The current coronavirus pandemic is inducing an economic depression.
Capitalism has regularly proved the most effective generator of equitable prosperity.
When we administer capitalism’s high octane version, its "Ten Commandments," it works like a charm.
Hey Washington: Use capitalism to get the economy roaring again.
The "Ten Commandments" are 10 high-powered prosperity inducers.
They are pragmatic, not dogmatic.
First, though, let’s dispel the big myth that is paralyzing our officials’ ability to take decisive action.
Karl Marx's and Friedrich Engels' "The Communist Manifesto" (1848) propounded the myth that capitalism oppresses workers. This myth lingers, especially among the "progressives" who infest the Democratic Party.
Don’t fall for it.
True capitalism benefits workers as well as businesses.
There are two flavors of true capitalism.
The left-leaning version is known as "social market capitalism."
Germany invented it and the Nordic countries are its most enthusiastic practitioners, most happily. The market is left free to generate wealth. The government uses the abundant tax revenues from that to fund a suite of popular public services, services which aren’t abused.
Like public libraries. Or, health insurance.
The right-leaning version is popularly known as "laissez-faire capitalism."
Singapore, Hong Kong, and, to a lesser extent, the United States practice this. This holds that the private sector is better at providing more affordable, higher quality, services and giving people opportunities to earn and afford them.
Both lead to human flourishing.
The snake in the woodpile?
Class warfare. "The Communist Manifesto" opens with the words "A spectre is haunting Europe — the spectre of communism." Then it states its fundamental doctrine: "The history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight. . . . "
This specter — really, an imaginary hobgoblin — still infests the world’s imagination, including that of the intelligentsia. It is wrong. It’s not merely wrong, it’s toxic.
It undermines the spirit of cooperation between labor and capital.
That cooperation is the source of mutual prosperity.
The mass media generates narratives — stories with heroes and villains — rather than simply reporting the facts.
Don't blame the mass media for pandering to us with what we prefer to consume: melodramas.
That said, this process generates some weird myths.
One of these myths is that the "supply-side" revolution was a "right-wing thing," designed to privilege the rich and prejudice workers. Utterly untrue.
Rep. Jack Kemp kicked off the tax rate reduction process with his proposal of a 30% across-the-board (meaning, for everybody) income tax rate cut. Few now remember, but Kemp’s main policy swami, Jude Wanniski, was a self-proclaimed Marxist.
Or, as Jude put it, "Marxian." (A distinction without a difference.)
Kemp himself had been a labor union founder and president. Kemp, and Team Kemp, was passionately pro-labor. Reagan, too, had been a union president.
Reagan was elected twice as president of the Screen Actors Guild (SAG).
But wait. There’s more:
Kemp’s proposed tax rate cut was drawn directly from President John F. Kennedy’s own proposal for a 30% rate cut. Kemp embodied the spirit of general prosperity that JFK was advocating in his last major public speech when stating that "A rising tide lifts all the boats."
Both JFKs opposed class warfare.
But wait. There’s still more:
Good pro-labor democrats, under the inspiration of House Ways and Means Chairman Dan Rostenkowski, trumped Kemp’s proposed rate cut by immediately cutting the top tax rate from 70% to 50%. Surely Kemp and Reagan approved but did not dare to propose this for fear of being painted as just shills for the rich.
The Dems led.
But wait. There’s even still more:
Reagan’s second major income tax rate cut, also initiated by Kemp, dropped the top tax rate to 28%. That that rate cut was propelled by two good pro-labor Democrats, Sen. Bill Bradley and Rep. Richard Gephardt.
The reduction in tax rates — with the top rate getting dropped from 70% to 28% — was part of the recipe that supercharged America’s job growth.
Per commentator Peter Ferrara: "During this seven-year recovery, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third-largest in the world at the time, to the U.S. economy. In 1984 alone real economic growth boomed by 6.8%, the highest in 50 years. Nearly 20 million new jobs were created during the recovery, increasing U.S. civilian employment by almost 20%."
Welcome to the Secret History Hidden in Plain Sight behind the first of the Ten Commandments of Capitalism. The First Commandment banished the specter of class warfare, at least for a time. Supermajorities of both Democrats and Republicans came together to enact this low top rate and usher in the attendant prosperity.
Welcome to the First Commandment of Capitalism. "The highest marginal income tax rates for individuals and businesses shall not exceed 28%."
Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $88T. He served as a deputy general counsel in the Reagan White House, has worked closely with the Congress and two cabinet agencies, and has published over a million words on politics and policy in the mainstream media, as a distinguished professional blogger, and as the author of the internationally award-winning cult classic book "The Websters' Dictionary: How to Use the Web to Transform the World." He has served as senior adviser, economics, to APIA as an advocate of the gold standard, senior counselor to the Chamber of Digital Commerce and serves as general counsel to Frax.finance, a stablecoin venture. To read more of his reports — Click Here Now.
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