[This is the addended transcript of my regular KVMR commentary broadcast on 3 August 2016.]
Liberal economist Professor Alan Blinder of Princeton maintains that 'Only (Hillary Clinton) Can Make Wages Grow Again', and then launches into a lecture on how economic policies by government fiat will outperform the market driven nostrums advanced by Donald Trump.
He rejects out of hand Trump’s workforce supply and demand argument along with lowering the American employers’ tax burden as ways to encourage and promote the ability of companies to raise wages. In Blinder’s epistle there is no recognition that workers’ wages are based on the value workers deliver to their employer, and that in turn is naturally dependent on the workers’ productivity. There is no reasonable way around these age old economic principles save through force by the government gun, and history makes plain the kind of economies which result from such autocratic policies.
It is important to understand the good professor’s counsel because he serves as an economic adviser to Mrs Clinton, and is a prominent national spokesman for a cadre of progressive economists. Blinder’s list of Clinton’s superior economic policies is 1) raise the minimum wage, 2) force corporations to share profits with workers, 3) launch government subsidized vocational education programs, and mandate employer provided apprenticeships, 4) compel states to provide pre-K education to all, and 5) increase the federal Earned Income Tax Credit.
Raising the minimum wage serves only to reduce jobs and remove the lowest rungs of the economic ladder for the poorest and least skilled among us. There is no evidence that it has ever raised aggregate wages (here). Oh yes, it also buys the votes of those who don’t remember that when you increase the cost of something, you get less of it.
And how does the government know what profit levels are appropriate for attracting risk sensitive investment, and how much of which profits should then be redistributed as unearned income to a company’s workers. Such an overreaching diktat guarantees only another bureaucratic mess that pours more sand into the gears of American industry and commerce already hampered by government’s overload of regulations and taxes that drives businesses overseas.
People forget that the federal government has screwed up every educational program it has attempted, save in the military. So how will a government, with the most incompetent economists in the business, know what vocations need subsidized education, or what industries must provide apprenticeship training, or how those courses or programs should be designed and taught.
Finally, pre-K education has proven to be a total bust. Its measurable effects cannot be discerned after students reach the third grade. Pre-K is one more government boondoggle to increase teachers’ union memberships and therefore a new and reliable cadre of Democrat voters.
So there you have Mrs Clinton’s plan that promises to take our already mired economy down another notch or two while doing nothing to help grow wages. What we all should ask is why we again count on the central planners, including Professor Blinder, who demonstrably know nothing about the workings of a real economy, and whose prescriptions require an ever larger government that has caused the problems in the first place. Why are we not instead freeing industry and commerce to again thrive so that they can pay more in taxes and hire more people?
My name is Rebane, and I also expand on this and related themes on Rebane’s Ruminations where the addended transcript of this commentary is posted with relevant links, and where such issues are debated extensively. However my views are not necessarily shared by KVMR. Thank you for listening.
[Addendum] The PBS finance reporter put it succinctly, “There are two kinds of economists, those who don’t know the future, and those who don’t know they don’t know the future.” Other economics pundits freely admit that they have “muddled models” of the economy which never work, but which can always be exercised one more time for the benefit of the great unwashed. Everyone from Canada, the US, through the UK understands that the profession of quantitative economists is filled with know-nothings sporting outsized egos, the rest just have outsized egos. Here, here, here, here, and here are someone else’s opinions to chew on.
I propose the establishment of a new professional society – The Union of Eternally Surprised Economists - that could serve its members as a kind of half-way house on their return to a more humbled society. Feel free to substitute your favorite s-word for ‘Surprised’.
As a Lucky Strike Extra, I leave you with a full list of Obama’s tax hikes, most marbled into the mono-party midnight massacre that birthed Obamacare.