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From Charles M. Kelly, a retired management consultant and author living in Charlotte.
"Senator Tea Party" Jim DeMint of South Carolina again makes the front pages with his new book, "The Great American Awakening," in which he details his valiant Congressional battle to "save freedom."
However, voters can best judge the validity of his economic theories by reading his previous book, "Saving Freedom." It is his blueprint for solving our economic problems. He's the leading poster child for politicians who remember the U.S. history that never was.
On page 34, DeMint correctly noted: "After World War II, America was on top of the world. Our powerful economic and military machines saved the world from tyranny and ushered in a generation of peace and prosperity." He further notes that, as of 1947, we led the world in manufacturing and exports.
But he never detailed the economic policies that stopped the Great Depression and began our ascendance to the top. Instead, he warned that, "As power began to concentrate in Washington, D.C. [after 1947], and the federal government began to take an ever-expanding role in planning and controlling more of our culture and economy, America began to transition from a wealthy and independent nation to one now characterized by debt and dependency."
Through omission, he thus implies that America was on top of the world because of the kinds of economic policies he recommends throughout the rest of his book: lower taxes for everyone, total reliance on the private sector for economic stimulus, the elimination of government regulations, and the downsizing of government. He then specifically claimed that America began its decline after 1947 because it abandoned those "small government" policies.
What does history actually record? During and after World War II - from 1941 to 1947 - we emerged from the Great Depression and began the biggest economic expansion in history.
How? In 1941, the federal government raised the top income tax to 88 percent, where it remained for the next 20 years, and instituted an excess corporate profits tax. Taxes on inheritances, dividends and capital gains were the highest of the century. During the first three years of the war, government deficit-spent seven times the amount it spent during the entire eight years of the New Deal, which was ruinously underfunded.
The federal government took unemployed people off the streets and paid for their military service, and created millions of good-paying jobs in the defense industry and their support industries. It rationed everything from sugar to automobile tires. That's how government - by stimulating an economy abandoned by investors - began the creation of the biggest and most prosperous middle class in history.
DeMint's contention that government became more intrusive after 1947, and restricted the freedoms defies reality. In 1947, a coalition of Republicans and conservative Democrats passed the Taft-Hartley Act over President Harry Truman's veto. They explained to the voting public that it was ok for government to control the economy during wartime, but in peacetime it should get out of the way and allow the free market to work its magic. A key provision of the legislation allowed individual states to pass "right to work" laws, which enabled them to keep unions - and their high wages and worker protections - from entering them.
(Author's note: the following material in italics was in the original manuscript, and edited out to fit space limitations in the newspaper.)
This deceitfully named legislation gave corporations the ability to pit states against each other in offering the lowest wages and fewest worker protections.Thus began the exodus of industries from the non-right-to-work states of the North and Northeast to the right-to-work states of the South and West.
Workers in the right-to-work states benefited from the influx of industries to their areas, but it was at the expense of workers in areas that lost industries. The biggest beneficiaries were the corporate executives and their investors as they increased profits by reducing overall labor costs. Fortunately, because of federal minimum wage and worker protection laws, there were barebones limits placed on states’ ability to compete in the race to the bottom.
NAFTA and free-trade agreements are today's global equivalent of the Taft-Hartley Act. Taft-Hartley gave corporations the power to pit states against each other, but free-market globalization gives them the power to pit nations against each other. Although some of the world’s workers temporarily benefit at the expense of other workers—from assembly line workers to engineers and scientists—the biggest beneficiaries are corporate executives and their investors.
DeMint is today's leading spokesman for a free market economy, ruthlessly controlled by corporations and unregulated by government, and voters would do well to look beyond his phony claims of protecting their freedoms.
