Media commentary tracks the business cycle. During recessions and most of the recovery, the media obsess over economic growth because tax revenues have declined. The media think we work only to feed Leviathan because without the government we would all die, right? And they will broadcast dozens of stories about people who died because of a lack of funding at one of our many levels of government.
Then when the economy turns around and GDP, the stock market and government revenue are robust, the media fix their gaze on all of the other problems that they can imagine. Recently, I wrote about Tucker Carlson’s screed. This week, Abby McCloskey rides a similar horse in her article “Beyond Growth.” Others will join them in a thundering herd, that is, until the next recession, which will happen within a year or two. Then their message will again become, “It’s the economy, stupid!”
Like Carlson, McCloskey fingers family failure as one of the most serious problem facing the country. And like Carlson she oozes contempt for GDP, for now anyway. McCloskey sums up her complaints this way:
Economic growth, while necessary, is insufficient to address many of the challenges of our 21st-century economy: stagnant economic opportunity rooted in the breakdown of families and communities, pressures on the American worker from technological change and trade, and our unsustainable fiscal trajectory.
McCloskey thinks the fraying of the social fabric forecasts a failed future for the economy, unlike Carlson who insisted that the loss of jobs causes the frayed fabric: “It is the strength of families and communities, not the broader economy, that is at the root of economic opportunity.” She claims that the state cannot solve this problem, but she expects it to try:
A person's sense of purpose, responsibility, friendship, family commitment, and decency are not things that the market or government can (or should) instill or provide...But it can help protect and expand the space for individuals and communities to thrive.
Her solution: more charity. She wants the state to provide incentives for people to “invest” in their communities through larger tax deductions for charitable giving. And it should create a national service program, something like the Peace Corps for the US. Of course, both “solutions” would cause the budget deficit to swell and destroy her efforts to reduce the federal debt, the third problem she identifies.
Like the mainstream media, McCloskey indicts technology and trade for the lower rates of participation in the workforce. But sound economics and history prove that technology and trade create more jobs than they destroy. She thinks a US version of the Peace Corps would also help encourage people to go back to work.
What Ms. McCloskey misses is sound economics of the Austrian variety. Labor force participation has fallen in part because low-skilled workers can’t find jobs; and they can’t find jobs because of the minimum wage. The great theologians of the University of Salamanca, Spain, warned us in the 16th century that minimum wages would do nothing but increase unemployment for less skilled workers. Mainstream economists have responded to their wisdom with a tsunami of studies “proving” that the minimum wage doesn’t cause unemployment even while they complain about the rising unemployment among the low skilled. At the same time, welfare pays more than minimum wage so why work if you?
A second cause of fewer job opportunities is oligopolies, or concentrations of markets in the hands of a few large corporations. Corporations write the regulations that control their industries through “regulatory capture.” In other words, the corporations being regulated buy Congressmen who appoint industry experts to regulatory agencies. Then the agencies write regulations that stifle competition, punish smaller competitors, protect the largest corporations and create oligopolies. They act like informal cartels. With little competition, corporations in oligopolies can act almost like monopolies and charge higher prices while regulations stifle job creation by new firms. For more on the subject readers should get the book Baptists and Bootleggers.
To her credit, McCloskey has a decent vision for entitlement reform, but we all know that will never happen. She thinks entitlements are the main cause of the federal budget deficit, but major contributors are the many existing types of welfare programs like those she advocates.
Yes, the state could shrink budget deficits, but politicians have no desire to, as the many government shutdowns over raising the debt limit prove. The public and politicians will grow concerned over the national debt when they can’t pay the interest on it.
And the state could build an environment for job creation by getting rid of federal agencies. President Trump is helping the situation by requiring agencies to get rid of two regulations for every new one they propose. But the Federal Register contains millions of pages of job killing regulations.
Neither efforts will fix families. The state is powerless to roll back the destruction of families. It cannot even create an appropriate atmosphere. After all, Americans are wealthier than ever in history, even the poor ones, yet marriage was much more popular when we were much poorer. The only solution for that problem is an old-fashioned revival of Christianity.
Are Americans less happy than when we were poorer? Probably. Envy has increased in proportion to the decline in Christianity and envious people are miserable in a just and free society. The envious are much happier in places like Cuba and Venezuela. Our only choices are to become like Cuba and Venezuela or have a revival of Christianity because history proves that only Christianity has the power to suppress envy.