The countries of the world that have the most stable economies and that suffer from the smallest boom and bust cycles are the countries with the highest tax rates on the very, very wealthy. The reason for that is that the government is functioning essentially as a stabilizer, so capitalist economies, there's just a fundamental truth about them. This is not a knock on capitalism, it's just the way it is.

Capitalist economies go in cycles of boom and bust. There are big cycles - what's referred to as the 80-year cycle of major boom and bust - and then there are smaller cycles which are sometimes referred to as the eight to ten year cycle of recession. Every roughly eight to ten years there's a consequential recession.

And so when those depressions and recessions happen, a government that is well-funded - in other words it has a broad enough and high enough tax base that the government has resources - that government can spend money into the recession. They could build new roads, they can do new construction projects, they can build new sewer systems, they can build out high-speed Internet infrastructure.

Whatever it may be, that government can spend or for that matter they can in an extreme case like in the Republican Great Depression, what Franklin Roosevelt did was he even hired people to do basically scutwork - to plant trees, to sweep streets - literally. The WPA was hiring people to paint murals, hired poets to write poetry and do public readings. Not that that's scutwork, but it's not the kind of thing that traditionally you think of as government functions.

The reason our government was doing that was because capitalism was in one of its cyclical failures, one of its cyclical crash modes. And government at that point needs to step in and stimulate the economy by putting as much money as possible at the bottom of the economy into the pockets of working people, which is exactly what FDR did, and it's how we got out of the Great Depression, between that and World War Two which was the largest government stimulus in the history of the United States.

-Thom

(What do you think? Tell us here.)