Twelve Progressive Policies That Make the Rich Richer and the Poor Poorer
It is a common misunderstanding among progressives that conservatives are “mean-spirited” because they refuse to support government intervention on behalf of the poor. But it is not that conservatives are mean-spirited that causes them to refuse government meddling, it is that they have a better understanding of sustainable economic policy that benefits the greatest number of people and leads to a higher quality of life for those who seek it.
While the mere presence of money and self-interest in an economy is enough for the progressive to scapegoat “capitalism” for all economic ills, capitalism is merely a means to measure and facilitate economic transactions between groups and individuals, and ensure that people get the socially-appraised value out of the economic system that they put into it, while securing the fruits of their labor.
Additionally, progressives often lash out at “capitalism,” when really they mean economic reality – for example, indisputable facts like scarcity and opportunity cost. Such fundamental misunderstanding of economic reality leads to progressives doing tremendous damage to the economy, all under the misguided notion that they are exacting “social justice.”
With that in mind, I will show how progressive policies, or alternatively, non-free market policies, disproportionately harm the poor through reduced opportunity for work and higher prices for goods and services:
- Bailouts – Though the bailout of banks and investment firms began under the progressive Bush, they were carried through under Obama. TARP cost Americans hundred of billions of dollars, money that was introduced into the economy by The Fed and subsequently inflated prices, as can be seen by the soaring prices of commodities. Every time The Fed monetizes debt, everyone pays for it. And due to the poor’s relatively smaller incomes, they are hit harder. The rich stay rich, and the poor get poorer.
- Stimulus – The $789 billion stimulus plan, introduced and passed by The Democrats, was sold as a program that would keep unemployment under 8%, which it has obviously failed to do. It has recently been discovered that only six percent of the stimulus program went to “shovel ready jobs,” a fact Obama joked about at a press conference. The reason the stimulus didn’t work was not just that, conceptually, it is like picking up a pail of water from a pool and pouring it back in, doing nothing to raise the overall level since none of it is based on savings, but more like it is akin to picking up a pail of water and pouring it into the gutter, only to go down into the sewer of special interests.
- Green Jobs – “Green energy” manufacturers like General Electric are cashing in on the taxpayer financing of wasteful green jobs, which have been estimated to cost roughly $135,000 each. What does this mean for the average American? That instead of productive jobs that create actual goods and services efficiently in the market, which lower the prices of those products and makes them cheaper for all to afford, Americans are subsidizing inefficient and cost-ineffective energy while lining the pockets of Washington insiders. That is, when the money isn’t flat-out going overseas. Indeed, billions of “green” money, 80% of the $2 billion allocated in the stimulus program, went to foreign countries. This means less money for Americans.
- Wars – While it was a perfectly reasonable response to the 9/11 attacks to retaliate against our attackers, it was not reasonable to attempt to nation-build historically backwards people into maintaining civilized nation-states. Not only is the mission quixotic, but it is fiscally wasteful. So while the right progressive Bush went to war against the Taliban and Iraq after being authorized by both parties in Congress, the left progressive Obama has continued Bush’s policies, even while limiting the troops’ ability to aggressively bring those wars to a close. And Obama has truly unilaterally gone to war against Libya, without Congressional authorization, in a mission that now looks to be a losing fight. All these wars, both the new ones and those continued by Obama in violation of his campaign promises, are a waste of billions.
- Corporate Welfare – Though the “right” is usually accused by the left of supporting corporate welfare, or money doled out to corporations in the form of government contracts in return for campaign contributions and other favors, it is the Democrat Party that is running away with the corporate bag money. In the 2008 campaign, Barack Obama took away the title of highest corporate fund-raiser in all economic sectors. Unsurprisingly, showing indeed the capitalists can be sold the rope to hang themselves, Barack Obama is again leading the pack in Wall Street kickbacks.
- Subsidies – From ethanol to sugar subsidies, the agriculture lobby garners between $10 billion and $30 billion in subsidies a year. While it may seem like such programs would help the poor by lowering food prices, in actuality, subsidies paid out for corn allocated for ethanol have drastically increased food prices. Indeed, even evil corporation General Mills has complained about ethanol subsidies, stating that they needlessly make food prices higher! And when a box of cereal is four dollars or more, it strains the budgets of the poor, who rely on such food for basic nutrition. While food stamps are among the least economically harmful welfare programs we have, in terms of negative impact on jobs, the program is overused at 40 million recipients and frequently abused.
