Ben wrote:
Funny. In the 50's when the top income-tax was 90%, the middle class exploded. Why would that be? Could it be that when CEOs face rates like that, they decide that it is better to build companies up and take pleasure in running a healthy company rather than robbing it for personal gain?


The middle class exploded because of the GI bill, and because labor productivity was growing at its fastest pace in history. Even the massive productivity boom we saw during the Clinton administration wasn't as fast as the growth in the 50s and 60s. And the 90s boom had a HUGE impact on poverty rates and employment levels at the bottom of the ladder.

Don't fall prey to golden age nostalgia, because it's absolutely not the case that 50s and 60s CEOs were better than modern ones. Caps on salaries just meant that most compensation happened "under the table" in perks, sweetheart deals, empire building, and other hard-to-measure payments. Corporate governance was a lot shabbier then, too, because boards were even less active than they are today, shareholders even more torpid. The 50s saw the birth of the conglomerate, and their main reason for existence was to hide badly performing divisions from shareholders and auditors by enabling profitable divisions to prop up garbage divisions.