Monday, November 30, 2015

John Tamny Takes On Bernie Sanders False Economic Religion

Bernie Sanders preaches to his flock the need to create an "economy that works for all, not just the wealthy," but as evidenced by the desperate desire among the world's poorest to get to the U.S., that economy already exists.  The world's poor are busy escaping the collectivism Sanders espouses, at which point we can only look to the well-to-do and careless as the source of Sanders' support.  Sanders disdains great wealth, but it's only in a country marked by abundant success and a lack of want that Sanders could have a following at all.

By John Tamny

THE END OF WORLD WAR II brought with it the end of the British Empire as it was previously known.  While in 1945 a British passport rendered the owner of it a citizen of one quarter of the world's land mass, within a few years the empire had shrunk quite a bit. India, the presumed "Jewel" in the Crown, was soon to be free thanks to the efforts of independence leaders like Mahatma Gandhi.

While he was uncomfortable with socialists whom he saw as "armchair" owing to their unwillingness to live in impoverished fashion, Gandhi sought an egalitarian India with ideas for the country that most today would view as socialist.  As Larry Collins and Dominique LaPierre described his vision in their endlessly interesting book, Freedom at Midnight,
"All labour, physical or intellectual, would carry the same reward in Gandhi's India.  It was not a property qualification that would earn a man the right to vote in his state, but a labour qualification.  To get it, everybody would have to contribute physical labour to the state.  Nobody, including saints or sages, would be exempt.  The ditch digger would get his almost automatically, but the lawyer or millionaire would have to earn his with calluses."
A well-bred and educated lawyer himself, Gandhi strived to live as the "untouchables" of India did, including limiting his food intake to the bare minimum necessary to survive.  Yet despite the leader's pose, lost on Gandhi were the costs related to keeping him "poor."

As one of his allies (Sarojini Naidu) relayed to Lord Mountbatten (the British official charged with overseeing India's path to independence), Gandhi's ability to travel on third class trains was a function of numerous Congress Party officials dressing up as "untouchables" in order to protect him.  Though Gandhi lived in India's slums, faux untouchables from the Party surrounded him in a protective cocoon there too.  As Naidu put it to Mountbatten, "My dear Lord Louis, you will never know how much it has cost the Congress Party to keep that old man in poverty."

Gandhi's somewhat faux poverty came to mind amid a recent campaign stop for Bernie Sanders at Georgetown University.  Full of the well-to-do and well educated, it's no surprise that the Democratic presidential hopeful would find willing listeners at a school largely defined by a lack of want within its student body.

More broadly, it would be interesting to learn the educational attainments and income of the average Sanders partisan, or better yet, average Sanders donor.  Odds are they don't hail from the "working families" or "sick and poor" classes that Sanders claims to represent.

Instead, Sanders embodies the hopes and dreams of people like Livia Matteucci, a Georgetown student who is majoring in psychology.  As USA Today reported about Matteucci, "she and other Georgetown students support ideas such as paid family leave and a higher minimum wage" energetically promoted by Sanders. How very fitting.

Figure Matteucci will graduate into the kinds of companies that already offer family leave, not to mention that her pay upon graduation will well exceed the "minimum" wages that her emotions tell her are good for others. The average Georgetown student most likely last earned the minimum wage in high school as a source of pocket money to supplement an upper middle class lifestyle funded by well-educated and well-employed parents; that, or someone from this demographic was well off enough to "toil" as an unpaid intern.

Those who will truly be affected by what's popular among Sanders partisans are those who most likely have never heard of the Vermont senator.  Many likely haven't heard of Georgetown either, yet they'll be victimized by the yearnings of those who matriculated to the elite and very expensive school.
It's the very people who don't have time to contemplate family leave and wage floors who will experience a more difficult hiring environment as a result of costly rules foisted on employers.  The people who would pay for Sanders' unreason probably aren't terribly aware of a socialist candidate who denies being a socialist, and they aren't because they're too busy working to care.

Sanders told his Georgetown audience "that we must create an economy that works for all, not just the very wealthy." Why wouldn't he say that at ritzy Georgetown? When you're already wealthy, it's easy to disdain the trappings of same.

Interesting about this is that to look at the Republicans vying for the GOP nomination, just about every single one (arguably to the detriment of every American worker, rich or poor) has called for erasing federal income taxes on the lowest earners, all the while maintaining the highest rates for those whom Sanders would deem rich.  Sanders seeks even higher rates of taxation on the "rich." What this should signal to the rest of us is that Republicans and Democrats are in a fight over who will tax the rich the most.  More explicitly it tells us that both major political parties aren't exactly seeking favor with the wealthy.

Sanders or his partisans might respond that what he's really looking to do is end the bailout culture that reached full flower under a Republican in George W. Bush, and that continued under a Democrat in President Obama.  If so, such a move would be a boon for the wealth creators.

We know this simply because the source of Silicon Valley's wealth has been the constant failure that has long defined the world's most innovative economic region.  Imagine how much less well off the Valley would be today if former darlings like Webvan, Friendster and had been bailed out.  Assuming the proper cessation of Wall Street bailouts, the result (a good one in this writer's eyes) will be a great deal more wealth thanks to lousy stewards of capital being starved of it so that the best Wall Street firms and minds can receive it in abundance.  Amen to that.

As has been already mentioned, Sanders wants "an economy that works for all, not just the very wealthy," but as the yearnings of the world's poor to live in the U.S. constantly remind us, the truly impoverished want nothing to do with Sanders' socialism.  In truth, they're actively trying to escape the collectivism that Sanders' espouses with an eye on the abundance wrought by a profit motive perfected in the United States.

Sanders has told his flock that the "billionaire class must be told loudly and clearly that they cannot have it all," but back in the real world billionaire-style wealth constantly reveals itself as the biggest enemy of the want that has historically defined poverty.  The Walton familygot rich by virtue of making life's necessities (including groceries) available to the poor and middle class at increasingly low prices, Henry Ford transformed the once hard to attain automobile into a common good, and Michael Dell became a billionaire by turning computers that used to cost over $1 million into an everyday item.

Only in a country this rich and billionaire dense could kids spend four glorious years in college spouting policies that, if actually implemented, would render their families too poor to send them to college in the first place.  Only in a country as rich as ours could those out of school have the time and resources to promote and financially support a candidate whose ideas have most often correlated with extreme poverty and unemployment.

If there's a negative tradeoff to prosperity, it's that we have to suffer politicians like Sanders.  Indeed, prosperity allows some of us to be truly careless in terms of whom we support for elected in office, thus making people like him possible.  The irony behind a Sanders' platform defined by disdain of great wealth is that he's 100% a creation of it.

John Tamny is Political Economy editor at Forbes, editor of RealClearMarkets, and author of Popular Economics: What the Rolling Stones, Downton Abbey and LeBron James Can Teach You about Economics(Regnery, 2015).  His next book, Who Needs the Fed?(Encounter Books), will be released in May of 2016. 

No comments: