What is to blame for
Americans’ economic woes?
Why, Americans’ selfish desires,
according to a school of thought that appears to be currently
dominant in the White House. An excellent example of this line of
thinking is former presidential economic advisor Robert
Reich’s
recent article
in the
Financial
Times, in
which he claims
America’s
“insatiable consumers” have
destroyed the economy and the “hubs of
our communities” with their relentless
pursuit of “great
deals.”
The “lure
of the bargain,” suggests Reich, is a
destructive force.
Well
that’s rich —
Berkeley professor Reich, clearly a member of the 1
percent, attacking the 99. While Reich consider low prices a great
evil, he ignores what they actually mean. Low prices indicate that
a good or service has become more abundant —
that is, more
available. This
availability of goods and services is the very definition
prosperity. The pursuit of low prices, which so offends Reich, is
just the pursuit of prosperity — the
pursuit of happiness that the Declaration of Independence
called
“unalienable.”
Reich blames
Americans’ desire for lower
prices, prosperity, and happiness for sending jobs
“elsewhere.” But he ignores
the fact that those lower prices mean we have more money available
to buy other, costlier goods and services here in America. So
rather than make snow globes and t-shirts, Americans develop
advanced technology, manufacture airplanes and cars, and provide
the world’s best financial, health, and
education services. They use iPads that put enormous competitive
pressures on laptop manufacturers and publishers to provide more
creative services to people who want them.
It is enough to make on wonder whether Reich
has ever read Schumpeter, who in 1942 pointed
out: “The capitalist
achievement does not typically consist in providing more silk
stockings for queens but in bringing them within the reach of
factory girls in return for steadily decreasing amounts of
effort.”
(Capitalism, Socialism,
and Democracy, p.
67)
Trade freed Americans from the sweatshop and
now it is freeing them from the factory floor. It will do the same
for Asians and Africans. Yet Reich would end trade with poor
countries, since their environmental and working
conditions “offend common
decency.” Does Reich truly believe these
workers’ usual alternative, subsistence
farming, can gain them a
“decent” standard of living?
Does he really believe he knows better than the poor in developing
countries what is best for them? Not allowing those workers to
decide for themselves would keep them in poverty. Meanwhile,
middle-class Americans are made worse off
by higher prices.
Reich
isn’t the only Obama ally
who wants higher prices. Treasury Secretary Timothy Geithner wants
more subsidies to raise housing prices —
even after those policies created a housing bubble that
led to the current financial crisis. Commerce Secretary John Bryson
has championed the cause of higher energy prices since the
1970s,
telling
Justice Stephen Breyer during a 2010 panel
discussion that “energy
prices are going to have to go up.”
Breyer responded by
saying,
“We better get away from oil.
That’ll help us.… Raise the price of oil! Raise it
through the roof, and then people will look for
substitutes.”
It’s
easy for rich liberals to ask for higher taxes and higher prices,
but these policies dramatically damage Americans’
standard of living. President
Obama’s cap and trade bill would have
cost each American family $1,761 per year, according to
the White
House’s own
figures. While
that bill failed, Obama’s
anti-drilling, anti-pipeline, anti-energy agenda is already forcing
Americans to spend more on gas as a percentage of their income last
year than at any point in the last three decades. Higher prices can
and do kill the American dream.
Reich wants to
“protect jobs and wages”
with “democratic institutions
that shape and constrain markets” — the
very same institutions he claims are controlled by corporations.
The reality is that large corporations do benefit from government
meddling in markets. Regulations increase costs that large
companies can absorb but that can drive small companies out of
business.
Low prices mean abundance and prosperity. High
prices mean scarcity and privation. The dynamic capitalism that
works to drive prices ever lower has helped make America the most
prosperous nation on Earth. The high price economy the Obama
administration and its supporters want will benefit no
one — except, ironically,
some of the 1 percent.
