“Middle-Class Economics”

Yesterday marked the date of the annual Sate of the Union Address – or as it has recently become – the president’s yearly pep rally. There were the typical liberal talking points, which consisted of how global warming is more threatening to the US than ISIS and Al-Qaeda, the importance of closing Gitmo so terrorists can be reunited with their families, and so on. One term that stuck out to me was “middle-class economics”. This was a term that may have been around for a while, but I have never heard of it. Although I study primarily in Temple University’s business school, I have had to unfortunately venture into the College of Liberal Arts to fulfill general requirements. As expected, the professors of these classes were liberals to say the least. It wouldn’t be uncommon for them to promote the theories of Marx and Lenin and bash capitalism. They used terms that would sound great to the average student that hadn’t studied economics in the past; terms like progressivism, social democracy, leftism, Keynesian economics, and so on. I never, however, heard them use the term “middle-class economics”.

Liberals, socialists, and communists – all of which aren’t far apart in ideology, despite what the “intellectuals” like to tell us – need to continually find and create new terms in order to re-brand the same old failed policies. Obama’s “middle-class economics” is just the newest term for these policies, and we can expect this term to be recycled throughout the Democrat Party, the liberal media, and our education systems. Yesterday, during President Obama’s State of the Union Address, he said, “Middle-class economics works. Expanding opportunity works. And these policies will continue to work, as long as politics don’t get in the way.” Well, Mr. President, let’s look at three of your talking points from yesterday’s speech.

Obama bragged how gas prices are the lowest they’ve been in years. It has only taken him six years to get prices back down to George W. Bush’s levels (even though he hasn’t had any influence on the prices). He also explained how America has become more energy independent since he has taken office. This is true, but is taking the credit from those who opposing his ideology. According to the US Energy Information Administration (EIA), only 1 of the top 10 energy-producing states has a Democrat governor (Kentucky, #9), and Alaska (#2) has an independent governor. The remaining eight top energy-producing states have Republican leadership, and the overall trend of top energy-producing states has more Republican leaders than Democrats. This energy dependency celebration is also coming from the same president who essentially wants to end one of the fastest growing industries in Pennsylvania (where I am currently living), which is fracking, and he even came to Temple University to support the now Governor of Pennsylvania Tom Wolf, who campaigned on shrinking the fracking industry. In addition, he has been an outspoken opponent of coal mining, and has also threatened to veto the approval of the Keystone XL Pipeline. Plus, almost all oil drilling has been taken place on private land. So let’s ask ourselves, has Obama’s economy created more energy independence and lower prices at the pump?

Another highlight of Obama’s State of the Union Address was the age-old idiotic, socialist belief that raising the minimum wage would end all economic disparities in America. Of course, all of us that have the rare gift of common sense and have studied a little bit of economics know that this will produce a deadweight loss, resulting in further unemployment and greater inefficiency (Econ 1001, Day 2). But let’s play along and say that a minimum wage law will pass, and raise the minimum wage to $15/hour (as Obama has proposed, because the only thing Americans today want is to aspire to become are minimum wage earners). Also, let’s imagine we’re in a magical place where there would be no deadweight loss, and everyone remains employed. What would the employer see? Companies would see a decline in net profit do to higher expenses. Although many companies today pay their employees higher than the minimum wage, somewhere along their supply chain, there most likely are minimum wage earners. Do we really believe that companies will be content with a loss of profit? Absolutely not. We already see this with an increase in their costs due to the ACA (I’m not even going to open that can of worms in this post, that will be a separate article). Prices for essentially all goods would increase, keeping the value of the dollar essentially unchanged. Now what would happen in the real world if this proposal passed? Most likely a mixture of both scenarios; there would be deadweight loss (unemployment), as well as an increase in price. More companies would also move as much production as possible overseas, and companies would stop “looking to bring jobs back from China,” as Obama claimed last night.

The last topic that I’m going to write about today is the new proposal to give away “free” community college to all of our college bound citizens. First off, I use quotation marks around “free,” because as we all know, nothing is ever free. Next, let’s see what the Constitution says about what jurisdiction the federal government has for education. Oh, that’s right, there is absolutely nothing. There shouldn’t even be a Department of Education, but that’s besides the fact. Once again, let’s play pretend and say that the federal government does have some power over education. What benefits would this bring to our society and economy? First off, it instills the false belief that you must have a college degree to be successful today. In fact, some of the highest paying jobs today are those that require a special trade – such as plumbers, electricians, masons, etc. Hell, even some retail jobs pay well. This is because there is already a shortage of trade workers. Students today are brainwashed from elementary school that they need to go to college in order to be successful. Today, more and more college graduates are leaving college only to be unable to find a job, have stacks of student loans (remember how student loans were supposed to make higher education more affordable, but instead made tuition skyrocket?), and oftentimes become underemployed if they are lucky enough to find a job. What Obama is essentially proposing with this “free” community college proposal is the dumping (economic term) of college graduates. We’ll see lower pay for those that have a degree, more competition for jobs, and not to mention even higher taxes and a less efficient higher education system.

I just scratched the surface of Obama’s beliefs and policies, and the damages that just three of his proposals would bring to America. I wrote this primarily to bring awareness to what sounds good and what makes good sound bites, as opposed to what will actually happen. I am confident that “middle-class economics” will soon become a household term for liberalism, and students will be indoctrinated with these beliefs in our educational system (which Obama wants to control even more), just as they are now – only under a different term. As we can see, “middle class economics” will affect the middle class greatly, just as Obama promises; only it will destroy it, not improve it. It is only capitalism, free markets, and extremely limited government that can – and will – improve the middle class and make America the “city upon a hill” it once was.