Exposing the madness wehind current economic thought

Thursday, July 25, 2013

Obama gets it wrong

Obama in his speech on the economy at Knox College in Galesburg, Ill.:

"In the period after World War II, a growing middle class was the engine of our prosperity. Whether you owned a company, swept its floors, or worked anywhere in between, this country offered you a basic bargain – a sense that your hard work would be rewarded with fair wages and benefits, the chance to buy a home, to save for retirement, and above all, to hand down a better life for your kids. But over time, that engine began to stall. That bargain began to fray."

Robert Wenzel sets him straight:

It wasn't the middle class that was the "engine of our prosperity." The middle class was the beneficiary of the prosperity, which was the result of a generally friendly environment for business operations and capital investment. Without such an environment, productivity would not have skyrocketed, which benefited the middle class.
Further, there was no "bargain" with the middle class. The post-World War II period was a period of free market operators attempting things on their own, the government just stayed out of their way. The operators needed workers to fulfill their own visions and sought out workers.
In current day America, this free market spirit has been suffocated by regulation after regulation and Obamacare is going to make it even more complex, difficult and expensive for businesses to hire the middle class.