Firebrand progressive Elizabeth Warren has created such a storm that even democrats are concerned with how her far-left rhetoric could be politically damaging. From income inequality to minimum wage, Warren’s flare for “middle class economics” (whatever that is) makes her appealing to the socialist left. She hypocritically blasts the rising cost of tuition and “predatory” student loaning practices. Her supporters view her as a demigod incapable of mistruths.
The Senator frequently boasts the injustice of “rising costs of tuition” and “predatory student loaning”. Her hypocrisy is almost hard to comprehend. Warren was paid over $700,000 in two years for teaching at Harvard. How many classes did she teach? One.
If she is so concerned about “rising costs of tuition”, then she could have taken a real stand by voluntarily accepting a salary cut. Instead, she points fingers and blames other people for actions akin to her own.
Warren criticizes supposed “greedy student loan” practices as the cause of debt traps. However, she fails to mention that student loans are largely held by the government and directly contribute to increases in tuition. In effect, this egalitarian government policy has driven up tuition prices, thus entrapping more people in debt.
From 2008 to 2012, federal student loans quadrupled from $111 billion to $425 billion. To put that in perspective, the private student loan market was only about $22 billion in 2008. It appears Mrs. Warren is scolding her own institution, thus she should have no problem cutting federal student loans.
The Brookings Institute found that net tuition, the amount a student actually pays after financial aid, has risen only 13% since 2002. During that same time, federally held student debt increased 77%. Out of pocket expenses have declined as sticker prices increase. Furthermore, the direct costs of education have only slightly increased while other non-value add costs have skyrocketed.
The market is now a competition for arbitrarily high enrollment to corner government funding. In other words, schools can charge whatever they want when the government is paying the bill.
Her student loan talking points are only the beginning of her extremist rhetoric. Warren constantly bashes the “1%”, “evil corporations”, and calls for solutions to income inequality, such as raising the minimum wage. Her economics are, at best, illogical and hypocritical
She is ranked the 76th wealthiest member of 535 representatives and senators. Including her luxurious home, Warren’s average net worth is $8.75 million. According to CNN Money, the senator declined to comment on her exorbitant wealth. It appears she is very much in the 1%, but won’t publicly admit it.
One of her favorite talking points is the “shrinking middle class” and “income inequality”. Such ambiguous terminology makes for great rhetoric. She fails, however, to clarify where this “middle class” has shrunk to. Are they less wealthy than before? Well, according to CNBC, there are more millionaires in the United States than ever before.
By measuring income through tax units, as opposed to households, income inequality becomes less apparent. Economists at the National Bureau of Economic Research used this more accurate metric to decipher if the middle class is, in fact, shrinking. They found that the “shrinking middle class” has shrunk its way to higher incomes and greater wealth.
Warren is a politician who panders to her base with no regard for how that might actually turn out. Her support for a shocking $22 minimum wage stands out amongst them all. She reaches this conclusion because it would be so high if it had kept up with productivity.
She generalizes the word “productivity”, but sidesteps economic reality. Wages are not a reflection of productivity. Labor markets set wages through employer competition and consumer valuation of a product. For example, if a burger flipper becomes “more productive” that does not mean the consumer suddenly wishes to pay more for their burger. Furthermore, their wage fluctuation is not a result of their output. Compensation is not determined by the amount of labor required.
The Senator completely ignores empirical evidence that minimum wages are simply redistribution schemes amongst low-income families. In fact, minimum wages increase the chances some families escape poverty while equally increasing the chances other families fall in to poverty. Thus, the net result is, at best, breaking even.
A review of long run employment and minimum wages concluded that there is very little, if any, convincing evidence that minimum wages have a positive effect on employment. In fact, almost all empirical analysis points to a negative effect on employment. The exception? Minimum wages force young people to remain in school longer, thus boosting their human capital. However, there is no indication that would alleviate poverty.
Lastly, Warren repeatedly claims that families have not had income increases for the last 30 years. She must not have access to the Federal Reserve Bank of St. Louis. According to their data, total compensation of employees, both wage and salary, has risen dramatically; specifically more in the last 30 years.
Liberals hold her as a supposed champion in the fight against corporate welfare, despite her support for the Export-Import Bank. A closer look at the Ex-Im loaning practices reveal that they are, in fact, a corporate welfare stronghold. Boeing, for example, would have to finance $7 to $9 billion if the Ex-Im bank were to close tomorrow. Following Boeing, the Ex-Im loans huge sums of money to Caterpillar, General Electric, and United Technologies just to name a few.
Senator Elizabeth Warren is either oblivious to reality or she blatantly lies to her base for a self-aggrandizing agenda. She consistently expresses unfounded opinions and maintains hypocritical stances on issues that can easily be debunked with some economic know-how and internet searches.
Democrats rightly fear her extremism because it alienates their moderate base as well as open the door for criticism. Her rhetoric will only put her on the political fringe and socialist left, but that could be a good thing for the rest of us.1 comment