- Regulations – Although regulations are seen by those paranoid of the market as necessary to restrain big corporations, what they actually do is increase compliance costs for small competitors relative to the size of their company budgets. Many small manufacturers can barely afford the legal fees or the lobbyists needed to compete with “the big boys.” Deregulation actually levels the playing field by making it easier to start up a competitive business. And the market is a much more predictable and sensitive instrument of accountability to the people than bureaucrat regulators, and the self-interested politicians who claim to represent the will of the people.
- Unions – While private sector unions are consistent with freedom of association, they also inhibit efficient allocation of resources in exchange for the production of value. While some see profits as inherently exploitative, and thus labor unions as absolutely necessary to prevent abuse, they are actually indispensable for company reinvestment, amortization, and incentivizing shareholders. They are a hedge against future uncertainty, such as the possibility of an economic downturn. But private sector unions are much less harmful thant public sector unions, which routinely sponsor Democrats who kickback taxpayer money to the unions. While the narrative has it that such unions are needed to prevent exploitation, the numbers show that unions actually lead to workers being overpaid for their skills relative to the labor market. BLS statistics show that the yearly earnings of a union worker vs. non-worker is $47 ,684 vs. $37,284 – or 22% higher. But neither figure is poverty level, and we can deduce that the unionized business is made less competitive and more likely to fail. (See the bailout of the UAW-run General Motors.) By extension, the drive to force the unionization of more Americans is a response to the fact that corporations have been offering the benefits often touted by unions, such as healthcare, vision, and dental care coverage, pensions, retirement plans, and so forth. Corporations have therefore had a substantial negative impact on unionization by simply remaining attentive to their employees. This in turn is spurring the labor union bosses to ratchet up political pressure in order to continue their rents. In summary, more labor cartelization and more failed businesses mean less jobs for lower-skilled laborers. Union workers may be relatively better off than non-unionized workers, but fewer people are better off.
- Minimum Wage Laws – The effects of the minimum wage are similar to those of union cartelization, as it decreases the ability of workers to sell their labor at a wage lower than their competitors, thus limiting the ability of people to get a start in the labor market and work their way up. The minimum wage thus limits opportunity. In addition, jobs are often lost due to the increased expenses of maintaining minimum wage employees. This disproportionately harms the poor and the young looking for work experience.
- Education – Universal, state-run education is one of the leading causes of the progressive left, even to the extent that many progressives oppose there being any choice in school attendance at all, purportedly in the name of “equality.” But public run schools have been shown to be an unmitigated failure, non-competitive, overly expensive, and simply inadequate preparation for either the work force or college. Speaking of college, even though more Americans attend college, most students emerge drowning in debt, and with ill-preparation for the work force stemming from their largely market-irrelevant academic training.
- Corporate taxes/ Taxes in general – The United States has the second highest corporate taxes in the world, leading to a business-hostile environment that leads corporations to “exit” the country, or “voice” their preferences (for lower or no taxes) through lobbying government. That numerous loopholes are granted to large Democrat donors like GE and Goldman Sachs, which paid disproportionately lower taxes or even no taxes in 2010, is no surprise. But what is a surprise is how progressives keep pushing progressive income taxes as a solution to all problems, when they should be pushing policies like the FAIR tax, which has no loopholes and would increase tax transparency and predictability. More workers would be employed, since company compliance costs would be lower; the IRS overhead would be reduced; lobbying would be dramatically curbed; and politicians would be more responsive to voters instead of understandably tax-dodging companies. But to summarize, corporate taxes and taxes in general lead to corporations either lobbying government for special favors competitors cannot, do not, or will not offer; or fleeing the country and taking their jobs with them.
- Welfare – The sum effect of reallocating market-driven, or alternatively, consumer-responsive resources is to structure an economic system that is dependent on government expropriation and redistribution to political clientele. Structural inefficiency inexorably leads to higher prices, which disproportionately harms poorer people. Government intervention and overhead leads to a reduction in productivity, through removal of workers from private sector jobs, whose increased productivity lowers prices, and their replacement with public sector jobs, which not only consume goods and services produced by the private sector but often inhibit the private sector! Government intervention thus leads in many cases to a doubly negative impact on the productive economy. Second, the payment of welfare to those who cannot or will not find a job has an objectively harmful effect, in that welfare payments consume produced resources without corresponding inputs. Welfare subsidize idleness, as we can state even without negatively judging the recipients, leading to a loss of productivity and foregone lower prices for goods and services, which would arise at the very least through market competition. But welfare not only harms the market, but it harms the recipients themselves, for it leads to a sustained lower quality of life. As Ben Franklin put it:
“I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”