Sunday, December 13, 2009
On Entitlements (part III)
Over the years I casually catalogued the platforms of a progressive associate of mine, which included: affordable housing, a living wage, universal health care, free daycare for working mothers, expanding the use of green energy, stringent environmental regulations and so on.
I do not inherently object to any of these policies, but I am troubled by my associate's implied belief that an unlimited burden can be placed on our economic system without imposing substantial costs on the public. And on a deeper level my associate's platform implies a belief that prices, production and wages are arbitrary and can be simply dictated by politicians and activists without creating serious economic consequences.
Entitlement programs directly paid for by employers raises the cost of labor, which inevitably lead to a lower demand for labor (higher unemployment). And when such programs are paid for by general taxation they limit the capacity of businesses to invest and the public to consume, the end result being higher unemployment. In addition, they inevitably draw funds away from private and public research and development, which are vital to capacity of the American economy to produce new innovations that create wealth and employment opportunities.
Environmental mandates raise the cost of production which inevitably increase the outsourcing of high paying industrial jobs. The promotion of "affordable housing" usually implies rent controls, which inevitably decreases the quality and availability of housing. Mandating that employers pay for child care make it less desirable for employers to hire women. Forcing employers to hire women under such mandates raises the cost of labor, which also leads to higher unemployment.
The point is not that we should not pursue social mandates, but simple that we must carefully weigh the costs and benefits that they offer to the public. We must affirm that the source of America's high living prosperity is the productive force of its comparatively free market system. What this means is that we must be judicious on the burdens that we place on free enterprise. And given this reality, more progressives need to be cognizant that their programs are not complimentary; they compete for limited public resources and simultaneously limit our capacity for economic expansion. Ignore this reality as the Obama Administration has and you will be faced with massive debt and lingering economic malaise.