Unhinged, Cont.

Mickey Kaus, a liberal, takes Paul Krugman to task over his latest column (my post on it is here) and his assertion that in order to turn the economy around, we just need to go back to the 1950s when the highest marginal income tax rate was 91%.  Here is Kaus:

Did this super-rich hundredth-of-the-1% in the ’50s really a) pay anything near those super-high 91% marginal rates, or did they b) employ accountants and loopholes to avoid them (as the conventional tax-reformer wisdom would have it)? If you read Krugman’s paragraph you’d probably conclude (a)–high income tax rates really sock it to the rich! But the truth is closer to (b). 

According to this CRS study, that 91% marginal rate produced an effective income tax rate on the top o.o1 percent of only about 45%. Krugman himself appears to be relying on Piketty and Saez–but they come in with an even lower figure, 31%. They only get to 70% by including corporate taxes, which Krugman mentions, and estate taxes–which he doesn’t mention at all. (emphasis in original.)

And Kaus on Krugman's main argument:

We had powerful unions and more progressive taxes in the 1950s and the country prospered. Therefore we can have powerful unions and more progressive taxes now and prosper again! I can’t be the only one to point out that this does not follow. What if something important about the economy has changed in the meantime? Say, trade has opened up a global market in which American workers must compete with cheaper foreign labor (so any union that extracts above-market wage hikes is quickly undercut). And advances in technology have reduced the value of unskilled work, quite apart from trade-while requiring businesses that can make lots of changes very quickly (without worrying about work rules) and workers who can shift jobs frequently.

If unions having more control equals a more prosperous country, then how would Krugman explain what happened concerning Hostess?