- - Monday, January 26, 2015


President Obama wants to move people out of poverty. He said so last week, on Facebook. Well, free-market conservatives want to move them out of poverty and way beyond — to the income security and wage growth that comes only from robust job creation.

The president’s regulatory approach — imposing arbitrary minimum wage increases and employer mandates — is the employment equivalent of musical chairs: After each round, another bunch of jobs disappears.

His plan pits a herd of famously unmotivated bureaucrats against employers — including megacorporations and billionaires — to extract “fair” wage increases and mandatory benefits.

Billionaires may be devils or angels, some mix of the two, or something else altogether. But history shows they win battles with bureaucrats. Look at the first six years of the Obama administration. Higher tax rates on the upper-income brackets. A new system of phenomenally costly health care mandates. Dodd-Frank’s Consumer Financial Protection Bureau. He really stuck it to the billionaires.

Or did he? Income distribution has become more unbalanced over the past six years. The hottest part of the real estate market is the tippy, tippy top — those $10-, $20-, $30-million houses with closets bigger than your living room. It suggests the billionaires are doing OK.

How about the rest of us? We’re mired in the most pathetic economic recovery in modern history. The latest recession officially ended in June 2009, five months after Mr. Obama’s inauguration and before his stimulus package could have had any measurable impact. Six years later, the impact of the stimulus is measurably negative unless your definition of “recovery” is “millions of people quit looking for work.”

The decline in labor force participation is three to four times greater than can be explained by an aging population. Were it not for the dropouts, today’s unemployment rate likely would be around 7 percent. Bottom line: Labor market weakness has persisted longer than in the previous (no-stimulus) recessions.

Yet the people who brought you this economic anemia want to cure it by injecting more of what has caused the disease — more regulation, more mandates, another round of tax increases and, of course, more bureaucrats.

The liberals’ “release the bureaucrats” strategy isn’t working at all. A Gallup survey finds that the U.S. has fallen to 12th worldwide in business startups, trailing even Italy and Hungary. What’s more, since 2008 more businesses have shut down than started up. That’s hardly the recipe for a workers’ paradise.

The liberal strategy fails because it still depends on bureaucrats beating the billionaires — a total mismatch. What we need is a cage fight pitting billionaires versus billionaires. Get them fighting each other for your labor. Get them fighting each other for your consumer dollars. Get the next generation of billionaires fighting the last generation to provide you with better products, better services and lower prices.

So, how do we get this sort of fight going? Make it easier, not harder, to start and run a business. Remove the red tape and mandates that have driven employers into their wait-it-out bunker. Replace the excessive taxation that makes U.S. firms want to leave with sane taxation that makes foreign businesses want to locate here.

Let consumers keep more of their money and let them, not the bureaucrats, decide what kinds of cars they want to drive, what features they want on their appliances, what kinds of light bulbs they want and what flushing power their toilets will provide.

Then let the billionaires thrive or fail on their ability to deliver what consumers want at the best price and have the billionaires bid against one another for the labor to make those products.

Basically, then, we need to do pretty much the opposite of what we’ve done lately and the opposite of what the president just promised in the State of the Union.

David W. Kreutzer is a research fellow in The Heritage Foundation’s Center for Data Analysis.

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