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Soaking the Rich: The Second New Deal

FDR has come before Congress with a "Second New Deal". (What went wrong with the First New Deal?) We must help the poor, the sick, the elderly! (Am I in church or something?) We need workfare, not welfare! (He means the Works Progress Administration, or WPA which really stands for "We Poke Along" because when you are forced to work like slaves you act accordingly.) We need to put idle money to work! (What?) We need to clean up our city slums and relocate urban dwellers to rural farms. (Uh... what does a city guy know about farming?) We need to bring electricity to the farms and build new roads, bridges, dams, and ... you get the picture. In order to pay for all of these new programs, a wealth tax is imposed by your government benefactors. It's called the Banking Act of 1935 also known as the "Soak the Rich" tax. It increases the FDIC deposit guarantee, but also raises the income tax rate to 75% on people making $5 million dollars or more. Tax loopholes (otherwise known as tax deductions authorized by Congress) will be used vigorously, but most of those will go away in a couple of years. As the USA enters World War 2, the definition of "rich" will be changed to those making $200,000 or more. It is a large income for the 1940s, but it's not the Rockefellers. [1] [2] [3]

My Take by Alex Shrugged
Please note that politicians buying votes by sticking it to an unpopular group is an age-old tradition. Of course, forcing OTHER people to pay for programs from which YOU benefit is an age-old tradition too. The only thing that changes is who gets scr... uh... who has to pay for it. And the recipients are always deserving. "You must pay your taxes because I am the King chosen by God to rule you" or "I am working hard on behalf of the peepul," or "We must do it for the children," or "The rich have been stealing your money, so it is time to steal it back!" Uh... wait. If they are really stealing my money, how does taxing them benefit me? Do I get a tax break? I doubt it. I might get a benefit if I lose my job or break my leg, but nothing more than what my relatives or neighbors or church would have done for me anyway. So tell me again. Why are we taxing the snot out of these guys? I'm not a serf from the Middle Ages. Granted, my choices are limited, but with discipline I do have choices available to me. I am not a slave yet. Am I? (Sigh) I'm worried.

Soaking the Poor: The Social Security Tax

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
-- H. L. Mencken, 1915. [4]

As part of FDR's initiative to help elderly workers he imposes a special tax. (Thanks!) The tax money will be used to supplement the income of an elderly worker. If he continues to work as he is expected to do, then his benefit is reduced accordingly. The first recipients of the benefit haven't paid in very much, so they will benefit greatly. The next generation will also benefit, although less so, and so forth down the line. Currently this is only for the elderly who need some extra help. Later it will be sold as a pension plan, but in fact, it is a tax on income. It is also a "regressive tax" which means that the more money you make, the less you pay in taxes. It's like filling a bucket. Once the bucket is full you stop. If you fill it fast (with a higher income) you stop sooner. If you fill it slowly (with a lower income) you stop later or not at all. If this were really a pension fund then whatever you put into your bucket would be yours, but this is Social Security. You are filling the bucket of someone else. As you enter the workforce and pay the tax, the money goes to the person who came before you... to pay his benefit. Then workers who come after you will pay yours, but it is not a one-to-one payment. It takes several workers to pay your benefit and it will take even more to pay theirs. This is called a pyramid scheme and if you tried to sell this plan in the private sector you would be arrested, but this is government so it's OK... somehow. [5]

My Take by Alex Shrugged
Margaret Thatcher used to say (paraphrasing), "The problem with socialism is that eventually you run out of other people's money." That includes Social Security. FDR must have known the system would run out of money eventually, but the Great Depression was on and it was an emergency! (It always is.) If they were honest, they would pay off the people in the current system with 40 acres and a mule, so to speak. New people could make their own retirement arrangements. It is important to remember the lesson of Germany and economic collapse. When the government could no longer foot the bill to keep the elderly in retirement, the elderly were retired the hard way. The letters still exist of fathers and mothers pleading to their adult children to take them in, but their adult children could barely feed their own families. It doesn't have to end that way for us, but for now, there is nothing to prevent it. [6]

