Keynesians always seem to bring up the 1950s and 1960s as a model where there was high taxes (especially on higher incomes), prominence of labor unions, and more government intervention in the economy while at the same time there was low unemployment, low inflation, and few recessions during this period.
How do Austrians respond?
I would say the following:
1. Effective rates were not all that high. The brackets were set quite high and had lots of loopholes. For example there were a lot more types of income then than there are now. Furthermore, one of the big reasons for LBJ, Nixon, Ford and Carter liking high inflation was that the rising incomes put tax payers in higher brackets who made the same or less amount of real wealth. Note that neither Ford nor Carter NOR Reagan attempted to go back on the Brentton Woods Gold Exhange Rates as they liked the inflation as well.
2. The first part of the 1950s was building back the capital structure in the US economy. Look at the Down Jones, it did not get back to its 1929 high until 1953. Note that WW2 did not end the Depression but the release of productive soldiers and sailors into the real goods producing economy really ended the Depression but even that took several years.
3. The boom of the 1950s and 1960s yielded the bust of the 1970s. Again looking at Dow Jones history you can see that the Dow Jones had a high in 1972 of 1020 and did not make it back to that level until 1983. And what happened in the 1970? Stagflation, there was lots of money creation and high unemployment and growing government.
4. The bust of the 1970 was worse for some but not others, the South and West were not hurt as bad as the North East and North Central parts of the USA. I grew up in Pittsburgh where there were massive problems with unemployment. There were towns around Pittsburgh that had over 30% unemployment.
Milton Friedman's response is that there's a big long boom after every big bust.
Uh...since when is Milton Friedman an Austrian?
To the OP, this has been raised a number of times:
The Crisis That Wasn't
How Do Austrians Explain the Post-WW2 Economy?
GDP growth during the high tax periods in the '50's
Postwar Booms
WWII Ended the Great Depression
Where did post WW2 savings come from?
A friend's quip about World War 2 Debt
Did the New Deal really propel the post war U.S. economy?
Can anyone help me deconstruct this Statist nonsense?
They Tell Us The New Deal Worked!
Keynesians Can't Predict
Rothbard: World War 2 ended the Great Depression?
A debate against a brick wall
New Deal: Saved the Country from Capitalism
regulation and financial/economic crisis
U.S. 'Healthy' economy during times of high taxes and high rate of restrictions/regulations
I'll add more as I think of them.
Thanks for the info. People advocating higher taxes and more intervention always seem to point to the 1950s and 1960s as some sort of golden age. It seems it is greatly exaggerated just like their worship of the Nordic countries.