From Daniel Henninger at the WSJ, Will the 20’s Roar Again?:


When the 16th Amendment created the personal income tax in 1913, the original top marginal rate was 7%. By 1920 it was 77%, in part because of the Great War.

At the urging of Treasury Secretary Andrew Mellon, Congress enacted tax cuts in 1921, 1924 and 1926, with the top rate falling in middle-decade to 25% on incomes above $100,000. Prosperity followed, just as it did after the Kennedy tax cuts in the 1960s, Reagan’s reductions in the 1980s, and today—undeniably—after the Trump corporate rate cut of 2017. As in the 1920s, the consumer is again king, with disposable income available to buy an innovative economy’s extraordinary array of new products.

The Depression and FDR transformed the Democratic Party. It adopted as an article of faith, held to this day by every Democratic presidential candidate, that any tear in the social fabric should be mended with permanent entitlements or subsidies. The competing idea is that subsidies are a poor substitute for finding and holding a job in a vibrant private economy.

If there is one valid correspondence with the first Roaring ’20s, it is that the earlier decade produced a wave of new thinking about everything. We are overdue today for another wave of creative thought—about politics, culture, education and morality. This time, hold the roaring.


Entitlements designed to address the problems of the day become institutionalized and block out other solutions.  They end up institutionalizing the problem as well as the solution.  Identity politics is a form of this institutionalization attributing identities to problems and subverting social and behavioral solutions.