executive Director, The Fraser Institute


FreedomFest is an intoxicating experience that leaves a permanent glow! Normally I am a harsh judge of such events, but the sessions at FreedomFest were on a remarkably high level. It was great sharing with so many diverse folks united by a love of liberty and learning.” — Gene Epstein, Barron’s


“The atmosphere is electric. FreedomFest is the world’s largest and most important meeting of free minds. I wouldn’t miss it for the world.” — Ted Nicholas, world’s #1 marketing guru


“I’m a moderate Democrat and not a libertarian, but I thought the atmosphere at FreedomFest was extremely non-hostile, and I could speak my mind without making enemies.” –Prof. Alan Nelson, UC Berkeley


“Given the high caliber of attendees, speakers, the professionalism of the planning, and programs of Freedom Fest, is it too early to reserve Madison Square Garden for next year?” –Richard Viguerie


“Next to my wedding day and the birth of my children, FreedomFest 2008 was the highlight of my life!” — Alex Green, Chairman, Investment U


“I love FreedomFest–wonderfully interesting people and non-stop intellectual stimulation. The debates are the best. I’m really looking forward to FreedomFest 2009.” John Mackey, CEO, Whole Foods Market


“I was going to leave early, but after my first day at FreedomFest, I changed my flight at a cost of several hundred dollars more to attend the entire conference. It was worth every penny.” — Carl Johnston, attendee


“I feel an electricity here that I haven’t felt in years!” — Nathaniel Branden

How to Sign Up–Take Advantage of our “Early Bird” Special,

and Get a Free Silver Dollar

Want to know more? Go to www.freedomfest.com, or call Tami Holland, conference coordinator, at 1-866-266-5101. Take advantage of the “early bird” special by registering before April 15, and get $100 off person/$200 per couple. First 100 to sign up receive a free uncirculated American eagle silver dollar. Call today:


1-866-266-5101, or go to
www.freedomfest.com.

In liberty, AEIOU,

Mark


Mark Skousen
Producer, FreedomFest

“The world’s largest gathering of free minds”
July 9-11, 2009, Las Vegas

P. S. Good news! We just renegotiated our hotel contract, and Bally’s is now offering us room rates at $74 per night!

Start Your Own Tax Revolt — Without Getting In Trouble

From Human Events

“A virtuous and industrious people may be cheaply governed.” ~ Benjamin Franklin

“Little else is required to carry a state to the highest level of opulence but peace, easy taxes, and a tolerable administration of justice.” ~ Adam Smith

Today, on April 15 Tax Day, hundreds of thousands of citizens are protesting out of control government spending and taxes at Tea Parties across America.

Should we complain?

The good news is that marginal tax rates have gradually declined since the 1950s, when the rate on income was 90%. And taxes on long-term capital gains and dividends are now at 15%. Long live supply-side Reaganomics tax cuts.

The bad news is that prior to the 1980s, there were plenty of loopholes to escape onerous 90% tax rates. Those tax shelters are largely gone.

The good news is that Tax Freedom Day (the amount of days you have to work to pay Uncle Sam) arrived two days ago, on April 13, according to the Tax Foundation. This is eight days earlier than in 2008, and a full two weeks earlier than in 2007, due to the recession, and the large temporary tax cuts for 2009 and 2010.

The bad news is that Americans will pay more in taxes than they will spend on food, clothing and housing combined! (Source: http://mjperry.blogspot.com/)

Moreover, if you add in the federal budget deficit to total taxes collected, the real Tax Freedom Day is May 29, the worst since World War II.

But there’s more bad news: For American business, the corporate tax rate is 40% in the United States, 50% higher than the average size of other industrial countries. The average corporate tax rate in OECD countries has been falling over the past 20 years, but not in the U.S.

In addition, legislators have discovered ingenious ways to taxing its citizens — through import duties, levies, and fees of various sorts. Today the federal “excise” tax is taking its toll on gasoline, tobacco, telephone and utility bills.

And sales taxes are inevitably rising in state after state, and I know of no state that has cut sales taxes. After every recession, the governor “temporarily” raises the sales tax by a penny, but then never rescinds it. Moreover, the state legislators are always finding ways to expand the tax base. When I was in Florida recently, the state imposed its 6% sales tax on hotel parking fees!

The few sales tax exemptions left, such as out-of-state and online purchases, are gradually disappearing.

Not surprisingly, taxes at the federal, state and local level are at an all-time high as a percentage of GDP. And under President Obama’s tax increases on the wealthy and on average citizens through his “cap and trade” energy tax (which will raise substantially the price of gasoline and utility bills), the percentage is expected to reach 27%.

