The Democrats are now in the process of repeating all of the mistakes of the Great Depression.
Pushing for a war on inflation, seeking to increase uncertainty in the housing market, allowing a $2 Trillion tax increase in three years, threatening to go full Smoot-Hawley, and now pushing for artificially inflated wages and artificial - and extremely temporary - job security.
The UFCW Local 7 has introduced a whole raft of ballot initiatives for this fall. While they're the political equivalent of an F- economic grounds, their underlying political agenda is unmistakable.
First, the economics. Ben Bernanke's been taking a beating recently, and on some counts, he deserves it. But this is a scholar of the Great Depression. I'm probably one of the bloggers you'll see who's actually read any of his scholarly papers on the Depression. Bernanke notices two great contributing factors to the Depression: the US's late abandonment of the gold standard, and the stickiness of wages.
One of the dirty little secrets of the Great Depression is that if you had a job, it wasn't so bad. That's because wages often staid at pre-crash levels, even as more of them were being paid by soup kitchens. Why were wages sticky? That is, why, instead of lowering wages, did companies keep them high, even to the point of failure? Because Herbert Hoover wanted it that way, believing that high prices meant prosperity.
These labor initiatives: no firings without specific cause, forcing small business to pay for health insurance, and forcing businesses to match the inflation rate, are the economic equivalent of begging for unemployment. Sure, if you've got a job it's not too bad. But try getting one when the cost of hiring keeps going up relative to everything else.
The cynic will say that this is all part of the plan. Well, it is. First, the unions have seen their membership drop off the edge of a cliff. The majority of their membership is now comprised of public employees, and people are beginning to question the propriety of paying taxes to support a naked political agenda. The unions need to prove that they still have some political muscle.
Another, little-mentioned aspect of their initiatives is that it would let anyone bring suit for alleged corporate wrongdoing. Historically, you actually have to have been hurt in order to have standing in a civil suit. This obvious sop to the other Great Democrat Constituency, the trial lawyers, would be another avenue for corporate shake-down artists to raise the cost of doing business, and to fund their own personal and political cash flow needs from the hard work of others.
Inflation-indexed wages will have yet another perverse effect. Such a rule would act as a subsidy to inflation, both promoting and limiting the incentive to fight it. Which means that pensioners, retirees, and those on fixed incomes will find their own savings stolen from them. Which will become an excuse for another big tax increase to fund those generous retirement programs we've rashly promised our teachers and other public servants.
Today's economy is more inter-connected, more diversified, more entrepreneurial, and more resilient than in was in 1930, which probably means that we'll end up looking more like Japan in 1990 than the US in 1930. But that doesn't mean that the damage to hopes, dreams, and security won't be real.