Killing Schrödinger's Cat

Whatever is happening with quantum mechanics, it is clearly difficult to describe. Niels Bohr has gone a little too far with what is now called the Copenhagen interpretation. This prompts Erwin Schrödinger to mock him a little with a thought experiment using the idea of a cat that is both alive and dead at the same time. The idea goes like this (off the top of my head). You place a live cat in a box. A mechanism is attached which contains a deadly gas inside a glass tube, and a hammer set to fall upon the glass tube should a Geiger counter detect a cosmic ray. The sensitivity is set so that the chances of detection within 1 hour are 50-50. If a cosmic ray passes by, the hammer falls, and the poison is released and then the cat dies, but if a cosmic ray does not pass then the cat lives. According to Bohr's Copenhagen interpretation, before one can look inside the box, the cat is both alive and dead simultaneously. Only when the scientist looks inside to see the cat's condition will the quantum wave function collapse. As I said, the thought experiment was meant to mock Bohr's interpretation, but instead, Schrödinger's Cat seals its fate. That's exactly what is happening, or not happening. It's both. Later, people will point out that the scientist looking in the box could be part of the wave function and therefore we, his audience, waiting for him to look inside, are actually collapsing the wave function. But then again... who is watching us? Is a First Watcher required to bring a Universe into existence in one giant wave function? [7]

My Take by Alex Shrugged
I apologize for not explaining this better, but Albert Einstein and Edwin Schrödinger clung to the idea of a deterministic Universe. They didn't like "spooky action at a distance" and quantum particles that could not be measured exactly. So they tried to eliminate such absurdities, but never succeeded. If fact, their mocking portrayals only heightened the public's awareness of probability and the odd nature of nature. Einstein was wrong. God really does play dice with the Universe and Schrödinger's cat is both alive and dead until we look to see.

Notable Births

  • Ron Paul (Living): US Congressman (R), he has managed to teach Libertarian ideals without sounding like a kook. [8]
  • Geraldine Ferraro: US Congresswoman (D) and 1st woman VP candidate from a major political party: the Modale-Ferraro ticket. [9]
  • Mahmoud Abbas (Living): Chairman of the PLO after Yasser Arafat, and President of the Palestinian National Authority. [10]
  • Tenzin Gyatso (Living): The 14th Dalai Lama beginning in 1950 to the present. [11]
  • And in Entertainment...
  • -- Elvis Presley: The King of Rock and Roll, after he died, he was spotted everywhere. (And my wife and I hired his babysitter.) [12]
  • -- Julie Andrews (Living): Best known as Mary Poppins, Maria in "The Sound of Music", and the Queen in "The Princess Diaries". [13]
  • -- Bob Denver: Best known as Gilligan on Gilligan's Island. [14]
  • -- Sonny Bono: Half of the singing duo, Sonny and Cher. As a US Congressman (R), he worked to extend copyright protection to "Mickey Mouse". Thanks a lot, Sonny. [15]

**Note: (Living) means they were alive when I checked.

In Other News

  • The vinyl shower curtain is invented. Waldo turns PVC into flexible sheets, but it has no practical use. Then, while watching his wife sew up new shower curtains, the idea hits him. [16] [17] [18]
  • "War is a Racket" is published. General Butler exposes war as a means to profit wealthy industrialists. Butler recently, exposed a plot by businessmen to overthrow FDR. (Apparently, someone had been recruiting Butler.) [19] [20]
  • The novel, "It Can't Happen Here," is published. As the story goes... a populist President is elected promising a return to patriotism, traditional values and economic reform and becomes a dictator. Golly! Where do they get these ideas? [21] [22]

This Year in Wikipedia

Year 1935, Wikipedia.

