Those who claim that increasing income taxes will improve real hourly earnings have to explain the fact that prior to 1913 there was no income tax but real hourly earnings were increasing as much as 20 times faster than they have increased since 1971, when a significant income tax was in place. I tabulate some rough estimates of average real wage growth pre 1913 and post 1971. Between 1860 and 1890 real wages were growing at a 1-2% clip or so. Post 1971 they have been growing at about 0.1% per year. But there was no income tax for most of the 1860 to 1913 period. In contrast, under the income tax, real wages have been stagnant.
See comparison here.
Differences this big have been ignored in the popular debate about wage inequality. Something is seriously amiss here. Comments, anyone?
Wednesday, October 22, 2008
Wage Improvement Pre-Federal Reserve Bank, Pre Income Tax versus Post-Federal Reserve, Post Income Tax
Real Wages Pre-Federal Reserve, Pre-Income Tax
"In the United States, according to the data afforded by the census returns for 1850 and 1880, the average wages paid for the whole country increased during the interval for these years by 39.9 per cent...According to the investigations of the Massachusetts Bureau of Labor Statistics, the average advance in general wages in that State from 1860 to 1883 was 28.36 per cent...A careful investigation instituted by the Bureau of Labor Statistics for Connecticut of the comparative wages paid in the brass, carpet, clock, silk and wooden industries of that State in 1860 and 1887, and the comparative cost of the necessaries of life to the operatives at the same periods (see report for 1888), gave the following results: average advance in the wages of males about forty-three per cent, and of females fifty-seven per cent; decline in the price of staple dry goods thirty-nine per cent; of carpets, thirty-six per cent; increase in the average price of groceries and provisions, ten and a half per cent. 'There was an average advance in the retail price of such kinds and cuts of meat as are common to the market reports of both dates of thirty-three percent.'"
---David Ames Wells, Recent Economic Changes, p. 409
Real wage increase over 25-30 years: roughly 30-60%
Post Federal Reserve Bank, Post Income Tax
Average hourly wage, 1971: $3.67
Average real wage, Sept. 2008: $18.17
CPI Sept. 1971: 40.8
CPI in 2007: 208.49
Average real hourly earnings, Sept. 1971: 3.40 /40.8 = .08333
Average real hourly earnings, Sept. 2008 18.17/ 208.49 = .08715
Increase: over almost 40 years: 4.6%
Can flat real wages since 1971 be due to income tax policy, when there was no income tax in the 19th century and real wages grew 20 times faster?
"In the United States, according to the data afforded by the census returns for 1850 and 1880, the average wages paid for the whole country increased during the interval for these years by 39.9 per cent...According to the investigations of the Massachusetts Bureau of Labor Statistics, the average advance in general wages in that State from 1860 to 1883 was 28.36 per cent...A careful investigation instituted by the Bureau of Labor Statistics for Connecticut of the comparative wages paid in the brass, carpet, clock, silk and wooden industries of that State in 1860 and 1887, and the comparative cost of the necessaries of life to the operatives at the same periods (see report for 1888), gave the following results: average advance in the wages of males about forty-three per cent, and of females fifty-seven per cent; decline in the price of staple dry goods thirty-nine per cent; of carpets, thirty-six per cent; increase in the average price of groceries and provisions, ten and a half per cent. 'There was an average advance in the retail price of such kinds and cuts of meat as are common to the market reports of both dates of thirty-three percent.'"
---David Ames Wells, Recent Economic Changes, p. 409
Real wage increase over 25-30 years: roughly 30-60%
Post Federal Reserve Bank, Post Income Tax
Average hourly wage, 1971: $3.67
Average real wage, Sept. 2008: $18.17
CPI Sept. 1971: 40.8
CPI in 2007: 208.49
Average real hourly earnings, Sept. 1971: 3.40 /40.8 = .08333
Average real hourly earnings, Sept. 2008 18.17/ 208.49 = .08715
Increase: over almost 40 years: 4.6%
Can flat real wages since 1971 be due to income tax policy, when there was no income tax in the 19th century and real wages grew 20 times faster?
David Ames Wells on Socialism
"There is...an explanation in no small part of what to many has seemed one of the greatest puzzles of the time--namely, that with undoubtedly greater and increasing abundance and cheapness of most desirable things, popular discontent with the existing economic condition of affairs does not seem to diminish, but rather to greatly increase. And out of such discontent, which is not based on anything akin to actual and unavoidable poverty, has originated a feeling that the new conditions of abundance should be further equalized by some other methods than intelligent individual effort, self-denial and a natural, progressive material and social development (the actuality of which is proved by all experience); and that the state could, if it would, make all men prosperous; and therefore should, in some way not yet clearly defined by anybody, arbitrarily intervene and effect it. And this feeling so far as it assumes definiteness of idea and purpose, constitutes what is called socialism."
