By Mason Mohon | @mohonofficial
Bernie Sanders is back in the headlines, and he has brewed an economic wonder concoction that will supposedly solve every single one of the left’s discontents. It all takes the form of the dear old Senator’s jobs plan.
As the Washington Post reports, Sanders wishes to roll out a federal plan that would guarantee a $15/hour job, along with health-care benefits, to anyone “who wants or needs one.” The plan is expected to help the environment, infrastructure, and education, along with a reduction in racism and sexism.
It is probably the perfect program.
And its perfection is its fatal flaw.
As of now, there is not a hint of a funding plan for this program, nor is there any idea how it would be implemented. Sanders is just laying out exactly the type of socialist rhetoric his base wants to hear.
Because Sanders is not going to bother looking at the consequences of his actions, we should. This program would be immensely costly. The unemployment rate is currently 4.1%. Hypothetically, if Sanders gave each and every one of these people a $15/hour job, and they worked 40 hours per week and 50 weeks per year, the total would come out to $3.69 billion per year, and this is just for the wages. This figure does not include administrative costs and any costs in implementation.
The program would be a profound burden on American taxpayers.
At the same time, it would misallocate money. The reason that not everyone is paid $15/hour in the status quo is because not everyone does work worth $15/hour. Many do not operate at a level of productivity that is worthy of such a wage, so a jobs program would give artificially high wages to people doing less-than-adequate work.
One may object that anyone can work that hard or that skillfully if the incentive is there, but that is untrue. Some people are just less skilled than others, and it is the way things are.
Jordan Peterson outlines the jobs issue very well. He explains that “no, there isn’t a job for everyone, and no, you can’t train everyone to do everything.”
He explains that because of I.Q. distributions, within our increasingly complex society, there “isn’t anything for 10% of the population to do.” He is referring in this instance to the cutoff point for joining the military, which is at an I.Q. of 83.
There are not areas of the economy where such people cannot be sufficiently productive to earn $15/hour. It is a harsh reality, but it is a reality. Bernie Sanders seems to think that we can just shove everyone in a job and expect them to learn a skill, but people who are less productive would start out with a much lower wage than $15/hour in other sectors of the economy.
At the same time, Sanders’s plan would artificially boost industries that there is not necessarily demand for. As is the problem with all government production programs, the emphasis on infrastructure and education in the employment category leaves the potential for there to be overproduction in parts of the economy there is no demand for. The result would be a misallocation, and hence, and a waste of resources.
Keep in mind, all of his waste is coming out of the pockets of status quo American workers.
The fact of the matter, though, is that most of these consequences are long-term consequences, and the long-term is something the government rarely concerned with. Bernie Sanders especially.
To put it kindly, Bernie Sanders is not in his prime (assuming he ever had a “prime”). The Senator is 76 years old so he will not have to see the long-term consequences of any program he puts in place. Rather, he, like just about every politician, is primarily concerned with the short term. The short-term to them is the next election.
Politicians make moves to get themselves re-elected primarily. That is the number one goal, because without it other political goals are not going to happen. With this goal, though, comes a phenomenally high time preference. Politicians are incentivized to only look at the next election, so the lie, cheat, slander, and make promises they cannot keep.
Once they reach the age that Senator Sanders is at right now, it is a whole nother ball game. At his age, it is time to go for the big promises and ignore the long-term. Why would one look at the long-term when they will not live to see it.
Sanders has a jobs program that is good at heart; he wants to see the downtrodden reach new comforts. His method is not the proper method, though. Voters, especially young ones, need to be incredibly wary of older politicians making such grand promises.
Entrepreneurship is the best solution to our problems, not state intervention.