What was the secret to the outsized growth of the 19th century, particularly its latter portion, the Gilded Age? There were great technological innovations and large population increases, to be sure – but these things came in the 20th century as well. What was different back then was the absence of macroeconomic institutions.
There was no Federal Reserve, and there was no income tax – both would be created in 1913. Therefore, there were no instruments through which the government could conduct monetary or fiscal policy. Government’s role in shaping the economy was confined to regulating trade and enforcing contracts.
http://blogs.forbes.com/briandomitrovic/2011/06/07/back-on-the-road-to-serfdom-history-says-we-should-be-booming/
What? You mean government might not be a help to economic growth? And economic stalls were SMALLER before 1913? So what is it that the Fed does to "help" things?
What is to be done? As it happens, now on offer are serious suggestions in exactly this direction. Reps. Cantor and Ryan are both talking about capping the income tax at 25%, and there’s a new fascination globally with returning to the 19th-century monetary system of the gold standard.
Dismissing these solutions, as the cognoscenti are prone to do, as reactionary, unrealistic, and not-quite-Ivy-League is to betray ignorance about the immense statics of American economic history. It’s in our sinews to grow at 5-6% per year. If we’re doing less, it’s because we’ve arrogated power to institutions that blunder around in the name of the public good.
There was no Federal Reserve, and there was no income tax – both would be created in 1913. Therefore, there were no instruments through which the government could conduct monetary or fiscal policy. Government’s role in shaping the economy was confined to regulating trade and enforcing contracts.
http://blogs.forbes.com/briandomitrovic/2011/06/07/back-on-the-road-to-serfdom-history-says-we-should-be-booming/
What? You mean government might not be a help to economic growth? And economic stalls were SMALLER before 1913? So what is it that the Fed does to "help" things?
What is to be done? As it happens, now on offer are serious suggestions in exactly this direction. Reps. Cantor and Ryan are both talking about capping the income tax at 25%, and there’s a new fascination globally with returning to the 19th-century monetary system of the gold standard.
Dismissing these solutions, as the cognoscenti are prone to do, as reactionary, unrealistic, and not-quite-Ivy-League is to betray ignorance about the immense statics of American economic history. It’s in our sinews to grow at 5-6% per year. If we’re doing less, it’s because we’ve arrogated power to institutions that blunder around in the name of the public good.
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