Liberals hurt the poor in quest for power
Liberals claim care oh-so-deeply about the poor, not just in America (in fact not primarily in America, depending on the liberal group), but then take positions on economic policy which are deeply antithetical toward low-income people. Three such positions are liberals’ opposition to Social Security reform, their attacks on WalMart, and their hostility to free trade. While one might be tempted to think that liberals are simply economic idiots, and certainly many are, the motivation behind their leadership’s positions is much more basic to politicians: The desire to gain and maintain power.
Opposing Social Security reform is one such position, as Social Security is a major factor in keeping poor people poor; it's the largest tax low-income workers pay, and its not inheritable so when someone dies, the government just keeps what workers often think was some sort of retirement plan. (If the dead worker has a spouse, the spouse can either claim the worker's Social Security or his/her own, but not both, so the only way the government doesn't win if someone dies is if the surviving spouse had never contributed a penny to the pyramid scheme.
Democratic presidential candidates Hillary Clinton and Barack Obama not only oppose the creation of privately-owned Social Security accounts, despite the fact that the current system is going bankrupt, but they also do not understand some of the system’s most basic flaws.
Clinton, for example, says on her web site that “Social Security benefits are dependable and protected by law.” In fact, they are neither. Social Security has already seen increases in the retirement age at which a person can begin to collect. As the system goes forward, we’re likely to see a big push for means-testing, so that people who have paid in their whole lives but who have the misfortune of having succeeded economically will have their Social Security payments reduced.
Even more importantly is the “protected by law” concept, which is absolutely false. In 1937, cowering from FDR’s court-packing threat, the Supreme Court ruled that Social Security is constitutional, but that the taxes paid into it are simply general revenue “and are not earmarked in any way”. The Supreme Court has ruled specifically that Social Security is not insurance and that the government has no legal obligation to spend Social Security taxes on Social Security benefits. Those benefits are hostage to political winds. It may be likely that politicians won’t try to substantially modify Social Security benefits, even as the system collapses, but it should be frightening enough that they can.
Without going into too much detail about the economic arguments for personal accounts (which are compelling), it should be noted that current contributors will see a “return” on their “investment” in the system somewhere around 0%. Over any long period, even including a substantial stock market downturn, the stock market outperforms this. Opponents of Social Security reform play up fears of stock market volatility, but that not only ignores the fact just mentioned but also assumes, incorrectly, that private accounts would have to invest in the stock market. They could just as easily invest in government bonds, bank CDs or an other in a wide range of principle-protected assets, guaranteeing a better return and inheritability.
The reason liberals oppose Social Security is not because they believe it’s better but because it’s a great issue to buy and keep votes, especially votes of senior citizens (even though proponents of Social Security specifically say that current and near-term retirees could stay in the current system and would not lose a dime of benefits.) One reason that conservative politicians have been so reticent to support reform, in addition to being afraid of attacks by the AARP, is that government has been spending the Social Security surplus (more being taken in through payroll taxes than being paid out to retirees) on other government programs, thus masking the true size of the Federal deficit. Social Security reform would bring much needed sunlight on to our bloated budget and the tricks used to maintain it.
Attacking WalMart is another anti-poor position taken by liberals. WalMart shoppers have a low average income. WalMart employs about as many people as the military has soldiers. According to George Will, “Wal-Mart and its effects save shoppers more than $200 billion a year, dwarfing such government programs as food stamps ($28.6 billion) and the earned-income tax credit ($34.6 billion). People who buy their groceries from Wal-Mart -- it has one-fifth of the nation's grocery business -- save at least 17 percent.”
The “problem” is that WalMart refuses to unionize, knowing that it will force up their cost of doing business, force them to raise their prices, and cost them and their customers substantially. Liberals talk about WalMart as if it’s a predator on its employees. If that were the case, why are there generally thousands of applicants for a few hundred jobs at new WalMart stores? Are Americans just stupid? Liberals must think so.
As often happens, other businesses, such as unionized supermarket chains try to use government to attack their competition…which is simultaneously attacking the American consumer. Union activists and their lackeys are running public relations interference while attacking WalMart, either trying to convince people not to shop there or trying to prevent it from opening stores, for the real goal of getting more money into unions which they could then spend on those Democrats’ political campaigns. It’s a vicious circle with the American consumer as the victim.
A third issue, and probably the most important, on which Democrats take a truly dangerous (and anti-poor) position is their opposition to free trade. Tyler Cowen (of George Mason University) notes in a NY Times article how restrictions on trade in rice are substantially exacerbating high food prices and therefore hunger in developing countries. It’s not just food, however, and not just outside America where Democrats’ anti-free trade positions are damaging. Protectionism is widespread, as are its negative effects. (And I should note that if the product being traded has a concentration of industry in a particular state, you’ll often see Republicans go along for the protectionist ride.)
For example, in trying to protect textile workers, the country slaps tariffs on imported shirts and underwear. All the rhetoric in the news is that the domestic textile industry needs protection. What it really means is that the politicians from those states need protection, and they’ll buy that protection with the money you spend on t-shirts and underwear which cost you more than they would have, had there been a free market.
The value to the consumer, i.e. to the entire American population, is almost never mentioned. For some reason, it is less important whether we have to spend millions of extra dollars on shirts, sugar, or anything made with steel, than to protect the jobs of workers who are not efficient enough to compete as foreign producers modernize. Also, the media never talks about the fact that people can and do get retrained, and on average end up with better paying jobs, though there are without doubt losers from free trade. We must remember that a free trade loser almost always represents a victory for consumers. I don’t cheer for people to lose their jobs, but I cheer even less for government to support policies which increase my family’s cost of living simply so politicians can buy the votes of the out-dated union worker who believes he has a right to his job.
Imagine the outcry if white collar workers, maybe accountants, complained to the government that they were being forced to lower their prices or change jobs because of competition from internet-based service providers overseas. Imagine they argued that Americans should all have to pay more to get their taxes done so that they could keep living the way they’ve become used to living. Nobody would feel sorry for them, and nobody would think it is reasonable to ask millions of Americans to spend more on tax preparation so that a few thousand accountants can be protected from competition.
Yet that’s the same theory behind most protectionism of commodities. Indeed, the things which we do protect are things which lower income Americans are much more likely to need. The poor could certainly use lower sugar prices more than lower tax preparation bills, but instead we “protect” our sugar industry. Some people argue that we must protect vital national interests, but those arguments fail for a variety of reasons. Those claims are only made to distract us from what’s really happening: Democrats (mostly) are opposing free trade in order to garner political power from unions and special interests by forcing tens of millions of consumers to spend more for things we use every day, leaving us less with which we could raise our standards of living, improve our children’s educations, get better health care, or simply take a vacation.
I can not think of an economic issue on which Democrats take a position based on sound economics or even sound basic principle. They oppose liberty, free markets, and the best interest of consumers and the poor at every turn, while covering their cynicism with empty rhetoric about market risk, mean employers, or unemployed steel workers. Unfortunately, given that most of our students learn (or don’t) at government schools, far too few people understand the damage that’s being done to them.
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