Now more than ever, we need a stable, sound, low tax system that individuals and businesses can depend on for long term planning. Unfortunately, we change the tax law practically every year.

Countries like Hong Kong do it right. For the past fifty years, they have not changed their tax code hardly at all. They have a flat tax of 18% on individuals and corporations, and no tax on interest, dividends and capital gains. And they live within their means. No wonder the Economic Freedom Index ranks Hong Kong #1 in the world in terms of economic freedom and economic growth. We could learn a lot from Hong Kong.

I say, it’s time for a tax revolt. I favor a flat tax like the one advocated by Steve Forbes. It’s better than the so-called “fair tax” on consumption because it will create a new bureaucracy and will inevitably result in the U.S. having both a national sales tax and income tax.

But why wait for Congress to change the rules again and again? I say, wage your own tax revolt. But remember, some methods are effective, others are downright dangerous and could land you in jail. Here’s some do’s and don’t:

1. Take advantage of all legitimate tax-advantaged strategies. The two best ones right now are (a) a Sub S corporate business, and (b) investing in real estate, including your own home. Both offer ways to minimize FICA and income taxes; both can benefit from tax credits. In fact, it’s the best “buyers” market in real estate I’ve seen in decades.

2. Do consider moving to low-tax states, including ones that don’t impose an income tax (Florida, Texas, Nevada, Tennessee, Alaska, Washington, Wyoming, and New Hampshire). You might also consider living in a border state to avoid both the income and sales tax, such as Vancouver, Washington (by living in Washington state, you are exempt from the state income tax; by shopping in Oregon, you avoid the sales tax.)

3. Do consider working abroad and taking advantage of the foreign earned income exemption for Americans. My wife and I lived and worked two years in the Bahamas in the 1980s and saved so much in taxes that we bought a second home in London.

4. Do NOT get involved in tax protest movements involving the refusal to file tax returns on Constitutional grounds, or suspicious offshore tax haven deals. You’ll end up losing money and perhaps going to jail.

5. Do NOT renounce your citizenship and move abroad. Recent tax legislation forces ex-patriates to pay taxes on the next 10 years of income. It also limits severely how much time you can spend in the United States.

Finally, do NOT make business or investment decisions solely on the basis of avoiding taxes. There’s more to life than avoiding the tax man. Protest all your want today, but don’t make foolish financial decisions.

Was the Great Depression Good for Us?

“Everything was all right in those years, but only if you had a job.” ~ Grandmother of Amity Shlaes in The Forgotten Man


Can the worst of times also be the best of times? When we think of the Great Depression of the 1930s, we are quick to recall the soup lines, bank closings, dust bowls, bear markets, demoralizing despair, and the aftershocks — Nazi Germany, the New Deal, Keynesianism, and, some say, World War II. Today, as the current recession worsens, everyone fears the dreaded D and seeks desperate rescue measures.

But was the Great Depression all bad? Truth is, there’s a bright side to the gloomy Thirties — a lower cost of living, huge technological advances, new forms of entertainment, more leisure time, and a return to responsible social behavior.

It was the beginning of the five-day work week….the Golden Age of radio and film….the playing of social sports like bridge, Monopoly, and softball….leisure time to read books and dance the jitterbug….while scientists invented the electron microscope, FM radio, radar, the jet airplane, and network television….

Chicago economist Robert Lucas, Jr., once called the 1930s “one long vacation,” and social historian Frederick Lewis Allen exclaimed, “[T]he American imagination was beginning to break loose again.”

There’s an old Asian saying, “It is the irritation in the oyster that forms the pearl.” A few people couldn’t take the hard times and jumped out windows, but most people responded to the challenge. Adversity often brings out creativity and opportunities to learn and advance. The 1930s were no exception.

This is a summary of a full-length article called “Brother, Can You Spare a Decade?” that I wrote on the subject in the May issue of Liberty magazine. Since writing this controversial and politically incorrect article, I’ve been attacked and defended by friends and foes.

For example, Mike Sharpe, my academic publisher at M. E. Sharpe and a social Democrat, took strong exception to my article. He wrote:

“What Mark Skousen says in ‘Brother Can You Spare a Decade?’ is beside the point. Millions of people were jobless, hungry, and in despair during the Depression. The fact that songs were written or scientific discoveries were made doesn’t mitigate the suffering. Does the work of Socrates mitigate the effects of the tyranny that executed him? Do the discoveries of Galileo offset the Roman Inquisition? Do the works of Shakespeare compensate for the expulsion of the Jews from England? Does the first novel by an American black, Clotel, written in 1853, reflect well on slavery? Do the performances of Von Karajan under Hitler make Nazism enjoyable? Does “God Bless America” sung by Kate Smith during World War II make that war less of a tragedy? Skousen’s entire argument is a non sequitur, harmful to a true understanding of the effects of the Depression and by extension, the current recession. He should not make light of suffering.”