See Also


  1. Understanding Taxes - Theme 2: Taxes in U.S. History - Lesson 5: The Wealth Tax of 1935 and the Victory Tax of 1942. IRS (OFFICIAL GOVERNMENT SITE) (2017). Retrieved on 20 January 2017. “President Franklin D. Roosevelt's New Deal programs forced an increase in taxes to generate needed funds. The Revenue Act of 1935 introduced the Wealth Tax, a new progressive tax that took up to 75 percent of the highest incomes. Many wealthy people used loopholes in the tax code. The Revenue Act of 1937 cracked down on tax evasion by revising tax laws and regulations.”
  2. Revenue Act of 1935 - Wikipedia (2017). Retrieved on 20 January 2017. “The 1935 Act also was popularly known at the time as the 'Soak the Rich' tax.[2] To solve the problem of tax evasion through loopholes, the Revenue Act of 1937 revised tax laws and regulations to increase the efficacy of the tax.”
  3. Income tax in the United States - Wikipedia (2017). Retrieved on 20 January 2017. “During the Great Depression and World War II, the top income tax rate rose from pre-war levels. In 1939, the top rate was 75% applied to incomes above $5,000,000 (equivalent to $86.1 million in 2016 dollars). During 1944 and 1945, the top rate was its all-time high at 94% applied to income above $200,000 (equivalent to $2.72 million in 2016 dollars).”
  4. H. L. Mencken - Wikiquote. en.wikiquote.org (2016). Retrieved on 20 January 2017. “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
    • 'A Few Pages of Notes,' The Smart Set (January 1915)
    • A Little Book in C major (1916) ; later published in A Mencken Crestomathy (1949).”
  5. Social Security Act - Wikipedia (2017). Retrieved on 20 January 2017. “Although the program has been altered since its signing, the original purpose was to provide federal assistance to those unable to work.”
  6. How Bernie Madoff's Ponzi Scheme Worked - Business Insider. businessinsider.com (2017). Retrieved on 20 January 2017. “Five years ago Sunday, Bernie Madoff was sentenced to 150 years in prison for running the biggest fraudulent scheme in U.S. history. Even now, only a few of his victims have since regained all of their losses.”
  7. Schrödinger's cat - Wikipedia (2016). Retrieved on 6 January 2017. “Schrödinger's cat is a thought experiment, sometimes described as a paradox, devised by Austrian physicist Erwin Schrödinger in 1935.[1] It illustrates what he saw as the problem of the Copenhagen interpretation of quantum mechanics applied to everyday objects.”
  8. Ron Paul - Wikipedia (2017). Retrieved on 19 January 2017. “On three occasions, he sought the presidency of the United States: as the Libertarian Party nominee in 1988 and as a candidate in the Republican primaries of 2008 and 2012. Paul is a critic of the federal government's fiscal policies, especially the existence of the Federal Reserve and the tax policy, as well as the military–industrial complex, and the War on Drugs. Paul has also been a vocal critic of mass surveillance policies such as the USA PATRIOT Act and the NSA surveillance programs. Paul was the first chairman of the conservative PAC Citizens for a Sound Economy and has been characterized as the 'intellectual godfather' of the Tea Party movement.”
  9. Geraldine Ferraro - Wikipedia (2017). Retrieved on 19 January 2017. “In 1984, she was the first female vice presidential candidate representing a major American political party.”
  10. Mahmoud Abbas - Wikipedia (2017). Retrieved on 19 January 2017. “Mahmoud Abbas was elected on 9 January 2005 to serve as President of the Palestinian National Authority until 9 January 2009 but extended his term until the next election in 2010, citing PLO constitution, and on December 16, 2009 was voted into office indefinitely by the PLO Central Council. As a result, Fatah's main rival, Hamas announced that it would not recognize the extension or view Abbas as rightful president. Abbas was chosen as the President of the State of Palestine by the Palestine Liberation Organization's Central Council on 23 November 2008, a job he had held unofficially since 8 May 2005.”
