Depression Historian Says Low Taxes Caused 1929

By Tom Woods:

The Washington Post treated us the other day to a real gem from a “Depression historian” named Robert McElwaine.

He says the Trump tax cuts are just like the policies that led to the Great Depression.

The policies that led to the Great Depression — like loose monetary policy at the Fed? Ha ha. No mention of the Fed, of course, which may as well not exist for historians like McElwaine.

No, differences between rich and poor cause depressions, according to McElwaine.

If that were the case, why didn’t we have more and worse depressions before we even had a federal income tax at all? Why did the Great Depression occur 16 years after the income tax was introduced?

No mention that when Herbert Hoover increased the top marginal tax rate to 63%, we got the single worst year (1932) of the Great Depression.

No mention of the tax cuts under John F. Kennedy.

No depression followed the Reagan tax cuts, which only went into effect fully in 1988.

Meanwhile, McElwaine celebrates the fact that the 39.5% rate under Clinton led to a booming economy.

But 39.5% is much lower than 73%, which is where the top marginal tax rate was earlier in the century (and it even got higher than that for a stretch). So shouldn’t the 39.5% rate have led to a depression? Instead, McElwaine celebrates it!

It’s almost as if he doesn’t follow his own theory.

Fortunately, you have been inoculated against imbeciles like this if you’ve joined my dashboard university, where sane people teach:


(1) My latest post at my entrepreneurship site: “I Just Kicked My Uber Driver in the Rear End.”

(2) If you’re in the New York City area, come see Bob Murphy and George Selgin debate the economic effects of fractional-reserve banking on April 16. Details here.