Bernie Sanders' Agenda for America: 12 Steps Backwards Part 2

Senator Bernie Sanders' policy proposal, the "Agenda for America", is billed as 12 Steps Forward. In it, he details his proposed economic reforms. The proposal covers the standard run of social democrat talking points: more government growth, more intrusion into markets, and more onerous regulations.

This is a continuation of an item-by-item rebuttal of the Agenda for America (You can find Part 1 here)

7. Trade Policies that Benefit American Workers

Sanders continues his assault on the free market by attacking various free (or at least free-ish) trade policies such as NAFTA, which he dubs "disastrous". He is more explicit in his condemnation of free trade policies here. For Sanders, the issue is simple. American manufacturing jobs are "moving overseas" and this must be stopped at all costs.

Again, Sanders falls prey to yet another economic fallacy: economic nationalism (or, at the very least, an anti-foreign bias). Sanders cites the 4.9 million manufacturing jobs lost with the growth of more manufacturing overseas, but he fails to note all the other jobs that were created in the same timeframe. Sanders is not alone in his constant reiteration that America, for some reason, NEEDS manufacturing jobs.

The reason that there are greater numbers of factories located outside of America is simple: they're cheaper. The cheaper it is to produce a good, the cheaper that good can be sold for. Sanders is in effect advocating for higher prices nationwide (which isn't ideal for the American working class he claims to represent). The whole point serves as a convenient condemnation of two of Sanders' greatest foes: corporations and foreigners.

8. Making College Affordable for All

Though this is nominally about higher education, Sanders elaborates that he thinks America needs a complete educational overhaul. He believes that not only college, but also "quality child care" should be made "affordable" for all. Presumably, he means to lower the direct cost to the consumer through heavy subsidies.

Forbes has an excellent write-up that details how subsidies actually raise the price of college. Sanders' proposal would be at best counterproductive, and at worse, a major contribution to the mountains of debt that many students already find themselves under. Even pushing that aside, to subsidize education on this scale would necessitate a tremendous amount of increased government spending, complicated tax incentives, and likely increased taxation.

But hey, it sounds nice, doesn't it? And isn't that what really counts?

9. Taking on Wall Street

By this, Sanders means to "break up" large financial institutions, as they are "too powerful" to be reformed. He blames them solely for the Great Recession, and implies that their power and lack of regulation is a danger to us all.

The second point is laughable. The financial sector of the economy is among the most highly regulated in the nation, subject to the jurisdiction of a plethora of financial regulators (at both the state and the federal level). I applaud Sanders for attempting to address cronyism, but he misses the mark here.

Moreover, Sanders fears these financial institutions for their size alone. Even if he didn't blame them for the financial crisis, he'd still want to break them up and regulate them purely for being too big for his liking. Never mind the fact that these large financial institutions behave in such a risky manner because they've been trained to. By that I mean, there is the expectation that the government will always step in to bail them out if things go too far. This creates a moral hazard problem, where the risk is decreased because it is being borne by an outside party (the government), so banks feel free to risk as much as they want.

As always, Sanders only sees one side of the issue, and ignores the federal government's role in the problems he crusades so strongly against.

10. Health Care as a Right for All

Rand Paul said this better than I ever will. Sanders believes that there ought to be rights that obligate people to receive certain things at the behest of the federal government, rather than the understanding that rights exist to restrict what the government can do against the individual.

11. Protecting the Most Vulnerable Americans

America is in debt. Trillions and trillions of dollars worth of debt. Unfunded mandates are programs the federal government is obligated to pay for (such as Social Security or Medicaid), but lacks the money in the coffers to address it. These unfunded mandates measure in the hundreds of trillions of dollars, far in excess of the already massive federal debt.

Sanders doesn't care about the looming debt crisis. Instead, he calls for massive expansions to these programs. The cost is irrelevant to him. He believes that the key to alleviating poverty is through the hands of the federal government.

In 1964, Lyndon Johnson began the "War on Poverty", a series of legislative actions and social programs designed the end poverty in the United States. Fifty-one years later, poverty is still here. The only difference is the trillions of dollars spent trying to get rid of it. Poverty is not something that the federal government can ultimately vanquish.

An end to poverty comes from the millions of Americans working every day to create businesses, to expand wealth, and to invent new labor-saving technology. The market has freed more people from poverty than the government ever will.

12. Real Tax Reform

This is the crux of the matter. Sanders has so far outlined a massive spending program the likes have which have never been seen before in America. Trillions of dollars spent attempting to alleviate every perceived social ill that he can imagine, without a word of how to pay for it. Until now.

Sanders' idea of real tax reform toes his own party line: tax "the rich". As much as possible. Increase taxes on corporations, increase taxes on the wealthy, increase taxes all across the board.

