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October 29, 2022
What made America great? Unfettered capitalism.
The United States began with our Founders having wealth similar to the gentry in Europe. However, the ordinary people comparable to ourselves were essentially paupers. We built our homes with wood and mud (log homes and adobe), same as people before us for thousands of years.
But by 1914, we were the wealthiest people on Earth. Why? The answer is capitalism – capitalism with no government cost or interference. We didn’t even have an income tax until 1913.
By 1914, unfettered capitalism had brought prices down so low that one person, earning the average wage of only 32 cents per hour, could support a sizable family with no additional income.
Our incomes and standard of living continued to grow throughout the Roaring Twenties. The recently imposed low income tax was innocuous and there were almost no regulations to slow the rise in standard of living. Prices of food, clothing, autos, housing, and other usable goods were declining.
The quality of goods was increasing rapidly and became better than one might imagine. The average home was built on raised-wood decking with hand-laid and hand-finished floors, lath-and-plaster walls and ceilings, and more plumb wood structure than today’s oft-called cracker boxes. Many appliances lasted a lifetime. Women wore hand-embroidered silk blouses, fine hats, and men with average wages often wore tailored wool suits, real leather shoes, and wing-collar shirts.
By 1926, the average monthly wage had increased to $1.24 per hour, an 11 percent annual growth rate from $0.32 per hour in 1914.
One person, earning the average wage of $1.24 per hour, could pay off their home in five years, purchase a vacation home, pay that off, and support a family of five all the way through college. Note that our vacation-home boom in resort towns occurred at that time.
Why is our standard of living so much lower today? One might aver that it is not, because we have more products and technology today.
That is true; however, had those inventions occurred during the Roaring Twenties, they most certainly would have been produced at a lower price and a more long-lasting quality. Our rising wage-to-price standard of living peaked in the Roaring Twenties and has since been declining because of socialism.
First, we must define socialism properly.
Socialism is the Robin Hood theory, take from the rich and give to the poor. They take from the rich by taxing them. Taxation is the sword and tool of socialism. The current definition is completely inaccurate.
After Hitler, Stalin, and Mussolini destroyed the revered name of socialism, socialist historians and journalists changed the definition of socialism in an effort to dissimulate socialist activities. They eliminated the old Marxist definition of: “From each according to his ability, to each according to his need,” and settled upon a new definition, “The government’s takeover of the means of production.”
The new definition concealed the ongoing socialist operation of taxing the rich. Taxation of the private sector could proceed; however, the operators could no longer be called socialists. This ruse persists today.
The kings and queens of Europe taxed their subjects heavily as did the Romans before that. By the Roaring Twenties, the United States had achieved the world’s highest standard of living because it was the only technological country that had grown without taxation.
So what happened? President Roosevelt eventually increased income taxes for the poor in the lowest income bracket from 4 to 24 percent, as well as for the richer, with those in the highest bracket raised to 94 percent (reducing what we could afford to pay). He also raised corporate taxes to 40 percent (increasing the price we must pay).
This is non-violent socialism at full throttle. We became a hybrid capitalist-socialist nation, like other nations.
James T. Moodey is a retired entrepreneur, author, and economic essayist. His recent book, The Ladder Out of Poverty, successfully determined why the poverty rate has not declined since the Great Society promised to end poverty.
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