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The Great Depression – Washington’s Fault

Dick McDonald

Ask your average American educated in Democrat-controlled schools from 1932 to 2008 what caused the Great Depression that lasted from October, 1929 to December, 1941 and he or she will tell you the stock market crash of 1929. It is unfortunate in all political and cultural affairs the winners write the history books. If you are a Democrat I am sorry to burst your bubble but it was Washington politicians that caused the Great Depression not the stock market crash - and if Barack Obama and the Democrats get their way in 2009 they will repeat the same socialist mistakes and tax us into another severe depression.

As a man who spent his business life helping wealthy people “avoid” income taxes I have a different perspective on what Wall Street and Main Street suffer at the hands of Washington politicians who attempt to socially engineer the lives of Americans by imposing taxes. It wasn’t Washington meddling in the affairs of the people as Republicans like to point out – it was simply the taxes they imposed that drew the lifeblood out of the economy.

There is no better gage on my hypothesis than unemployment. In October, 1929 the unemployment rate was 5%. It spiked to 9% by December but retraced down to 6.3% by June, 1930. If the crash put people on the streets selling pencils why were so many working that June when Washington and a Republican President, Herbert Hoover, passed the Smoot-Hawley tariffs to protect job losses at American manufacturers. And what are tariffs? They are TAXES imposed on imports from other countries that American consumers have to  pay at the check-out stand in the form of higher prices. See Wal*Mart and the $2,300 they save each shopper each year selling inexpensive foreign-made products.

It wasn’t until December a year and two months after the market crashed that unemployment hit double digits. Restrictive trade practices weren’t the only damage Washington was to do to the country. Washington raised interest rates, income taxes and tried to let government replace the private sector by imposing restrictive business legislation and by having government work programs solve the unemployment problem. It didn’t work.

All these anti-business, anti-capitalist measures ran the unemployment rate up to 25% for years. On December 7, 1941 when World War II started it stood at 17% - a testament to the failure of the socialism that was employed by the Democrat Party.

Tariffs are taxes on the people, punitive income taxes were taxes on productive people and government-dictated high interest rates were taxes on the capital people use to start businesses and create jobs. All in all the American people had missed their civics lesson – “taxes are the problem.”

The Democrat Party and the Obama frenzy have one solution to all problems – tax the rich – then throw that money at all problems and create enormous bureaucracies to mismanage them. How totally mindless it is of the most powerful society on Earth to be so clueless.

After mindlessly taxing the income of the rich over the last 80 years, the Democrats have been slowly and deceitfully been increasing taxes on the poor and middle-class. What started out as a 1% payroll tax for “Social Security” has been raised to 15.3% of the lifetime income of the less fortunate.   In return the Democrats steal the million-dollar nest egg a lifetime investment of 15.3% would generate in the private sector for no nest egg and a paltry safety net to avoid starvation.

To add insult to injury the Democrats have run up $45 trillion in unfunded obligations over anticipated receipts. Democrats are NOT a tragedy waiting to happen, they have been a tragedy for decades bleeding our economy and its people with taxes.

See www.riseupamerica  for a solution to destroy socialism and a blueprint for a return to the principles our Founders prescribed.

Merry Christmas

Dick McDonald

Ownership Society Institute

December 25, 2008