George Rebane
[This is the addended transcript of my regular KVMR commentary broadcast on 5 February 2015.]
There is no doubt that America’s income and wage gaps are real, and everyone sees it as a social problem that should not be ignored. Both the Right and Left agree on the reading of that data, but that is where the agreement ends. The Left denounces the gaps as evidence of the country’s rich having robbed the poor through various open market stratagems and legal ‘loop holes’. But it pays to remember that the so-called loop holes are just the artifacts in complex laws carelessly crafted, and often by not very bright people.
We hear a lot about the ‘productivity conundrum’ – why have wages not risen with increasing productivity. A little thought reveals that this is not a conundrum. Rapid technical advances have created machines and methods that can do very complex things faster, cheaper, and with fewer people than before. So the cost of doing and making stuff has gone down along with increased layoffs of the resulting redundant workers. That leaves the fewer highly paid workers and a lot of low paid workers not yet displaced. Therefore productivity goes up while the median wage goes down. You can work this out for yourself on the back of an envelope.
What really is happening is that capital is replacing labor to provide everyone with better and cheaper goods and services, and today this process has no peaceful end in sight. It will end only with riot, revolution, or a mindful restructuring of our economy. President Obama’s ‘middle class economy’ is not one that can afford to transfer enough wealth to those being left behind and still improve everyone’s quality of life. Demogauging himself as a populist Robin Hood will ultimately pauper all but a small autocratic elite who will then rule by the gun.
Here we have been talking about the growth of America’s systemic unemployment that is quietly confirmed by the increasing number of the permanently unemployed and those participating in the workforce. All the while we are told to keep our eye on that dodgy unemployment rate.
As computers approach human intelligence and computer-driven technologies give rise to ever more capable robots, more humans will become redundant or simply incapable of competing in the work that creates enough wealth to feed, clothe, and shelter themselves. To retain their human dignity and quality of life, they must become recipients of transferred wealth, as they work in jobs purposely crafted to maintain their perceptions of self-worth.
Humanity has never been in such a state of development before. And traditional collectivist remedies that substitute managed economies and regulated social orders for individual liberty, enterprise, and open markets are proven disasters. Yet that is all we can expect from America’s progressives as they contrive national budgets which ignore how productive economies work to improve the lives of billions.
President Obama and his kind have not shown that they understand any of these realities. Instead, their solution to income and wealth inequality is the simplistic one advanced by Willie Sutton when asked why he robbed banks; his reply, ‘Because that’s where the money is.’ Applying the Sutton Solution on a national scale will not work, for the simple reason that the wealth creators will then not work. It turns out tax rates and regulatory burdens do affect people’s economic behavior, and is confirmed by states like California and Illinois, today’s sick and dying canaries in the great American gold mine. This is the state of our nation under the big and bulging leviathan in Washington.
In recent years the only policies untried are those that get out of the way of people who will stand the risk required to create productive jobs that employ others, and in the process, produce the wealth that once more unfetters life, liberty, and the pursuit of happiness. Unfortunately, those of us enamored of ‘smart growth’, things ‘sustainable’, and going deeper into debt while constrained by an ever more watchful and intrusive government, they compel us in exactly the wrong direction, a direction that will not help those being left behind.
My name is Rebane, and I also expand on this and related themes on georgerebane.com where the addended transcript of this commentary is posted with relevant links, and where such issues are debated extensively. However my views are not necessarily shared by KVMR. Thank you for listening.
[Addendum] One of the more reliable litmus tests to ferret out a progressive at, say, a cocktail party is to ask him what maximum level of government spending should contribute to our GDP. This is akin to asking if there should be some limit to tax rates. The progressive’s answer inevitably is to obfuscate or state simply that there should be no such limit, that government can and should take from private sector earnings and property whatever it needs. The implication being that good citizens will just hunker down to go out and work harder to earn some more when their past earnings and property have been confiscated. Obama’s socialist upbringing counsels exactly that kind of policy as he proudly declared in his SOTUS. A good summary on Obama’s taxing history is available here.
Stratfor’s Jay Ogilvy argues that “more important than the clashes among the great civilizations, there is a clash within each of the great civilizations. This is the clash between those who have “made it” (in a sense yet to be defined) and those who have been “left behind” — a phrase that is rich with ironic resonance.” And this is what RR has been declaring and exploring over the years (e.g. here), citing the works of thinkers like Charles Murray and Tyler Cowan.
Ogilvy points out what he calls the “paradox of those left behind by a lengthening ‘cultural curriculum’” (see figure and more here). This plays into the most recent sophomoric response that the White House issued in the presidents SOTUS – free associate degrees for all from community colleges. William Kelly Jr and Elizabeth Kelly have (here) called our attention to the obvious fallacy of such a policy that Team Obama hopes will get more people into the workforce. It’s called the ‘fallacy of composition’ that simply states if everyone can do it, then doing it is nothing special and is rewarded accordingly.
Here the administration’s dufus brigade thinks it’s getting a twofer by loading the taxpayer with yet another spending program generating academic degrees to nowhere. The Bureau of Labor Statistics tells us that there are already more AA degrees out there than jobs requiring the generalized sheepskins that the overwhelming proportion of students get from community colleges. Using an AA to get a job requires specialized AAs that take specialized skills and hard work, rigors most students for which most students don’t have either the fortitude or brains. But that makes no never mind to the progressives because whatever the marginal educational or job acquisition skills such a program produces, it will generate more Democrat voters from the ranks of undecided light thinkers.
rebanesruminations.com 
Leave a comment