My response:

I’m reluctant to start a fight with the publisher of my books, but here goes:

My essay may well be irreverent, but it’s not irrelevant. Mr. Sharpe’s view is the traditional view. I don’t dispute it. There was a lot of real suffering during the Great Depression, and I mention the dark side of the 1930s at various times in the essay.

But what I do try to do is look at the positive things that came out of the Great Depression. Sharpe wants to ignore them. Yes, there was a lot of suffering, but there were times of joy, good times, and scientific advances in the midst of the depression.

I think we have to look at both extremes to find out what really matters, the bad and the good that came out of the Great Depression and today’s recession. Sharpe focuses on the suffering that goes on in a recession/depression, I focus on the positive effects of a downturn, such as the good things people are doing now (out of necessity): being more careful about what they spend, saving for a rainy day, not taking their job for granted, and sensing trouble rather than going along merrily trusting in the establishment, without thinking. What’s so bad about that?

Both views are important.

Sometimes I think we as a nation and as legislators are impatient. We want to avoid suffering at all times, and take pills if we sense even a slight headache. No one wants to be unemployed or fired from a job, but you know what? Lots of unemployed and fired people tell me later (a year or two after finding another job) that it was the best thing that ever happened to them. Not all, but many.

I conclude that a lot of good can come out of bad times.

What’s your view? Is the recession or depression good or bad for America?

Recent Articles by Mark Skousen

I’ve compiled a quick list of a few of my recent articles and appearances in the press, addressing the current economic crisis, as well as the growing freedom movement in response to the power-grab currently going on in Washington. Now is the time for a return to the freedom principles of the free-market and the Constitution!

Obamanomics Is Making Matters Worse
by  Mark Skousen
02/24/200, Human Events Online
In the midst of the stock market freefall, Obama’s actions (and inactions) showed ineptness and wrong thinking. Read the article.

Will We Survive Obamanomics?
By Mark Skousen
Mar 5, 2009, The Gilroy Dispatch
Why I think Obama budget plan is leading us down the wrong path. Take a read!

Has Keynes Trumped Adam Smith?

By Mark Skousen
February 27, 2009
A nice reprint of one of my articles on a web blog. A great way to spread the word.

“Market Monitor” — Mark Skousen, Editor, Forecasts & Strategies
with Paul Kangas, Nightly Business Report, PBS, Friday, March 06, 2009

Link to transcript of the show

Steve’s Serendipities: Persuasion vs. Force by Mark Skousen
A discovery of my pamphlet on the principles of freedom. Worth a read!

With China We Trade,’ Historical Ties between China and Founding Fathers
by Jeffrey Bingham Mead, History Education Council of Hawaii
March 11, 2009, Honolulu Advertiser
This writer uses my work compiling The Compleated Autobiography by Benjamin Franklin, which revealed a lot of the great Founding Father in his later, significant years, in a fascinating new analysis of China and its trade practices. Take a look!

Plus, some nice reader reviews of Investing in One Lesson on Cheap Best Books. An important book to read in today’s investing climate.

Yours in liberty, AEIOU,
Mark Skousen

Mark Skousen In the News and On the Web

Has Keynes Trumped Adam Smith?
By Mark Skousen
February 27, 2009
A nice reprint of one of my articles on a web blog. A great way to spread the word.

“Market Monitor” — Mark Skousen, Editor, Forecasts & Strategies
with Paul Kangas, Nightly Business Report, PBS, Friday, March 06, 2009

Link to transcript of the show

Steve’s Serendipities: Persuasion vs. Force by Mark Skousen
A discovery of my pamphlet on the principles of freedom. Worth a read!

With China We Trade,’ Historical Ties between China and Founding Fathers
by Jeffrey Bingham Mead, History Education Council of Hawaii
March 11, 2009, Honolulu Advertiser
This writer uses my work compiling The Compleated Autobiography by Benjamin Franklin, which revealed a lot of the great Founding Father in his later, significant years, in a fascinating new analysis of China and its trade practices. Take a look!

Plus, some nice reader reviews of Investing in One Lesson on Cheap Best Books. An important book to read in today’s investing climate.

Yours in liberty, AEIOU,

Glenn Beck puts Cleon Skousen at #1 on Amazon

Well, he did it. Glenn Beck has put my uncle Cleon’s book, The 5,000 Year Leap: 28 Principles that Changed the World (How the US Constitution Inspired America’s Greatness) #1 on Amazon.com.

The guy is incredible.

