Thursday, June 12, 2008

High Taxes and Inflation

From the Texas A&M University Real Estate Center, I found this interesting presentation.

Slide 31 asks when the last time we had high taxes and inflation. From 1966 to 1982 the US had higher taxes, inflation, and regulation with a lower level of globalization an lower profit growth. The presentation then reports the Dow as almost unchanged for 16 years: in January 1966, the Dow was 924; in July 1974, the Dow was 607; in July 1982, the Dow was 896. Now the political pendulum is swinging back that way (sadly, both parties are guilty).

Populism of the sort advocated by Naomi Klein and Thom Hartman would increase regulations and taxes and increase trade barriers. Some of the things they say make sense on the surface, but they only highlight the part of arguments that they agree with. Prosperity and quality of life come from free trade. Of course, free trade should be fair trade. Currency manipulation and inadequate quality inspection (China is guilty of both) should not be tolerated.

That is what has me worried about the upcoming election. McObama both have bought into some of the populist message on trade and taxes. Sure, McCain says some good things on taxes, but then he promotes cap 'n trade - a massive tax on businesses. Obama is running for Jimmy Carter's second term. He wants to do all the stuff that created a stagnant economy from 1966 to 1982.

1 comment:

Kemp & Whitney said...

you should check out a link I just added to my blog. I think you would really like it. It's on the right hand column and it's a picture of the plan of salvation...click on the picture and it will take you to a pretty interested site.