Ah, the 1950’s – a quaint decade of peace and prosperity. We compare it the 60’s, and mourn our nation’s lost hygiene, oops I mean innocence. Ok, so maybe that sort of nostalgia is overblown and a wee tad derogatory. Yet Dwight Eisenhower warned us of America turning into Amerika and we just didn’t get it. So Paul Krugman rides again to sell us his typically origami* version of economic events.

Needless to say, it wasn’t really innocent. But the ’50s — the Twinkie Era — do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich. Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.”

(The Ney York Times And Daily Worker)

Krugman praises the fact that progressive taxation was the rule of the day. He celebrates the fact that people who made money made a lot less of it then than now. This is what Krugman considers ideal.

The data confirm Fortune’s impressions. Between the 1920s and the 1950s real incomes for the richest Americans fell sharply, not just compared with the middle class but in absolute terms. According to estimates by the economists Thomas Piketty and Emmanuel Saez, in 1955 the real incomes of the top 0.01 percent of Americans were less than half what they had been in the late 1920s, and their share of total income was down by three-quarters.

What Krugman says of the 50’s was somewhat true. The marginal tax rates were higher and a larger proportion of the workforce was unionized. Yet nothing he discusses explains why the 1950’s had an overall better vibe to them than today. We learn that from heeding a warning in President Eisenhower’s 1961 Farewell Address. President Eisenhower told us the following.

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence-economic, political, even spiritual-is felt in every city, every state house, every office of the Federal government. …Today, the solitary inventor, tinkering in his shop, has been over shadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers. The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.

And It’s far from just scholarship or the military-industrial complex that has come under the tentacles of the soulless governing leviathan. Karl Denninger reveals how much more of our society this ever-expanding and ever more powerful Federal edifice has swallowed.

Let’s be real here: The US Economy is ~$15 trillion, but government spending at all levels is about $6.4 trillion, or about 43% of the whole. Roughly $4 trillion of that, or more than 25% of the economy, is pure redistribution — it is “spent” on Pensions, Health Care, Education and Welfare. $900 billion, approximately all-in, is spent on various forms of “defense.”

(HT: The Market-Ticker)

This is of course in direct opposition to the 1950s. People talk about “The Fiscal Cliff” as if it were a bad thing. We lose GDP if we cut government. Maybe we regain something from the fall. Somehow, somewhere people will be freer to live their lives out from under the shadow of government mediocrities and deep intellects whose sole intent is to further that dominion.

What we need now is to stop feeding the vampire. As J. Kyle Bass said in 2008, we need to bring on The Darwinian Flush and kill these parasites once and for all. He speaks the unwanted truth of our age below.

The only way to solve this problem is to go THROUGH IT. We know it isn’t politically popular or even popular on Wall St, but the fact is that the U.S. and the world need a Darwinian flush to rebuild our foundations and become even stronger on the backside of this mess.

The Darwinian Flush will get us back to the meritocratic world of the 1950’s industrial economy. The confiscation of private wealth will not. It will only fuel a further departure from halcyon days of old along the azimuth President Eisenhower warned us not to follow as he gracefully left public life. This failure to realize that salient fact makes Dr. Krugman and the socialists who deliberately over-interpret the results of the recent US Presidential election far more like madmen than anyone you see on TV.

* – intended to imply a paper-thin resemblance of reality with no actual structure to back it whatsoever

And since I’m outta’ here until Monday, here’s a You-Tube to listen to while I’m gone…