  11. 14th Dalai Lama - Wikipedia (2017). Retrieved on 19 January 2017. “Tenzin Gyatso, shortened from Jetsun Jamphel Ngawang Lobsang Yeshe Tenzin Gyatso, born Lhamo Thondup, 6 July 1935 is the current Dalai Lama. Dalai Lamas are important monks of the Gelug school, the newest school of Tibetan Buddhism which is nominally headed by the Ganden Tripas. From the time of the 5th Dalai Lama to 1959, the central government of Tibet, the Ganden Phodrang, invested the position of Dalai Lama with temporal duties”
  12. Elvis Presley - Wikipedia (2017). Retrieved on 19 January 2017. “Regarded as one of the most significant cultural icons of the 20th century, he is often referred to as 'the King of Rock and Roll', or simply, 'the King'.”
  13. Julie Andrews - Wikipedia (2017). Retrieved on 19 January 2017. “From 2001 to 2004, Andrews starred in The Princess Diaries (2001), The Princess Diaries 2: Royal Engagement (2004). From 2004 to 2010, she lent her voice to the Shrek animated films, and Despicable Me (2010).”
  14. Bob Denver - Wikipedia (2017). Retrieved on 19 January 2017. “an American comedic actor. He portrayed Gilligan on the television series Gilligan's Island and the beatnik Maynard G. Krebs on the 1959–1963 TV series The Many Loves of Dobie Gillis.”
  15. Sonny Bono - Wikipedia (2017). Retrieved on 19 January 2017. “Bono was elected to the United States House of Representatives in 1994 to represent California's 44th congressional district. He was one of twelve co-sponsors of a House bill extending copyright. Although that bill was never voted on in the Senate, a similar Senate bill was passed after his death and named the Sonny Bono Copyright Term Extension Act in his memory. It is also known (derisively) as the Mickey Mouse Protection Act.”
  16. Waldo Semon - Wikipedia (2016). Retrieved on 14 July 2016. “On December 11, 1935, he created Koroseal from salt, coke and limestone, a polymer that could be made in any consistency. Semon made more than 5,000 other synthetic rubber compounds, achieving success with Ameripol (AMERican POLymer) in 1940 for the B.F. Goodrich company. In all, Semon held 116 patents, and was inducted into the Invention Hall of Fame in 1995 at age 97.”
  17. Carter, W. Hodding. Flushed: How the Plumber Saved Civilization. Atria. ISBN 9780743474092. “Semon was told to come up with some practical use for PVC or risk losing future research funding. Thus inspired, he cried eureka after watching his wife sew together shower curtains, which at the time were made of rubber-backed cotton. PVC, in the form that would become commonly known as vinyl, was going to replace rubber as the ultimate waterproof material. Thereafter, since it resists both water and to a lesser extent fire, the uses of PVC became seemingly endless, from a coating for electrical wires to a replacement for rubber tires to the irresistible Naugahyde to the ever-present credit card and, of course, to shower curtains.” 
  18. Naugahyde - Wikipedia (2017). Retrieved on 20 January 2017. “Its name, first used as a trademark in 1936, comes from the Borough of Naugatuck, Connecticut, where it was first produced. It is now manufactured in Stoughton, Wisconsin.”
  19. Butler, Smedley D.. War is a Racket. Round Table Press, Inc.. “WAR is a racket. It always has been.” 
  20. Smedley Butler - Wikipedia (2017). Retrieved on 17 January 2017. “Smedley Darlington Butler (July 30, 1881 – June 21, 1940) was a United States Marine Corps major general, the highest rank authorized at that time, and at the time of his death the most decorated Marine in U.S. history.”
  21. It Can't Happen Here - Wikipedia (2016). Retrieved on 4 October 2016. “It Can't Happen Here is a semi-satirical 1935 political novel by American author Sinclair Lewis. Published during the rise of fascism in Europe, the novel describes the rise of Berzelius 'Buzz' Windrip, a populist United States Senator who is elected to the presidency after fomenting fear and promising drastic economic and social reforms while promoting a return to patriotism and 'traditional' values. After his election, Windrip takes complete control of the government and imposes a plutocratic/totalitarian rule with the help of a ruthless paramilitary force, in the manner of Adolf Hitler and the SS.”
  22. Alex Shrugged notes: I'm not dumping on President Trump here, but something has to be broken in our system when a guy or gal can promise the moon and still get elected President. I'm not sure there is a perfect solution though.

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