Hillary’s Magical Thinking on the Economy
Everyone likes to dream. In dreams, you can fly, you can win the love of those beautiful people who won’t talk to you in real life, and the laws of the universe no longer apply. But when we confuse dreams for reality, bad things happen. You shouldn’t jump off your roof in an effort to soar through the air, and you shouldn’t pretend that the rules that govern the natural world cease to exist.
Someone should tell this to Hillary Clinton. In her speech in Warren, Michigan on Thursday, she revealed why the Democrats’ economic policies have utterly failed to revitalize the American economy over the last eight years, and also why they tend to perform so well in elections. It’s what I call the “wouldn’t it be nice if” agenda, based entirely on magical thinking and fantasies totally out of touch with the harsh realities of economics. Of course, it all sounds great to voters. Who doesn’t like to engage wishful thinking from time to time? But when put into practice, these policies not only fail to deliver the promised benefits, but make things worse for everyone in the process.
The key example of this kind of thinking in Hillary’s speech came when she asserted that every American willing to work hard should be able to find a job that will support a family. That certainly would be nice, but unfortunately that’s not how jobs work. Employers don’t hire people because they want to support families, they do so because those workers have a skill to offer that is worth something. How much that skill is worth depends on many factors, such as the price consumers are willing to pay for the final product, how cheap it would be to have a machine do the work, or how much another potential worker with a similar skill would be willing to accept for the job. Hillary thinks she can just wave her hand and dictate how much jobs pay, but she can’t control how much consumers are willing to pay. Likewise, she can’t control the costs of automation, and she can’t control competition among workers for the same position. The price system for labor regulates all of these factors to create a working market, and when you just try to set wages by decree, you break the whole machine.
Even if you don’t want to delve into the economics of it all, this idea should be obvious nonsense. Do you really think a sixteen year old getting his first job bagging groceries should be able to make enough money to feed a family of four? If that were the case, no one would ever hire grocery baggers again. We’d have to do the bagging ourselves, and young people would lose out on an opportunity to earn a few extra dollars, as well as something to put on a resumé for future advancement.
Hillary continued her agenda of childish whimsy by calling for free college tuition for everyone. Doesn’t that sound nice? Except there ain’t no such thing as a free lunch, and that includes college. Professors expect to get paid for their services (they need to be able to support a family, remember?), which means that someone is going to have to pay them. It costs money to build and maintain dormitories and classrooms. Electricity, heating, furniture, books, plumbing, computers, paper — all of these things cost money. The question is, who should pay for them? It makes far more sense to have the people who desire these services, and who benefit most directly from them, to foot the bill. Hillary thinks people who don’t particularly want or profit from them to pay instead. It doesn’t take a genius to imagine what will happen to the quality of college when dissatisfied customers lose their ability to withhold funding in response to poor service. There’s also no incentive for “free” colleges to keep prices down if those prices are being paid by extorting money from an unwilling public.
Hillary didn’t stop there. She also wants government-sponsored child care, as well as government-run health care, which she asserts will strengthen competition and drive down costs, in defiance of all logic and historical precedent. Here we run into the same problems as with tuition. Her “wouldn’t it be nice” musing on free services ignores the fact that someone always has to pay. When you destroy the consumer’s ability to choose how to spend his money, you also destroy any incentive for producers to do a good job at a low cost.
This is the problem with Democrats. They refuse to acknowledge how things actually work and they have a bunch of pie-in-the-sky dreams they want to make reality. Similarly, they think the right president can just make it happen. But just as a president is powerless to change the laws of physics by decree, they are also incapable of thwarting economic reality just because “it would be nice.” (For more from the author of “Hillary’s Magical Thinking on the Economy” please click HERE)
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