I wish the Speaker of the House had the same sign in his office that Congressman Benishek, representing Michigan’s first district, has. We need more elected representatives, senators, and a president, who understand the simple truth of this sign. There is also a history professor in southern Michigan’s Hillsdale College who writes a lot of simple truths that I wish more folks would take to heart. His name is Burt Folsom. Here is an excerpt from an article he recently wrote, The Greatest Economic Myth of the Century.
How did we get out of the Great Depression? After World War II, the U. S. sharply cut government spending and slashed the top corporate tax rate from 90 to 38 percent. This anti-government spending approach worked miracles and finally triggered the recovery from the Great Depression. My book, written with my wife Anita, entitled FDR GOES TO WAR (Simon & Schuster) will be out in the fall, and in the final chapter, we describe the recovery of the U. S. from the Great Depression. The U. S. had only 3.9% unemployment in 1946 and 1947.
Why do politicians persist in massive government spending? Because many interest groups see the chance to gain federal funds at the expense of others. And these targeted groups happily give their votes to the politicians who can deliver to them other peoples’ money. FDR won re-election in 1936 because of the huge spending on through the WPA, and then he won in 1940, in part by delivering large defense projects to key states whose electoral votes he wanted to secure.
Because so many politicians believe the myth that more federal spending is better (or maybe they just want to give cash to certain voting groups), most members of the Senate and President Obama as well talk about alleged catastrophes if the federal spigot is shut off. The lesson of the aftermath of World War II, however, is that if we cut tax rates and cut federal spending, we will encourage entrepreneurs to invest, halt the increase in destructive debt, and spark an economic recovery.
This is not the first time Burton Folsom has talked about the federal spigot. He wrote an excellent book “The Myth of the Robber Barons,” that goes into details about a federal spigot giving money to railroad tycoons. In 1862, Congress hastily passed the Pacific Railroad Act.Â The act led to the creation of the Union Pacific Railroad, which would lay rails west from Omaha, and the Central Pacific Railroad, which would lay rails east from Sacramento. Congress gave each line twenty alternate sections of land for each mile of track completed. Congress also gave each line loans: $16,000 for everyÂ mile of track laid across flat prairie land, $32,000 per mile for hilly terrain, and $48,000 per mile across the mountains.
After construction was completed, many were astonished at the costs. The officers of the Union and Central Pacific created their own supply companies. What they did not make running the railroad with exorbitant rates, they made selling supplies to the railroad at excessive prices. All this profiteering by the dirty, rotten scoundrels of the Union and Central Pacific Railroads, led to new anti-trust laws from the US Congress. The Interstate Commerce Commission was created in 1887. ICC law eventually cost the taxpayers millions of dollars every year; it created a need for thousands of federally funded bureaucrats to listen to shippers all over the nation, and to snoop into detailed records of almost every railroad in the country. The laws that were passed to thwart those crooked, subsidized scoundrels at Union and Central Pacific, were then intentionally used to thwart James J. Hill, who built his transcontinental line with no government subsidies at all.
President Teddy Roosevelt urged the Supreme Court to bust up Hill’s holding company, Northern Securities. Teddy called the Northern Securities a “very arrogant corporation.” In 1904, in a landmark case, the Supreme Court decided five to four against Northern Securities. In the majority opinion, Justice Harlan wrote that the mere existence of a large corporation was seen as a threat to trade and therefore unlawful.Â How you conducted your business was translated into your mere existence being enough to be considered unlawful. Justice Oliver Wendell Holmes wrote a dissent which credited this astonishing verdict to an unsophisticated, but widespread belief that big corporations must necessarily be bad ones. Holmes wrote
Great cases make bad law.
This country needs to take bold actions like it did in 1946 and 1947. Maybe there needs to be another election cycle to take place first. Before we talk about the election of 2012, we need a conversation about our response to the decisions and votes taking place right now. Some think the latest skirmish over the CR for the remainder of 2011 is too puny to warrant any criticism. Remember Justice Holmes words. What is not puny are the principles we hold our elected officials to. I understand the concept thatÂ you only get what you have the votes for in the US Congress. What I do not understand is spinning something to be a victory when it is just treading water at best.
The idea of playing on fear or envy in order to hold on to a seat in the US Congress, is nothing new. We can not let ourselves fall prey to this manipulation. We also need these conversations so the politicians know we are still paying close attention to what they are doing. Amongst themselves they are responsible for choosing their own leadership. When ‘We, the People’ let them know who we are approving and who we are disapproving, then the leadership should take that into account.
The picture above is from Congressman Dan Benishek’s office.Â I like the way Congressman Benishek has conducted himself since his arrival as a freshman representative from MI-01.Â I believe that he is displaying important leadership qualities we need right now in the US Congress.