JEFFFLEEW

I was looking around on futurist sites today and ran across a reference to this book. The title enchanted me, innovation IS how we will restore the American Dream. But, in watching his video his political views have been so biased and oversimplified by our last 30 years of supply side economics and media control that he cannot be trusted.

I think a longer term view of the relation between US political power, taxation, economic growth and innovation is in order. Marginal tax rates were 63% or greater from 1932 through 1981. During this 50 year period of time, per capita GDP growth averaged 3% per year. Since then, for the last 30 years, per capita GDP growth has averaged 1.8%. This is a HUGE difference.

The biggest periods of growth from 1913 till 2009 (the dates I have information for) were 1934-1936, and 1941-1943. In these three year periods per capita growth rates were 33.85% and 55.92%. With our current 14 Trillion dollar economy these growth rates would make our debts manageable and undoubtedly make America #1 in the world.

So... how were these fantastic growth rates obtained?

The first period maps exactly to Roosevelt's New Deal, more specifically the "Second New Deal". The "Deal" included the Wagner Act to promote labor unions, the Works Progress Administration (WPA) relief program, the Social Security Act, and new programs to aid tenant farmers and migrant workers. The cost in today's dollars for a New Deal would be about 500 Billion dollars (The cost of the US military for one year). If it created the same effect, the economy would grow 4.7 trillion dollars, enough so that the taxes (assumes 12% overall rate of taxation on the new GDP created) on the increased economy would easily pay for a New New Deal.