Sunday, February 17, 2008

Excerpt from "The Forgotten Man," by Amity Shlaes

I am currently reading "The Forgotten Man: A New History of the Great Depression," by Amity Shlaes. Here is an interesting excerpt from page 262-263.
Benjamin Anderson at the Chase Bank --- warned of trouble too. The new law raised taxes on several classes of taxpayer. But it targeted the rich. It might sound amusing to impose high rates on wealthy people. But such taxes also caused enourmous damage. The thing to focus on was not that the economy might be improving a little bit, but rather that the country was not getting the strong recovery that it should expect. The New Deal was causing the country to forgo prosperity, if not recovery. The wealthy, after all, were in a position to take risks with new ventures precisely because they were wealthy --- they could invest in several projects at once. Under the new 1935 law, a very wealthy man would see more than three-quarters of any profits from new ventures taken by income tax. Any loss, however, would be the same man's to bear. This man would try to hoard his capital and wait --- thus coming to fit the very stereotype of the idle rich man the New Dealers were hoping to propagate.