State of the Union: Obama's war
By The Tribune-Review
Published: Tuesday, Jan. 28, 2014, 9:00 p.m.
Think of these items as President Obama brings his post-State of the Union road show to West Mifflin on Wednesday and you are bombarded with claim after claim that his growth-retarding policy prescriptions are just what the doctor ordered to restitch America's fabric:
• Claim: The “American Dream” of working hard and bettering one's station in life is dead, killed by wage stagnation and “income inequality”; we must “spread the wealth around” even more through increased government redistribution programs.
Reality: “Mobility,” the term generally associated with advancing into higher income quintiles, has remained flat over the last 40 years. And it is family structure (or lack thereof), not “income inequality,” that generally predicts mobility. (Curiously enough, Mr. Obama has chosen Greater Pittsburgh to once again attempt to make the point, a metropolitan region that liberal researchers at Harvard and Berkeley rank second in the nation for conditions conducive to achieving the “American Dream.”) Oh, and real income for the average American family has increased by a third over the last 30 years.
• Claim: We must extend unemployment benefits to not only aid the long-term unemployed but to boost an economy still lagging from The Great Recession.
Reality: “You pay people not to work — and many respond accordingly,” reminds noted Ohio University economics professor Richard Vedder, a scholar at The Independent Institute. Such benefits are a net economic drag, a study by the University of Pennsylvania and the Federal Reserve Bank of New York concludes.
“The negative effects of unemployment benefit extensions on job creation decisions by employers dominate any potential stimulative effect that some ascribe to such policies,” their study says.
And do remember that unemployment is falling only because workforce participation is at a 36-year low.
• Claim: Raising the minimum wage helps the poorest workers among us.
Reality: Actually it's just another front in what Professor Vedder calls the “war on work.” “Future Nobel laureate George Stigler noted in 1964 that minimum wage laws caused unemployment, and subsequent empirical evidence overwhelmingly shows that they kill jobs for the most vulnerable unskilled workers. That is, the more labor costs, the less there is of it. Then as now. (Except in the closed market of government work, we would note. President Obama's executive order raising the minimum wage on new federal contracts will — by fiat and not based on productivity — raise the cost to taxpayers).
“No nation ever achieved greatness when vast portions of its productive workforce were idle,” Vedder says. It's a reference not just to extended unemployment and minimum wages but also to the proliferation of food stamps, higher taxes on workers, higher rates of Social Security disability and federal student financial aid (which only gives higher education cover for jacking up tuition).
“America will not regain its economic vitality until it ends this war on work,” Vedder says. And that's not likely as long as President Obama so steadfastly prosecutes his war on the American fabric.
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