I was on his show a couple of weeks ago, and he told me between commercials, “Cleon Skousen’s book changed my life.” He has written an introduction to a new version of the book, which is expected to come out soon.

Glenn just announced his “912 Project”–go to www.the912project.com. I wonder where this will all lead.

In liberty, AEIOU,

MAS

Will we survive Obamanomics?

From the Gilroy Dispatch

Officially, President Obama’s $3.6 trillion budget is titled “A New Era of Responsibility.”

That’s false on two counts. It’s an era – not of responsibility, but of big-government taxation, spending, and regulation. And it’s not new. History is full of attempts to inflate the state to grow the economy. Virtually all have ended badly. As the recent sell-off reminds us, Wall Street’s verdict on Obamanomics has been quick and sharp.

The president’s budget is right in castigating the “troubled past” of the Bush administration, which spent money like a drunken sailor on education, healthcare, bailouts, and two seemingly endless wars in the greater Middle East, with virtually no regard for how to pay for a rapidly growing national debt.

But now we must confront the troubled future. Obama has adopted the big-spending policies of George W. Bush, with trillions more proposed for education, bailouts, and healthcare. He wants to sharply reduce (but not end) the American presence in Iraq. At the same time, he plans to deploy an additional 17,000 troops to Afghanistan, which may lead to an expanded quagmire there.

Hasn’t Obama read the bestseller “Three Cups of Tea: One Man’s Mission to Promote Peace … One School at a Time,” by Greg Mortenson and David Oliver Relin? A Pakistani general who talked with Mr. Mortenson aptly identified the real problem in Afghanistan: “The enemy is ignorance. The only way to defeat it is to build relationships with these people, to draw them into the modern world with education and business. Otherwise the fight will go on forever.”

In some ways, Obama’s plans are more grandiose than Bush’s. He wants to encourage green technology and energy independence, and move toward national healthcare. The cost is enormous. The deficit for this year alone is expected to reach $1.7 trillion.

To help pay for this, Obama proposes the largest tax increase in history. Some of this, such as new taxes on oil and gas companies, is explicit. Some of it, such as the new cap and trade program, is quite subtle. And some of it will “merely” repeal the Bush tax rates on high incomes. But all of it represents a tremendous muzzle on the economy at a time when it needs to be unleashed.

Even these huge tax hikes won’t be nearly sufficient to pay for the outlays. In fact, to pay for it in full, The Wall Street Journal pointed out, Uncle Sam would have to confiscate every penny earned by Americans making at least $75,000 a year.

What’s the future for Obamanomics? The stock market’s reaction doesn’t bode well. The Dow has fallen more than 18 percent since the last trading day of Bush’s term. Clearly, Wall Street thinks that Obama’s tax, spend, and regulate policies will be a disaster.

Despite the dire headlines, the world is not coming to an end, we are not headed into another Great Depression, and free-market capitalism has not breathed its last breath.

In my book, “The Big Three in Economics,” I found that the press has frequently and prematurely written the obituary of Adam Smith and his free-market philosophy, only to see a new and more vibrant global marketplace reemerge after being savagely attacked by Keynesians, Marxists, and assorted socialists. Market capitalism survived and prospered after the boom-bust industrial revolution of the 19th century, and the Great Depression and world wars of the 20th century. It will recover from the financial panic of 2008-09 and Obamanomics.

Adam Smith, the supreme defender of market capitalism, expressed this optimism well in 1776 when he wrote in “The Wealth of Nations”:

“The uniform, constant, and uninterrupted effort of every man to better his condition … is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration.”

The ideas of Adam Smith and his modern followers will make a comeback. Already, pro-market forces are gathering in Congress to defeat Obama’s ambitious and highly socialistic agenda. Charities and nonprofits are already up in arms about the proposed limits on tax deductions for wealthy donations for good causes.

I’m doing my part by holding the world’s largest gathering of free minds at FreedomFest, July 9-11, 2009, in Las Vegas.

Details: www.freedomfest.com.

Mark Skousen on Twitter and Facebook

Dear Forecasts & Strategies subscribers,

We’ve always been able to keep in touch via the monthly newsletter, my appearances at investment conferences around the world, and my weekly hotline.

Now I’m on two of the biggest social networking sites on the Internet, Twitter and Facebook.

With these two great websites, you can follow my day-to-day, sometimes hour-by-hour, thoughts on the markets, the economy, as well as my various activities as I travel the world. It’s easy and free to join. So, join up at Twitter.com and Facebook.com, and follow my feed or add me as your friend!

It’s another great way we can stay in touch!

Yours in liberty, and in cyberspace!

AEIOU,
Mark Skousen