Thursday, January 29, 2015

What Middle-Class Economics Really Looks Like

President Obama introduced a new catchphrase in his 2015 State of the Union speech: Middle Class Economics. As he put it:
[M]iddle class economics is -- the idea that this country does best when everyone gets their fair shot, everyone does their fair share, everyone plays by the same set of rules.
Then he sharpened his definition.
[M]iddle-class economics means helping working families feel more secure in a world of constant change.
What does that mean? The president says it means government subsidized child care, government mandated sick leave and maternity leave, another equal pay law, and a higher minimum wage.

Of course these benefits have nothing to do with any kind of economics. They are simple government welfare state benefits, and the idea is to attract the votes of women and low-paid workers.

Nothing wrong with that. If women and workers want to subject themselves to the feudal mercies of the Great Lord Obama, that is their choice.

The telling point is that President Obama feels he has to cover the ugly reality of his class-warfare authoritarian welfare state in the clothing of the middle class. He's not just handing out loot to his faithful voters; he's upholding middle class values. He's not just appealing to the narrow interest of low-income voters; he's upholding justice for all. The Democrats have been doing this for a while, ever since they stopped openly pitching for the working-class vote. It tells us that they think they are batting on a sticky wicket.

The Wall Street Journal's Dan Henninger charmingly calls the president's policy "Obama's Peter Pan Economics."
In Mr. O’s world, tax revenue is sort of like Tinker Bell’s pixie dust. You just scoop up another handful and spread it wherever you want. As he said Saturday: Middle-class economics “means making it easier to afford childcare, college, paid leave, health care, a home, and retirement.”
 Henninger is right. Middle-Class Economics is a fairy tale. Here's how.

Government doesn't make childcare more affordable; it strangles it in regulations and certifications and makes it more expensive. Government doesn't make college more affordable; its subsidies have encouraged colleges to jack up tuition into the stratosphere so students can't any more work their way through college. Government doesn't make paid leave more affordable; it just forces workers to work for lower wages while their employers bank their vacation pay for them. Government doesn't make health care more affordable; it makes it impossible to afford unless the government is paying for you -- and that's assuming that the government covers the procedures you need. Government doesn't make homes more affordable. It doesn't make a home more affordable. It just crashed the housing market with its "affordable housing" policies and the people hardest hit were the blacks and Hispanics the very people that the policy was supposed to help. Government doesn't make retirement more affordable; it just sequesters middle-class savings and spends the money on buying votes for 30 years.

Hey GOP candidates for 2016! Here's the germ of a stump speech!

OK. Let's get back to first principles. On my view, government is force, and what governments do is distribute loot to their supporters. No loot, no supporters. The purpose of election campaigns and State of the Union speeches is to dangle the promise of loot before potential supporters, and entice them to vote for you.

But real middle-class economics and real middle-class culture is opposed to this. It imagines that it has evolved beyond the child-like complaint of "it's not fair", the wail of the people of the subordinate self. The middle class believes in responsible individualism. It says "tell me the rules, and I will follow the rules, go to work, pay my taxes, and obey the laws." And I will take responsibility for contributing my share to society. I will take responsibility for childcare, meaning that I will work to care for and raise my children. I will take responsibility for college, meaning that I will save for my childrens' education. I will take responsibility for paid leave, meaning that I will work to save money so I can take time off for a vacation, for sickness, for family emergencies. I will take responsibility for health care, meaning that I will select a health insurance plan that meets my particular needs and protects my assets. I will take responsibility for buying a home, meaning that I will save up money for a mortgage and buy a house that I can afford and that won't wipe me out if there is a recession. I will take responsibility for retirement, meaning that I will save money on my own time in my own way, and when I've saved enough (government mismanagement of the economy notwithstanding) I will retire.

That's what middle class economics really means. It means that people of the responsible self surrender themselves to the mercies of the market in the faith that by working and saving and doing useful things for other people, and constantly improving their skills,  they will wive and thrive in a world of constant change. The point of responsible individualism is that it is the taking on of responsibility that makes life meaningful. Otherwise you are just a peasant or a serf.

All the middle class needs is a government that keeps its cotton-picking hands off the levers of economic intervention, and do simple things like defend the nation against enemies foreign and domestic, provide a sound currency, provide a job market free from credentialism and a business environment where you can start a business in one day with one form.

That would be real middle-class economics.

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