# If low taxes/regulations are economic nirvana why was the 1930's so bad? **URL:** \ **Category:** Great Debates\ **Created:** [July 29, 2012, 9:18pm UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795 "2012-07-29T21:18:40Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![GreasyJack](https://avatars.discourse-cdn.com/v4/letter/g/df705f/32.png) [@GreasyJack](https://boards.straightdope.com/u/GreasyJack)\ **Post date:** [August 3, 2012, 3:34am UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795/21 "2012-08-03T03:34:27Z")
> [@ralph124c](#): > > Wrong..in WWII, the weapons were made in American factories, owned by American firms. The wages paid out went to Americans, who spent the money in America. > In the case of HSS, most of the money will go to foreign firms (China, Korea, Germany), The money will be spent in those countries, and not in the USA. > Take the AMTRAK “Acela” trains-they were mode by a French firm, in connection with a Canadian firm (Bombardier). The stimulus went to France and Canada. The rolling stock is the only part of a high speed rail project that can be done mostly abroad and is an exceedingly minor part of the whole scheme. The main part of it is essentially a big construction project that would be mostly done by US contractors. The specialized work that would be done by foreign firms would still mostly be physically done in the US, so they’re going to hire lots of US workers and any foreign workers are going to be living, eating and entertaining themselves in the US. The idea of stimulus isn’t to hand money to US companies, it’s to get the money circulating in the economy. It makes virtually no difference whether the tiny percentage of that stimulus spending that ends up as profit for the contractors themselves goes to a company that gets its mail in the US or Europe. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [August 3, 2012, 11:39pm UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795/22 "2012-08-03T23:39:44Z")
> [@ralph124c](#): > > Wrong..in WWII, the weapons were made in American factories, owned by American firms. The wages paid out went to Americans, who spent the money in America. > In the case of HSS, most of the money will go to foreign firms (China, Korea, Germany), The money will be spent in those countries, and not in the USA. > Take the AMTRAK “Acela” trains-they were mode by a French firm, in connection with a Canadian firm (Bombardier). The stimulus went to France and Canada. Not true. While you are correct that some foreign firms are leading manufacturers of mass transit systems, it is also true that those firms have placed manufacturing facilities in the US. So stimulus spent on transit creates US jobs. I am aware of two such facilities in the Atlanta area, operated by [Transtechnik](http://www.transtechnik.com/) and [Vossloh Kiepe](http://www.vossloh-usa.com/cms/en/home/vossloh_kiepe/vossloh_kiepe.html). ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 4, 2012, 6:50pm UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795/23 "2012-08-04T18:50:04Z")
The OP seems to feel that conservatives argue that low taxes and low regulations themselves, with nothing else mattering, always lead to prosperity. The argument is that they are tools to promote prosperity. The economy is more complex than one variable. I can say, “look at the boom of 18XX before there were income taxes or social programs, we need that!” You can say, “look at the 1950s and a 90% marginal tax rate and how good the economy was. We need that!” ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [August 4, 2012, 7:13pm UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795/24 "2012-08-04T19:13:36Z")
> [@jtgain](#): > > The OP seems to feel that conservatives argue that low taxes and low regulations themselves, with nothing else mattering, always lead to prosperity. I think the OP is observing that conservatives believe prosperity cannot be achieved without low taxes and less regulations. Is that inaccurate? ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 4, 2012, 7:26pm UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795/25 "2012-08-04T19:26:44Z")
> [@Fear\_Itself](#): > > I think the OP is observing that conservatives believe prosperity cannot be achieved without low taxes and less regulations. Is that inaccurate? I’m not the spokesman for all conservatives, but I believe that prosperity can be had in spite of high taxes and regulations if all else falls into place. I didn’t know there was a debate on that point. I thought everyone believed that higher taxes and more regulations lead to market inefficiencies but that the other side believed that those higher taxes and regulations were necessary for other reasons. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [August 5, 2012, 5:14am UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795/26 "2012-08-05T05:14:42Z")
Price fixing was attempted on an unprecedented scale during the Depression. > **[National Industrial Recovery Act of 1933](https://en.wikipedia.org/wiki/National_Industrial_Recovery_Act)** > > The National Industrial Recovery Act of 1933 (NIRA) was a US labor law and consumer law passed by the 73rd US Congress to authorize the president to regulate industry for fair wages and prices that would stimulate economic recovery. It also established a national public works program known as the Public Works Administration (PWA). The National Recovery Administration (NRA) portion was widely hailed in 1933, but by 1934 business opinion of the act had soured. > The legislation was enacted in J... > **[Agricultural Adjustment Act](https://en.wikipedia.org/wiki/Agricultural_Adjustment_Act)** > > The Agricultural Adjustment Act (AAA) was a United States federal law of the New Deal era designed to boost agricultural prices by reducing surpluses. The government bought livestock for slaughter and paid farmers subsidies not to plant on part of their land. The money for these subsidies was generated through an exclusive tax on companies that processed farm products. The Act created a new agency, the Agricultural Adjustment Administration, also called "AAA" (1933–1942), an agency of the U.S. ... Regulation was definitely on the rise. Government was exercising more control over the economy than before and this contributed to uncertainty. People didn’t want to [invest](http://www.independent.org/pdf/tir/tir_01_4_higgs.pdf). > [@](#): > > In 1929, when gross private investment was $16.2 billion, net investment was $8.3 billion. Net investment fell precipitously to $2.3 billion in 1930 and then became negative during each of the following five years. For the eleven-year period of 1930 to 1940, net private investment totaled minus $3.1 billion. No investment. No recovery. Taxation increased during the depression with the [revenue act of 1932](http://en.wikipedia.org/wiki/Revenue_Act_of_1932). This would have the effect of lowering private investment as well. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [August 5, 2012, 5:15am UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795/27 "2012-08-05T05:15:50Z")
and then world trade was strangled by tariff wars. In which the US played a pretty big role with the Smoot-Hawley tariff. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [August 6, 2012, 5:23pm UTC](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795/28 "2012-08-06T17:23:25Z")
In 1932 the top tax rates went from 25% to 63%. In 1936 they were further increased to 79%. During the 1930s the corporate tax rate doubled from 12% to 24%. In 1937 payroll taxes were introduced at a 2% rate for almost every working person. The Smoot Hawley act raised tariffs on imported goods which is a type of tax. It is therefore inaccurate to say that there were low tax rates in the 1930s, the top tax rate was twice as high at the end if the 1930s as it is currently. There were many new regulations in the 1930s as well, such as the Glass Steagal Act, the Securities Act, the Agriculture Adjustment Act, etc. The NRA was formed which is perhaps the most wide ranging attempt to regulate the economy in the nation’s history until it was overturned by the Supreme Court. It mandated prices, wages, and production codes for most of the non farm economy. To give you an idea about how extensive the regulation was, the plantiff in the suit that overturned the NRA had been arrested because he allowed his customers to pick the live chicken that they wanted to buy instead of being given the first one the merchant picked. [Previous page](https://boards.straightdope.com/t/if-low-taxes-regulations-are-economic-nirvana-why-was-the-1930s-so-bad/629795.md?page=1)