Robert Reich Strikes Again

That Robert Reich, the esteemed Chancellors Professor of Public Policy at Cal Berkeley, who consistently represents the thinking of the Liberal Left should make comments that are beyond the boundaries of even the most basic notions of established reality is not a surprise. The “causality problem” of Liberal Lefties (the inability to intellectually link – even remotely – any observable effect with its actual root cause) was on special display, however, by Professor Reich in a recent San Francisco Chronicle editorial.  Out of a very large and condensed pile of blundering lunacies embedded in his article, the three that are examined below are representative of some of the most choice.

Reich Comment #1) “For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling. That basic bargain created a virtuous cycle of higher living standards, more jobs and better wages.”

So let me get this straight. The reason we have had an improving economy over the last century is this “basic bargain” where employers have paid workers enough to buy what other employers were selling? Has anyone heretofore been aware of this arrangement? It is simply amazing to me that Reich would even begin to imagine the “goodness and graciousness” of employers who would consider the material outcomes of their employees in any calculations they may be doing. In the Liberal playbook, all capitalists and entrepreneurs are evil. So, a penalty flag should clearly be thrown on Mr. Reich for calling this play.

More to the point, if there is any such “basic bargain” it is certainly not to be found where Mr. Reich identifies its source.  The root of rising living standards is not found in any informal and nondescript social contract, but rather in the liberties built into our constitutional form of government. That free agents can take their money, time, and talents and seek the improved satisfaction of consumer desires in a market free from government manipulation is the seminal root of rising productivity – and of rising living standards. The liberal intellectual meanderings and musings of Mr. Reich would seem to be greased by a personal lubricant called “I have never had a real job before.”

Reich Comment #2) “Corporations don’t need more money. They have so much money right now they don’t even know what to do with all of it.”

This comment must be viewed with a “liberal decoder ring” where the word “money” is swapped out for the word “profit.” All well-trained socio-Marxists must agree (as a matter of religious dogma), that profits are everywhere and always bad. Actually, they must agree that profits are inherently and morally evil, and that those who are responsible for creating them are both temporally and eternally damnable. 

To indicate that corporations have money lying around (that they do not know what to do with) is indisputable. What is also indisputable is that the reason they don’t invest it is not that they have too much of it, but rather that there are no reasonable investment opportunities that trump their need to hold on to their shareholder’s cash during this period of political and regulatory attack. But that is not the essential source of Mr. Reich’s error. The real error is in his notion of what profits actually represent.

In the Liberal Worldview, profits are that which are stolen from workers by greedy capitalists and should be taxed at 100% – and then redistributed back to workers. In the real world, profits are generated when the value of a something that is produced extends beyond the costs that are required in creating that something, resulting from a free exchange between a willing buyer and a willing seller. Without economic profits, the economic system is effectively in a static state where nothing is improving, productivity levels are stagnant, and standards of living are essentially fixed. The profit mechanism is that which allows the winners (those producing that which creates real consumer value) to be separated from the losers (those who are not producing anything of relative value). Socialist economic systems will always fail as a result of their inability to essentially “capture” the economic profits, and reward those who are actually improving the outcomes of the entire system. The idea of “too much profit” is a complete oxymoron.

 Reich Comment #3) “American businesses, including small-business owners, have no incentive to create new jobs because consumers aren’t spending enough.”

No, Mr. Reich, the reason that small business owners are not creating new jobs is because consumers don’t have the money to buy the goods and services the small business produce. Consumers spend money if they have it at their disposal. This seemingly modest difference may be a bit nuanced for our West Coast Liberal friend to understand, but that does not change the point. If the good professor’s point where actually true, maybe the answer would that the government should just write everyone a check for, say, “one million dollars!” 

The obvious answer to consumer spending shortfalls is a lack of jobs (read income) and a lack of willingness on the part of consumers to spend money during a period a rampant economic and political uncertainty.

While the Obama administration is busy “deficit spending” at a level of almost ten percent of total GDP and spewing an endless and venomous diatribe against wealth in general, and job creators specifically, Mr. Reich identifies the problem of small business hiring as a consumer spending problem? He would be more credible by specifying some causal link between the level of small business hiring and Kim Kardasian’s love life. 

This type of Cal Berkeley thinking could almost make a person really mad…or completely sick. But, whatever the attached emotion, it is clearly both very wrong and very dangerous.

 

About the Author

Mr. Nygaard is a Managing Director with Atticus Advisers, a marketing consulting firm in Atlanta, Georgia.

 

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