Wilfred Reilly recently came out with a new book entitled “Lies My Liberal Teacher Told Me: Debunking the False Narratives Defining America's School Curricula,” a title that calls back to the left-leaning book the 1995 book “Lies My Teacher Told Me: Everything Your American History Textbook Got Wrong” written by James W. Loewen, which sought to address some of the history that was “sanitized and omitted from American history books.” There was much truth to what Loewen stated including that both racism and the impact of disease on the Native America population were understated in American history text books, to name just two examples. Since then however the left has conquered academia and with this conquest has come the new myths, many of which Reilly seeks to address including:
“The ‘Red Scare’ was a moral panic that caught no commies”
The hippies were the good guys, and the sexual revolution was great for women.
“Native Americans were peaceful people who spent all day dancing”
The Founders counted slaves as three fifths of a person
America’s use of the bomb to end the war with Japan was unjustified and evil
The theme of this book reminded me of my time as a post grad student and the bias that I always saw in academia – this can be summed up only slight exaggeration as “nothing good ever came from Republicans and the Democrats could do no wrong (except Bill Clinton who bears most of the responsibility for mass incarceration – note: he doesn’t, that’s just what progressives will tell you).” Reilly provides a good overview of some of the historical bias, but he couldn’t cover everything and one topic he didn’t hit on was economics.
Reilly’s purpose was to address historical inaccuracies not economic ones so we can’t hold the absence of progressive economic myths against him. However, there are many that need to be addressed; some owe popularity to racial politics, some failed to die when Marxism did (it hasn’t really died, it just lives on in the only place it can, academia) and some are simply stories politicians on the left tell to stir up the base. What they all have in common is that they are clearly wrong to anyone with a basic understanding of economics.
America was built on the backs of slaves
Here is an example taken from the Arizona State University site, “How America was built on slavery: Those roots can still be felt today:”
“American capitalism was built on the backs of slaves and the slave economy — and not just in the South. Some of these practices are still with us.”
It is, as the saying goes, clear, simple, and wrong. We can’t refute every historian who has made this argument, but we can look at one of the more famous (infamous) books that covered the topic. Edward Baptist’s, The Half Has Never Been Told: Slavery and the Making of American Capitalism argues that “the expansion of slavery in both geography and intensity was what made American capitalism.” The problem with his argument is, frankly, that it’s…well…crap. Baptist is either making up the math or sucks at it. While stating accurately that cotton made up 5% of GDP, he then proceeds to use some “back of the envelope” calculating that turns this into nearly 50%. Baptist had to fudge the numbers because no one, let alone anyone with an economics background, would believe that an industry providing 5% of GDP was the cornerstone of an economy. To put this in modern terms here is a list of the top 10 industries by GDP:
Can you imagine a historian in 100 years arguing that America was built on the back of the retail trade?
It’s also important to recall that the South was economically backward prior to the Civil War since “dependence on slavery reduced the incentive to invest in physical infrastructure and real estate.” As this map shows, property values in the north greatly exceeded those in the south driven in part by the North’s greater investment in canals, the primary method of transporting goods prior to the railroad.
One gets the impression that even Baptist himself doesn’t believe his own argument. When criticized by economic historians he did not respond with facts but rather accused them of them of racism (he’s white by the way). Say what you will about him, he was a screeching activist with an overdeveloped sense of his own importance long before it became a popular side gig for academics. Here’s what some economics historians had to say about his argument:
Edward Baptist’s study of capitalism and slavery is flawed beyond repair – Alan L. Olmstead, University of California, Davis
“...it is a poor book. It is badly written, sometimes spectacularly so. It is inadequately researched and shows a lack of familiarity with economic theory. It is overblown and full of overstatements. Most disturbingly, however, it is sloppy, indeed scandalously deficient, in its referencing. These deficiencies are so serious as to cast considerable doubt about the capacity of the author to present evidence properly. In short, a lot of the book is just made up…” - Trevor Burnard, University of Hull
Arguing that America was built on the backs of slaves is not a new idea, in fact it was, ironically, the argument that pro-slavery advocates argued leading up to the Civil War; “slavery was the nursing mother of the prosperity of the North.” It is also very much a Marxist argument, Karl Marx having written in 1846 that “without slavery there would be no cotton, without cotton there would be no modern industry.” Why have historians and activists decided that the pro-slavery advocates were right? Because the new enemy is not slavery but capitalism and linking capitalism to slavery helps “prove” it is evil.
No, slave owners used slaves as collateral for loans and shipped cotton around the world thereby participating in the emerging industrial capitalist economy, and in many cases became very wealthy, but neither America nor capitalism was not built on the backs of slaves.
Note: I read this book in 2019 and a lot of what I’ve written here, while all true, amounts to me finally being able to get this off my chest which I was unable to do at the time since most of my fellow students were progressives and raved about the book. To be clear, Baptist’s book is one of the worst history books I’ve ever read and the only time I’ve ever been tempted to burn a book. However, I like to keep copies of history books I’ve studied (even the bad ones) so instead briefly considered buying a second copy so I could burn it. Financial responsibility and breathing exercises restrained my hand.
