It is quite clear that progressives, as led by President Obama, have devised a brilliant strategy for advancing both their political fortunes and their ideological agenda of wealth distribution and the destruction of market capitalism. It is really quite simple. First, using policies that they know will accomplish the opposite of their stated goals, they engineer undesirable market outcomes. Second, they use those outcomes as a a reason to advance the broader progressive agenda. Clearly that is the case with Obamacare. The point was to create a policy that completely destroys health insurance and health care markets and then use this result as a reason to move to a complete government takeover of the health care industry.
We can see this same strategy being invoked in the president’s latest agenda push.
Let’s start with the issue of income inequality. For years Obama’s cronies at the Federal Reserve have been pursing monetary policies that keep interest rates near zero with the main beneficiaries being stockholders and investment institutions–i.e. higher income individuals. The rich get richer, the poor get nothing and the progressives get to use growing income inequality as both a campaign issue and an excuse for redistributionist policies. Sweet.
Then there’s the issue of extending unemployment benefits. Using basic economics virtually anyone could have predicted that Obama’s policies would do nothing but keep unemployment rates high–which they have done. Obamacare and other regulations have raised the cost of labor while the Fed’s interest rate policies have artificially lowered the cost of capital. What a perfect scenario for promoting the extension of unemployment benefits as the only truly compassionate thing to do. Clearly the ultimate goal is to make such benefits permanent, converting the system into a guaranteed minimum income for all. As the president pointed out recently, people are finding themselves unemployed “through no fault of their own.” Of course what he didn’t say is that their fate is an intended effect of his policies and the implementation of his progressive agenda.
Finally there’s the minimum wage increase. Obama’s policies, mentioned above, have kept the demand for labor low, which depresses wages. What a perfect excuse for raising the minimum wage. The storyline is obvious. The greedy rich, who, thanks to Fed policies, are getting richer, refuse to use that wealth to pay workers a “liveable wage,” hence the minimum wage must be increased. How perfect this all is. The higher minimum wage will generate more unemployment for low skilled labor, which will mean an even wider income gap, which will require more wealth redistribution, and an excuse for extending unemployment benefits even longer.
Now many of my colleagues in the economics profession complain that progressives just don’t understand how markets work. To the contrary, they in fact understand the machination of markets all too well.