Taxation has a negative effect on the creation of wealth. A progressive tax rate effectively punishes success. The more value you create, the more people you help, the better you do for your fellow man in an economy (as measured by your own wealth), the more the government takes away from you. Under this plan, enterprising young workers would pour out of the country. Businesses would flee to less restrictive regimes. Unemployment would rise. Growth would fall.

For Sanders, this would be justification of his whole plan. The corporations would be at fault, the foreign governments that offer less financially oppressive regimes would be at fault. Certainly not the federal government! All Sanders wants to do is help the people out.

Sanders may have the best of intentions with his ambitious "Agenda for America", but he would ultimately hurt workers, the economy, and the country more than he would help.

Bernie Sanders' Agenda for America: 12 Steps Backwards (Part 1)

Senator Bernie Sanders' policy proposal, the "Agenda for America", is billed as 12 Steps Forward. In it, he details his proposed economic reforms. The proposal covers the standard run of social democrat talking points: more government growth, more intrusion into markets, and more onerous regulations.

In going through each item individually, it's clear to see that the agenda is truly 12 steps backwards. Away from a free market, and away from the institutional foundation that is key to prosperity in America.

1. Rebuilding Our Crumbling Infrastructure

In Sanders' first proposal, his goal is twofold. First, to artificially create 13 million "decent paying" jobs, to be accomplished by the second goal of $1 trillion "investment" in infrastructure. To start out with, that is a staggering amount of taxpayer money to be spending on anything. Moreover, his use of the catch-all term "infrastucture" is dubious, as it includes not only roads and bridges, but also schools and waste water plants.

While infrastructure repair may be necessary for the future, Sanders' proposed spending levels are outrageous. Moreover, part of the justification for this massive sum is to "create jobs". One of the most enduring economic fallacies in America today is that the government can, in fact, create jobs. The workers in this proposed infrastructure plan would be paid by the federal government, which in turn can only get funds through taxation or borrowing.

Either way, that money has to be diverted from other uses in order to be used by the government. While it is true that these 13 million people would have jobs (however temporarily), it's also true that those trillion dollars could have been used to potentially create more or better jobs, groundbreaking technological advancements, or a whole host of other things. None of that will come to fruition, however, because the money was taxed away to be spent on something else.

2. Reversing Climate Change

Next, Sanders proposes sweeping subsides to "sustainable energies" among other environmental pet projects. The entire project reeks of cronyism (which Sanders purports to be against) by picking winners and losers in the energy market.

Alternative energies are famously expensive and comparatively inefficient. Diverting more tax dollars in the form of subsidies would indeed "create good paying jobs", as Sanders claims, but only for those in the alternative energy space. What about the lost jobs in coal and oil? What about the more expensive power and heat for Americans across the country? Sanders is silent on this, but these concerns are likely beneath his lofty goal of an American-led climate change reversal.

3. Creating Worker Co-ops

This marks the first appearance of Sanders' economic nationalism, where he proposes "new economic models", such as a co-operative, in order to counter corporations who "send jobs to China". I actually agree with part of his outrage (over the massive targeted tax breaks given to said corporations), but  Sanders doesn't seem to oppose cronyism in general, just for the stuff he doesn't like.

His solution is to "provide assistance" from the government in order to restructure business as worker owned co-operatives, wherein workers invest in and own the business, and collectively make democratic business decisions. Can you imagine the chaos of just a mid-sized company making every decision democratically? There would be an immense time cost in just the administration of such an affair, and it would result in more time bogged down in democratic meetings and less time actually working. Far from increasing job creation and productivity, the plan would easily flounder in a loss of productivity.

There are indeed situations where worker owned co-ops may make economic sense, but pushing for it at a national level would be a failure.

4. Growing the Trade Union Movement

Currently, union membership in the United States is at 11.1%, a .2% fall from the year prior. Sanders believes that it is only through collective bargaining and union membership that workers will be able to get higher wages and benefits. While it is true that union members, on average, have higher wage increases than non-union workers, there's more to the story. To begin, the more expensive it is to employ a worker, the less workers will be employed. In other words, unions can often lead to less jobs, not more.

Unions are in general a benefit to workers in them, but not necessarily always. In many workplaces (particularly, in states without a Right to Work law), workers are compelled to pay union dues (even if they deny association with the union). A portion of these dues are channeled into the political arm of these unions, who in turn funnel to the money to politicians like...Bernie Sanders.

Indeed, in many states, union membership is a condition of employment, regardless of what the individual worker wants. Though Sanders does not target Right to Work laws (at least, not here), it's clear that he remains on the side of Big Labor.

5. Raising the Minimum Wage

In one of his more widely accepted proposals, Sanders calls for an increased minimum wage. Though not cited here, he supports a $15 per hour national minimum wage. Approximately 3.3 million Americans (roughly 1% of the nation) currently earn at or below the minimum wage. And roughly 42% of American workers earn under his proposed minimum of $15 per hour. Isn't this a good thing? Shouldn't we want people to make mroe money?

