2016 Presidential Race Economics of Liberty

The Top Three Economics Horrors of the Democratic Platform

Recently, the Democratic Party released a draft of their 2016 presidential platform. It’s likely no surprise to anyone, but the positions listed are far from perfect when it comes to economic freedom. While almost every tenant deserves criticism in its own right, here are a few standouts that directly threaten our freedom to succeed.

Labor

Labor: The Democratic Party believes that when workers are strong, America is strong. Democrats will make it easier for workers, public and private, to exercise their right to organize, and join unions.

This sounds all well and good at face value, but diving into the platform reveals the more ignorant aspects of this vision. They humorously include how, “[Donald] Trump rejected some attempts by his own employees to unionize and has personally hired union busting firms to undermine workers’ rights.” What this ignores is why business owners like Donald Trump work so hard to fight unions in the first place.

Unions like to stake a claim that their interests are good for everyone. They claim that unions make workers more productive with their higher wages and bring benefits back to their respective companies. Following union logic, employers like Trump would be crazy to alienate workers by cracking down on organized labor.

In reality, unions can be a primer for inefficient behaviors and rules that hamstring employers. When Democrats include their opposition to “right to work” legislation in their platform, what they’re demonstrating is a callous indifference to the preferences of workers. If workers don’t want to be bound to union rules, they shouldn’t have to succumb to them.

If labor truly is so indispensable, it would stand to reason that unions would be a force in this country. Instead, unionization rates are no higher than 11.1% in the U.S. While unions can make it easier for workers to bargain as a group, their ability to cannibalize their own firm while they funnel contributions to the DNC casts a shadow on their public image. Democrats may want to stifle the free market, but they do so at the expense of the millions who reap its benefits.

Housing

Housing: Where Donald Trump rooted for the housing crisis, Democrats will continue to fight for those families who suffered the loss of their homes. We will help those who are working toward a path of financial stability and will put sustainable home ownership into the reach of more families.

The shortsightedness of this tenant would be laughable if it weren’t so serious. While its bogus enough to suggest that anyone was actively rooting for American suffering, Democrats seem to be turning a blind eye to their own part in perpetuating the housing crisis. President Bill Clinton revitalized the Community Reinvestment Act during his presidency, which ultimately led to a lot of people receiving mortgages who had no business receiving them.

While the policy of irresponsible lending flourished under President George Bush, Clinton had set the wheels in motion to permeate financial markets with bad loans. Now, Democrats want to create this cycle of bad incentives once more.

It sounds nice to want to give housing loans to poor people. It plays well with the public to say that you’ll, “make sure that everyone has a fair shot at [home ownership].” Even as housing prices stay low, with enough intervention you could see housing demand flourish again. With the poor receiving more home loans, firms will rush to construct new houses. It works, until it doesn’t.

The issue is that if you put pressure on banks to give out loans to people who may not be able to repay them, they very well may default down the road. When they default, prices start to go down. When prices go down, people try to sell their homes which pushes down prices further. Housing projects that seemed profitable no longer are, causing firms to withdraw from them.

We’d see a downward spiral lead to another meltdown. It seems intuitive, because it is. We’ve seen it play out before. Democrats are trying to replay the 2007 financial crisis, all in the name of altruism. Sound financial policies create a playing field where people can afford houses within their means. Government creates an environment for people to pursue present gains at the cost of massive future losses.

Social Security

Social Security: Democrats are proud to be the party that created Social Security, the most successful government program in our nation’s history. We will fight every effort to cut, privatize, or weaken Social Security, including attempts to raise the retirement age or to diminish benefits by cutting cost of living adjustments.

Continuing the grand tradition of turning a blind eye to our fiscal issues, Democrats want to perpetuate our failing system of retirement insurance. Social Security as it stands boasts $16.6 trillion in unfunded liabilities. The program is projected to become insolvent by 2033. This seems like a far-cry from “the most successful government program in our nation’s history.”

Democrats point out how (in a rare moment of lucidity), “[Trump] has referred to Social Security as a “Ponzi scheme” and has called for privatizing it.” This is perhaps one of the most accurate and helpful statements that’s come out of the Trump campaign. Privatizing the system, either in part or in whole, would give Americans unprecedented control over their retirements. In all likelihood, they’d see better results.

If people are unnerved about the potential for risk, they can always invest all of their retirement money in U.S. Treasury bonds, which will stand as long as the U.S. government does. Otherwise, the Democratic Party should get out of the way of people who want to take ownership of their own retirement. Following through on a failing system is ignorant at best and malicious at worst.

No one should expect the Democratic platform to subscribe to the laws of economic reality. While Republicans disregard economic law behind laissez-faire rhetoric, Democrats are at least brazen enough to put their ideas out into the public marketplace. Like all manners of snake-oil peddled by nefarious hucksters, these ideas too shall meet their demise in the marketplace of ideas. The longer these delusions are pursued, the harder it will be to adjust when the time to face the music ultimately arrives.

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