Happened to listen to Bill Moyer’s interview with Robert Reich a political economist (what does that mean?) who served as Secretary of Labor under Bill Clinton.
He appeared to plugging a new book, but I didn’t get the title.
What struck me was his passionate appeal for better ‘distribution of wealth’ and advocacy for unionization and/or a $15/hour wage for WalMart and McDonald employees.
In defending the higher wages he lamented that ‘surely these very successful company’s can afford’ to do ‘their duty’.
This such a stupid statement that I had to turn to a different program! It makes me so mad when some idiot talks as though the wage will automatically be paid out of ‘corporate earnings’. Don’t these people understand that labor is simply a cost that will be passed on to the customer? What’s more if it can’t be passed on because the consumer simply refuses to pay the additional cost, that company has no choice but to go out of business.
Why the hell to they think so many companies have moved out of the country to seek lower labor costs?
Another point he stressed, and one which made me boil, is that our country’s economy is driven by ‘consumerism’. Good Lord above, doesn’t someone claiming to be an economist understand that consumers add nothing, zero, nada to the Gross Domestic Product? The GDP is commonly used to measure economic health and is composed of all products and services produced by a country. Consumption, without production, equals increased imports which are subtracted from the total production and thus lower the GDP.
Aside from these two stupid statements, he correctly identified a growing problem which is that the wealth is becoming more concentrated. He also correctly identified a key contributor to that disparity, namely that politicians are being ‘captured’ by these wealthy entities.
But he incorrectly identified the wealth as coming from big finance and big business. These are contributors, but they are not alone. Organized labor and special interest groups (especially the ‘green’ energy lobby) are equally responsible for the growth of cronyism that effectively stifles competition and contributes to wealth concentration.
While paying lip service to ‘freedom of opportunity’ he failed to mention either the complex tax code or the unbelievably large regulatory burden that corrupts our ‘free market’ economy.
The real cause, at least in my eyes, of the decline of the middle class is the lack of a true ‘free market’. The government must take the blame for this loss and thus is responsible for the decline in the middle class. Arbitrary choosing ‘winners and losers’ via direct loans, subsidies and regulations eliminates the ‘free market’ where winners and losers are determined by the consumer.
He even picked up on Obama’s very stupid declaration that the ‘world economy’ and technology were the culprits causing unemployment. The fools that hold this opinion would eliminate the productivity gains from technology. Productivity gains that are essential to ‘economic growth’.
If we want economic growth we must increase productivity via technology and innovation. We must encourage the innovation that permits this increase and we must allow the ‘old ways’ to fail and be replaced by the ‘new’.
We do not create innovation by increasing wages for no corresponding increase in productivity (minimum wage), bailing out failing companies (GM, Chrysler), supporting failing companies (Solyndra, Fisker) or artificially subsidizing government approved activities (electric cars, ethanol). We also don’t encourage innovation by ‘crony capitalism’ which creates barriers to competition. Yet, these are exactly the policies being pursued by our government, both Democrat and Republican.
Frankly, we shouldn’t be in this situation. It has been spawned and promoted by a media that seems disinclined to tell the public the truth. A great majority of the public gets their information from and generally accepts as factual whatever the media chooses to report.