The push for a higher minimum wage (for the benefit of workers) is largely counterproductive. The recent strikes specifically from fast-food workers to earn $15 per hour have led to increased automation in fast-food restaurants, again resulting in less employment, not more. It's economic lunacy to assume that you can double the cost of labor with no negative consequences on employment. Businesses don't have a massive store of money with which they can fund such huge increases in labor costs. The best solution, then, is to eliminate the need for labor as much as possible with greater capital investment.

Even if it weren't for that, businesses simply can't afford to continue employing the same amount of people at a doubled wage. There would be lay-offs and even greater unemployment as a result.

Sanders focuses on the fact that most can't survive on a minimum wage job alone. Jobs that pay the minimum wage are primarily for unskilled workers, who are happy to have a job at all. Raising the minimum wage essentially builds a massive barrier to entry for these unskilled workers into the labor market, where it simply isn't worth it to hire them.

While Sanders pushes this plan so that nobody who works full time "should live in poverty", it will simply make even more people live in poverty with greater unemployment.

6. Pay Equity for Women Workers

Continuing his pandering to his base, Sanders next proposes complete pay equity, that is, "equal pay for equal work". He's addressing the alleged wage gap that exists between perfectly equal men and women working the same job, and cites that women only earn 78% of what men earn.

At face value, this assertion already shouldn't hold much water. To begin, businesses could save a tremendous amount of money by solely employing women (which doesn't happen). The wage gap exists for many reasons, but blind discrimination isn't one of them.

First off, there's the problem of aggregation. To compile this statistic, the Census Bureau just compares male annual earnings to female, again, in aggregate. This ignores the fact that men and women tend to make different choices in the field of work they go into. In general, more men than women go into high-earning jobs, and vice versa. This is not an issue of mass societal discrimination, it's simply a matter of choice.

Another key cause of the gap is that women, moreso than men, tend to leave the workforce to raise children or after marriage. Men also tend to work in more higher-risk jobs (like fishing and logging), which again means more pay.

Apparently for Sanders, none of that matters, and he feels free to continue propogating the myth of the discrimination wage gap.

(You can find Part 2 here)

The Economic Illiteracy of Bernie Sanders

Bernie Sanders, the feisty Independent Senator from Vermont, is challenging Hillary Clinton for the Democratic Presidential nomination. Originally seen as little more than a token resistance, Sanders has continually drawn crowds numbering in the thousands, and his fair share of media attention. 

A Monmouth University Poll (August 5) shows that he is still well behind the frontrunner, Clinton, but comfortably ahead of the rest of the meager Democratic field.

Sanders is tapping into the anti-establishment sentiment sweeping across the nation, blaming "establishment politics" for the woes of the country. This outsider spirit, youth appeal, and distrust towards the status quo have caused some to dub him "the Ron Paul of the left". Indeed, many young left-libertarians are applauding his stances on money in politics and crony capitalism, and deservedly so. However, this only captures a small part of his campaign platform.

From the beginning, Bernie Sanders' campaign has been about economic issues. He favors economic reforms such as a $15 per hour national minimum wage, an end to all free trade agreements, and economic redistribution (calling our current system "rigged"). For every one thing he gets right (such as his opposition to the Export-Import Bank), he gets five things dead wrong.

Sanders describes himself as a democratic socialist, and his campaign rhetoric revolves around not only the political establishment, but what he calls the oligarchy. The oligarchy is the power structure of big business and government that allegedly colludes to conspire against the average American. To an extent, he's right about the disease. Crony capitalism, government-private partnerships, or whatever other intrusions of the state into economic affairs there may be are indeed one of the biggest problems facing America today.

However, his cure is worse than the ailment. Sanders consistently advocates for MORE government intrusion into the market, not less. He wants more regulation, less freedom of trade, and less freedom of labor. While some of his proposed reforms may indeed weaken big business, he completely misses the point.

Commerical interests have a tendency to use the coercive apparatus of the government to restrict competition, increase their own market share, and lobby for regulations that benefit their own specific niche in the economy, rather than the market as a whole. Sanders sees this and decries big business. He glosses over the fact that the only reason business interests are able to do this is through the coercive apparatus of the government! The centralized, bureaurcratic, constantly growing government is the source of the problem.

In his quest to purge the country of inequality, Sanders also chooses the most ridiculous topics to attack. He has claimed that we have too many choices of deodorant and sneakers while children go hungry. He advocates for a minimum wage of $15 per hour while simultaneously pushing for full employment, and pays his interns less than his lofty minimum wage.

Bernie Sanders has consistently displayed a massive economic illiteracy. Even with the few things he gets right, his abysmal economic policy prescriptions make him the absolute wrong choice for President.