The Laffer Curve promotes tax cuts for “the rich”
Another item from my time in post grad. First, let me be clear, I was not pursuing a master’s in economics but in history. However, I have an engineering degree and an MBA so have what we’ll call an unusual background compared to my fellow students who were largely (if not entirely) comprised people who had recently graduated with undergrad degrees in history. While this meant I faced a steep learning curve during my first 6 months or so, it also meant I had a more rounded background than most of my counterparts. I was also a good 15 to 20 years older than the rest of them so had experience in the “real world” and a different perspective on life. This different perspective came to light in 2019 when Arthur Laffer’s planned lecture, "Trump, Tariffs, and Trade Wars," was shut down by protesters. I remember wondering what the big deal was as in my mind the Laffer Curve made perfect sense. For those unfamiliar with it, the Laffer Curve is a theoretical description of the relationship between taxation rates and government tax revenue.
By Bastianowa - This file was derived from:Krzywa Laffera.svg:Laffer Curve.png:, CC BY-SA 2.5, https://commons.wikimedia.org/w/index.php?curid=117585270
Simply put, government revenues are nil at a 0% tax rate, rise as at an unknown rate as tax rates increase until at some point the tax rate causes people to put in less effort and tax revenue begins to fall reaching zero at a 100% tax rate when workers no longer see the point in working or, as Soviet workers used to joke, “we pretend to work and they pretend to pay us.” One can debate where that imaginary point of declining revenues lies, for example the chart below has it below 50%, but the existence of a point of diminishing returns seems undeniable.
So why was Laffer’s talk disrupted? What I had failed to understand was that as Laffer had worked for both Ronald Reagan and Donald Trump on economy issues, in the eyes of progressives, he and any of his ideas are at best wrong and most likely evil. Ideas, you see, cannot be separated from the individual. Good people have good ideas and bad people have bad ones. A lawsuit accusing Binghamton University of violating free speech and equal protection demonstrates this view. While disrupting Laffer’s talk protestors shouted, "We are tired of being oppressed and we are tired of getting murdered by this (Trump) Administration ... you, this man, this liar, Arthur Laffer, supports" before going on to accuse Laffer “of helping the Trump Administration further ‘racial oppression’ and a justice system that he equated with ‘modern-day slavery.’" Laffer is a bad person and therefore his ideas can be dismissed out of hand.
The Laffer Curve does face some reasonable criticism including that it is overly simplistic and that it is difficult (impossible?) to ascertain where on the curve a country sits at any given time and therefore not useful in determining raising taxes or reducing them would be more beneficial. The problem with the progressive objection to the curve is that it’s not founded on any logical argument but instead based on a dislike for the person who devised it.
In general progressives believe government is an absolute good and given the correct (progressive) policies will eliminate poverty, inequality, and social injustice. To do this, however, requires taxes. Consequently, any tax cut is by definition harming these efforts and benefiting “the rich.” After 50 years of welfare and no indication that poverty will be eliminated anytime soon it may be tempting to ask, “exactly how much money is required?” The answer from progressives will always be: “more.” If pushed one wonders if progressives would agree that 100% taxes would be a bad idea?
It is not unreasonable to argue that tax cuts may in fact promote growth, an argument that predates Laffer by at least 50 years, in which case the Laffer Curve does not promote tax cuts for the rich but rather tax cuts for the economy.
Conclusion
It is perfectly rational and acceptable to debate the effectiveness of different economic policies or to disagree over the correct tax rate since economics, unlike physics or chemistry, often straddles the line between science and art. Economic theories are difficult to test. We can’t for example keep randomly changing the tax rate until we know for sure what the Laffer Curve looks like. The goals of economic policy are economic growth, stable prices, and full employment and there are many problems that stand in the way. In science and the social sciences, to which economics belongs, identifying solutions to these problems requires an understanding of the underlying causes which in turn requires an open mind. This is not possible when you propose solutions to a problem already “knowing” what caused it. Unfortunately, this is too often the approach that Marxist and progressive academics and activists take. As all problems are seen to be caused by capitalism, racism, or the rich, any solution that does not address one or all of these will be seen as evil and dismissed out of hand without debate. This presents a problem to those honestly seeking a way forward as “who can refute a sneer?”
Note: My intention here was to cover a few more progressive economic myths than I was able to get to including price controls, rent controls (which may just be a subcategory of price controls), and whether or not “the rich” are paying their “fair” share. However, my desire to keep the post under 2000 words foiled my plan. The good news is that I get to come back to this another time for round 2 so stay tuned and thanks for reading.
Apparently 37 million Americans are getting SNAP that’s food stamps. That’s a subsidy for Walmart but Walmart family is extremely wealthy
I doubt the real Laffer curve would be symmetrical
Frankly under Biden my rent jumped 30 percent in two years
That was a nationwide thing
And corporations have the highest profits ever
There are enormous layoffs in tech and jobs being offshored
I think some deal was made by the democrats to led the oligarchs run wild
I have started looking at other countries to retire in
Living in America is very expensive and not very good
Even Switzerland is expensive but it’s good
Same with Singapore expensive and good
America is expensive
and not good a very bad combination
There are many countries that are cheaper and better lol