Reward Work Not Wealth

Last Friday, September 9th, the White House released the momentous Biden-Harris Economic Blueprint, a plan describing where President Biden and his team wants to take us and our economy over the coming years. What? You’ve never heard anything about this great plan of his? Maybe the fact that the plan was released on a Friday had something to do with that. Maybe the fact that Queen Elizabeth died the day before and the coverage of that event by news outlets pushed everything else aside. Maybe the fact that there was no presidential speech or press conference announcing this great plan might have been a factor. Or maybe it’s because nobody gives a hoot about what they say they are going to do.

But it is interesting because it explains a lot about how President Biden and the progressive minions in his administration think about the economy and what they believe the role of government should be. The plan has five pillars.

The first pillar is Empowering Workers, although what he really means is empowering unions. Actual workers mostly vote for Donald Trump, but unions give tons of money to the Democratic Party. More unionized workers, means more union dues, means more donations to the Democratic Party. Get it?

The second pillar is Making and Building it in America. The Blueprint describes a “modern industrial policy” that conforms to the Democrats’ leftist ideological agenda. The plan touts the recently passed bi-partisan infrastructure bill, but the future is dedicated to the Green New Deal. The plan pushes energy from wind and solar developments, noting that in 2021 80% of new electric generation capacity was clean energy (and they don’t mean nuclear). President Biden is apparently using the European model as a guide for energy policy, a policy that has led to a 1000% increase in utility bills across the continent and which will cause the deaths of many Europeans who must choose between heat and food (or rather freezing versus starving).

The Blueprint closes the second pillar saying, “the north star of this strategy will remain creating a 21st century industrial economy that has strong labor and workforce standards, supports decarbonization and advances economic opportunity for all Americans across the country.” Worthy goals as long as you don’t decimate the private sector, don’t saddle consumers with high-priced union-made goods, develop an energy infrastructure that is not vulnerable to the setting sun and is, at the same time, also able to meet the international challenges created by rising autocratic powers.

The third pillar is Giving Families Breathing Room, by which he means more and more entitlements and subsidies that history has shown never go away but only metastasize into ever greater gobs of expenditures. The Blueprint gives the Biden administration credit for the decline in the price of gasoline of over $1.20 this year, which was more the result of the rising interest rates that strengthened the dollar (which lowers to the cost of oil for us Americans but not for anybody else) along with the fear of a coming recession that will reduce the demand for oil.

Giving families breathing room features “efforts focused on improving middle-class and low-income families’ household finances.“ But these efforts consist of the government providing a welter of subsidies, entitlements and price controls rather than improving peoples’ ability to take care of themselves. There is no exit ramp for ever greater government control of families’ finances – finances dependent on government.

The Fourth Pillar is Making American Industry More Competitive, Less Concentrated and More Resilient. Their commentary on the fourth pillar begins by bragging about “delivering about $3,000 in savings to American families for a pair of hearing aids.” Hearing aids that had been so horribly expensive because of government regulation of the free market that was eliminated by a bill passed by the Trump administration in 2017- implementation of which was delayed for five years by, wait for it, government.

The Biden administration appears fixated on preventing mergers between companies. Obviously, some mergers are anticompetitive, and some American companies are already very large. But in a twenty trillion dollar economy and a huge global market as well, large size is not always anticompetitive. Only four of the twenty largest banks in the world are American. Only two of the ten largest automobile manufacturers are American. A certain size is necessary to be competitive on a global scale, but the Biden administration does not seem very impressed by this economic necessity. In fact, there is only one sector of the economy that is immune to this directive and allowed not only great size but also freedom from competition – unions.

And then there is pillar five. Reward work, not wealth. This is the new mantra of the Biden administration. And like all mantras, this one is likely to be repeated over and over and over again. Repeated ad nauseum until it loses all meaning. But work that doesn’t produce wealth is, well, worthless.

Progressives tend to view the economy as a zero sum game. Nobody can get wealthy without someone else getting poorer. This despite the fact that even the poor in America are infinitely better off than their parents and grandparents. Grandparents who thought indoor plumbing was for the wealthy and royalty. Parents who wouldn’t have put the words “smart” and “phone” in the same sentence.

Progressives are mired in the concept that the value of something is equal to the amount of labor it took to make it. That if someone (such as a capitalist) takes even a small percent of the money made from a product, then that someone is exploiting the labor of the worker that made the product. By this way of thinking, any accumulation of wealth must come from the exploitation of others. Such accumulation of wealth is, therefore, illegitimate.

Since the accumulation of wealth is, by definition (at least their definition) illegitimate, such wealth is subject to confiscation and redistribution. Only this type of cogitation can explain the antipathy progressives have for wealth and their zeal in trying to expropriate it.

The Biden Economic Blueprint is a recipe for disaster. Government directed industrial policy - the pathway to crony capitalism (see how the chip manufacturers demanded subsidies to build fabs in USA). Ideological energy policy that jeopardizes national security (look what’s happening in Europe). Union centric government policy instead of consumer centric policies (look what unions have done to our public schools). Reimposing the heavy hand of regulation on US companies (Trump’s deregulation policies were a key factor for economic growth). Confiscatory taxes on US businesses (and more IRS agents to harass small businesses with pass through taxation).

The reason that the Biden Economic Blueprint misses the mark, and actually causes more harm than good, is that progressives don’t understand the relationship between work and wealth. They believe that work and wealth are in opposition to each other in some sort of zero-sum game. Thus, the mantra: reward work, not wealth. But people work to build wealth.

Last Sunday (September 11, 2022) CBS news 60 Minutes featured the conversion of East Brooklyn, New York from the murder capital of the country to a thriving minority community. The Nehemiah project was developed forty years ago by a group of community churches that created an audacious plan to build privately-owned houses to be sold at working class prices. With the support of Democratic Mayor Ed Koch and Republican Mayor Rudy Giuliani the Nehemiah homes have created an estimated $1.5 billion in wealth for first-time Black and Latino homeowners. As the Reverend David Brawley, of St. Paul Community Baptist Church in East Brooklyn, N.Y. said, "Everything changes when you have equity. Communities are able to build wealth. Families are able to build wealth. Life changes inter-generationally."

This is not the equity touted by diversity, equity and inclusion managers that are pushing for the redistribution of wealth, but the creation of wealth. Wealth from hard work and sacrifice. This is real wealth. Wealth (and the experience you gained from building that wealth) that creates not just wealth for future generation, but hope. The hope of achieving the American Dream. And that makes all the difference.