The president has said that inequality is the biggest issue for his second term. Aside from acting as if someone else has been president for five years, the president has a fundamental mismatch between his diagnosis and his agenda.
Raise the minimum wage (which implicates a fraction of the workforce and, among them, a fraction of heads of households) for government contractors (a still smaller fraction of the workforce concentrated in states that already do well from doing business with the government). That’s a small nothing burger. Universal preschool? The results of years of Head Start are measly. And Obamacare, by discouraging work, especially at the bottom of the income ladder, only makes things worse. There is nothing in there remotely designed to have a positive impact, in contrast to a number of state programs.
What is the liberal antidote to poverty and inequality? Liberals seem not to have one bold and effective enough to deal with the problem they have described. There is, however, a robust agenda on the right, which Republicans need to tout far and wide.
School choice, patient-centered health-care reform with no work disincentive, energy development (which provides cheap gas and jobs, and hugely benefits the rest of the economy) and pro-growth immigration policy (at the very least letting in the smartest technology people who can spur leaps in innovation) alone would do far more than the president has suggested to open opportunity and get people on the ladder of success. There are small items as well, including skill training legislation, that the Senate won’t consider. And there are promising ideas for accreditation programs as an alternative to four-year college that can prepare young people for jobs that pay well.
It is not even a close call as to which agenda is more thoughtful and more likely to succeed. Indeed, Republicans should hammer the president, who has become the poster child for cronyism (wherein the well-connected big donors get ambassadorships, green-energy boondoggles, etc.) and caters to Hollywood and East Coast elites at the expense of working-class Americans (e.g. domestic energy development). Republicans don’t like to talk about inequality because, I suspect, they feel like it’s the Democrats’ issue, but that is both defeatist and wrong.
The left also disserves people at the bottom of the income ladder by pushing a protectionist trade policy. Yes, we know Big Labor sees globalization as a threat to our way of life. This is economic nonsense, which Bill Clinton, among others, didn’t buy.
Globalization in essence is specialization, with Americans (provided we have a trained and flexible workforce) getting the higher-valued, more sophisticated economy. Consider, for example, Western Michigan. Steve Moore, now of the Heritage Foundation, wrote last month:
While the unemployment rate at the end of 2013 in Detroit was a sky-high 15.1%, in the Grand Rapids metro area it was just under 6%. Jerry Zandstra, president of Inno-Versity LLC, a Lowell, Mich.-based firm that produces manufacturing training films, says the region needs “more trained engineers, technicians and tradesmen” to meet the demand from thriving local companies.
He adds that Michigan has benefited enormously from America’s energy drilling boom that has lowered power costs. Cheap natural gas drilled from the nearby Marcellus Shale is also used as a production feed stock for chemicals and other manufactured products. . . . Gentex, with its 4,000 employees, is a corporate anchor in the region. The company’s skilled workers operate tens of millions of dollars in state-of-the art machinery. The brain center of the facility is a lab with physicists, chemists and designers who are constantly developing new technologies, such as high-tech dimming windows for airplanes, a new Gentex product line. The company owns more than 600 patents.
That didn’t come about because of a screwy tax code with incentives for manufacturing, as President Obama wants. This isn’t the result of a “promise zone.” The workers there didn’t have the benefit of universal preschool or Obamacare.
Likewise, North Dakota, which has been leading the country in job creation for five years, is dramatic evidence of the energy boom, which if government would cooperate, could be extended simply by getting out of the way. CNN explained: “North Dakota’s economy posted a 13.4% growth rate in 2012, according to a report released . . . by the Bureau of Economic Analysis. That’s nearly three times as fast as the number two state, Texas, and trounces the national average of 2.5%. This is the third year in a row that North Dakota took the top spot in BEA’s state-by-state report on gross domestic product (GDP). The muscle behind the boom is a surge in oil production from the Bakken Shale, an underground rock formation in the northwestern part of the state.” Prosperity in the energy sector breeds prosperity around the country. “The boom has attracted workers from all over the country and rippled out to incorporate not only the oil and gas drilling sectors but also other industries that supply them, including wholesale goods and transportation.” (Instead of extending unemployment insurance, maybe the federal government should provide relocation credits so workers can get to where the jobs are.)
In sum, what Obama wants to do is unhelpful or counterproductive when it comes to fighting poverty and inequality. If we want to improve mobility and spread prosperity, the policy ideas and the energy resources are there, as the right has been arguing. Conservatives need to make that cluster of policy ideas the focus of their agenda. Like the energy boom itself, it’s an opportunity that is waiting to be seized.