Bill Maher tells authoritatively that capitalism did not produce a middle class.  It was actually worse than that.  I quote extensively from his statements on “Real Time” on HBO because you have to read it to believe someone said it:

“so what’s happening is, the Democrats are proposing to nibble around the edges of our middle-class problem, and the Republicans are pretending to care while they go back to servicing eight rich d*ckheads who own coal mines, and no one is telling the truth, which is that the large, thriving middle class that America used to have didn’t just appear out of the blue. It was created, using an economic tool called Socialism. I know, we never use that term here in buzzword nation, but that is exactly what our government did after World War II, it taxed the rich up to 90%, and massively redistributed that money through the GI Bill so that more than half the population benefited from free college, free job training, cheap mortgages, and much, much more. Yes, for a brief, shining moment, we were Finland. Now, we can debate whether that’s a good thing or a bad thing to go back to, but what is beyond debate is that that is what happened, the 50’s and 60’s are the era of Socialism in America…. a middle class is actually not the normal byproduct of capitalism. Ask any historian, a middle class is actually a fluke in history, like in the 14th century, a middle class was created in Europe when, during the Black Plague, a third of the population died.”

Now you have seen it in print.  I can’t help but respond to this because it is so historically wrong and because it is empirically and philosophically wrong.  Let’s begin at the beginning.  First he excoriates Republicans for what he believes is fake compassion by the rich.  Now it is true that too often wealthy individuals successfully lobby government to protect and promote their own interests at the expense of others (as Adam Smith told us would occur).  That is cronyism.  But Maher would have us believe that all Republicans are like that—and worse.  But that is relatively mild compared to the utterly ridiculous words following.

Maher says America used to have a middle class, and, yes, he continues, it was actually created by Socialism.  Government planning, control and redistribution created higher incomes for a great number of people “in the middle” of the income range.  Obviously he is also implying that market capitalism failed to accomplish very much if anything and was in addition bad for a host of other reasons (first raised by French Socialists, the Marx and the various Marxist schools of thought).

Maher’s interpretation of history as well as his factual assertions are mostly simply wrong.  Let’s take tax rates first.  Yes, the Feds did tax 94% of the income of the top bracket away in 1944. But Maher conveniently forgets that Congress brought these rates back down, not as low as they should have been , but definitely down considerably.  Yes, there was a GI Bill.  But it did not amount to massive redistribution.  It was really pretty modest.  And that one is “cherry-picking” because it seems relatively easy to argue that those we sent off to war should get the opportunity to begin or finish their college education.  But incomes were also rising as the economy revved up for peacetime—without government for the most part.

Maher also says the “massive” programs related to the GI Bill were the (THE) cause of prosperity—government is the great savior.  Well, here Maher is simply wrong.  No doubt these government programs helped returning soldiers, and I do not disagree with them in principle.  But to say they were the cause is to forget that at the same time the economy was being freed from both Depressions era and wartime regulation and was exploding on its own.  Of course Maher sounds like a Keynesian, albeit a less qualified one, in arguing that government spending stimulated the economy so much so that it gave us the Middle Class.  The Middle Class came into existence before World War Two and only continued its rise after, but due to an unleashed private sector and not government paternalism.  The 50s was not Socialism and we do not want (I hope) to look like Finland.  I cringe to think we would want 90% tax rates again.

But I suppose Maher thinks everyone will simply accept his statements at face value.  This blogger will not.  “Ask any historian….”?  I did, by consulting economic historians.  Ah, Mr. Maher, which historians have you been consulting?