---David Ames Wells, Recent Economic Changes, New York, D. Appleton and Co., 1891.
Unfortunately for Progressives and socialists like Walter Weyl, efforts to use the state to redistribute wealth in pursuit of "equity" have engendered the following. Division of society into more sharply defined classes than ever before due to Federal Reserve, income tax and other innovation-destroying government controls; the creation of segregated inner cities marked by chronic unemployment; inflation; an increasingly elite wealthy class that lives off investment but does not produce value; and the migration of industry to foreign shores in place of the rapid innovation characteristic of the laissez-faire period of American history. The spirit of envy; of something for nothing; of greed for a handout from the state rather than self-discipline as the source of wealth has destroyed this country's future.
---David Ames Wells, Recent Economic Changes, New York, D. Appleton and Co., 1891.
Unfortunately for Progressives and socialists like Walter Weyl, efforts to use the state to redistribute wealth in pursuit of "equity" have engendered the following. Division of society into more sharply defined classes than ever before due to Federal Reserve, income tax and other innovation-destroying government controls; the creation of segregated inner cities marked by chronic unemployment; inflation; an increasingly elite wealthy class that lives off investment but does not produce value; and the migration of industry to foreign shores in place of the rapid innovation characteristic of the laissez-faire period of American history. The spirit of envy; of something for nothing; of greed for a handout from the state rather than self-discipline as the source of wealth has destroyed this country's future.
Explosive Berg v. Obama Developments
Jim Crum just forwarded this from Judah Benjamin of Texas Darlin
I direct you to America's Right…where Jeff Schreiber has devoted all of his spare time to looking at the case. (Thank you beyond measure, Jeff, I don’t know where you get the time and energy. You are a hero, and Republican, or not, I hope you end up as Chief Justice.) Go to Jeff’s site, I don’t care if he’s a Republican, he’s the man who is in contact with the Court and with Berg and who breaks the news the minute it comes out.
Berg has struck back with a Procedural bombshell!
A motion requesting an immediate order deeming his request for admissions served upon Barack Obama and the DNC on September 15 admitted by default, and
B) A motion requesting an expedited ruling and/or hearing on Berg’s motion deeming the request for admissions served upon Obama and the DNC admitted.
These motions are based on Rule 36 of The Federal Code of Civil Procedure. This Rule, it seems, states that “a party upon whom requests for admissions have been served must respond, within 30 days, or else the matters in the requests will be automatically deemed conclusively admitted for purposes of the pending action.”
Needless to say, Obama and the DNC have NOT made any Legal admissions, or answers to the allegations, at all since September 15th, at least none of which Berg is aware and he should be if they have.
If Judge Surrick grants these motions, Barack Hussein Obama II is, at least temporarily, neither eligible for the Office of POTUS nor a Citizen of the United States, in Law.
Follow the legal developments here and here.
I direct you to America's Right…where Jeff Schreiber has devoted all of his spare time to looking at the case. (Thank you beyond measure, Jeff, I don’t know where you get the time and energy. You are a hero, and Republican, or not, I hope you end up as Chief Justice.) Go to Jeff’s site, I don’t care if he’s a Republican, he’s the man who is in contact with the Court and with Berg and who breaks the news the minute it comes out.
Berg has struck back with a Procedural bombshell!
A motion requesting an immediate order deeming his request for admissions served upon Barack Obama and the DNC on September 15 admitted by default, and
B) A motion requesting an expedited ruling and/or hearing on Berg’s motion deeming the request for admissions served upon Obama and the DNC admitted.
These motions are based on Rule 36 of The Federal Code of Civil Procedure. This Rule, it seems, states that “a party upon whom requests for admissions have been served must respond, within 30 days, or else the matters in the requests will be automatically deemed conclusively admitted for purposes of the pending action.”
Needless to say, Obama and the DNC have NOT made any Legal admissions, or answers to the allegations, at all since September 15th, at least none of which Berg is aware and he should be if they have.
If Judge Surrick grants these motions, Barack Hussein Obama II is, at least temporarily, neither eligible for the Office of POTUS nor a Citizen of the United States, in Law.
Follow the legal developments here and here.
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