by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The blunt truth is that the President should steer clear of Krugman’s seductive populist message because it will only reinforce the view that a floundering administration is unable to mend its ways. Indeed, key Democratic operatives are on to the risk of populist rhetoric, because they realize that it is risky business to push hard, for example, on the minimum wage, which is not an issue that resonates most strongly with their core constituency: “A thriving middle class is the backbone of the economy.”
Opportunity, not equality, is the new buzzword. Sadly, a change in rhetoric isn’t the same as a change in policy. Once again, the key issue is how “opportunity” is defined. For those like myself in the Classical Liberal tradition, equality of opportunity allows all individuals, regardless of their race, creed, color, religion, national origin, or any other characteristic, to offer their goods and services to others at the highest price that they can obtain in a competitive market. This principle means that we do not have to go through the artless process of deciding, in the name of equal opportunity, which characteristics are those on which employers cannot discriminate in labor markets. The logic of this position is to minimize transaction costs and administrative overhead in order to increase the velocity of win/win transactions free of government oversight.
Unfortunately, the President always equates equal opportunity with the expanded and misguided agenda of the Equal Opportunity Employment Commission, which hopes to “enhance efficiency and enforcement of federal sector equal employment opportunity laws,” without stopping to ask whether costly “enhancement” will kill off job creation for both workers and employers.
These counterproductive activities, moreover, will do nothing to aid the elusive middle class. The middle class consists of employers, employees, independent contractors, and retired individuals. It is not defined by its occupational role, but by its basic income characteristics.
It is a common error of union supporters to write, as in the 2007 Congressional Report, for example, that any increase of unionization will improve the fortunes of the middle class, which translates into a support of the Employer Free Choice Act with its card check and compulsory arbitration provisions—a dual recipe for economic disaster. The simple point here is that many employers hurt by such legislation are also members of the middle class; so too are countless employees, many of whom are shareholders of large public corporations whose bottom line will be adversely effected by any shrinkage in the overall economic pie.