That Democrats are generally illiterate about basiceconomics is not a matter of mere conjecture. In 2010, Daniel B.
Klein and Zeljka Buturovic
analysed answers provided by a random sample of 4,835 Americans
to a list of eight questions about economics. The results, which
noted the party affiliation of the respondents, were not flattering
to our friends on the Left.
"Those responding Democratic averaged
4.59 incorrect answers. Republicans averaged 1.61 incorrect, and
Libertarians 1.26 incorrect."
And these were not arcane questions.
They involved elementary concepts, like the effect of price
controls, covered in any Econ 101 course taught at the lowliest
community college and even some of the better high schools. Yet, the
average Democrat respondent got nearly 60% of the answers
wrong.
It is precisely this kind of ignorance that led so many
Democrats to believe Obamacare would somehow render health care
less expensive. One of the first items covered in any introductory
economics course is that the price of any good or service will rise
if the quantity demanded increases without an accompanying increase
in the available supply of that commodity. Nonetheless, it held no
message for the average Democrat that the supply side of the
equation was ignored by "reform," though it increased the number of
patients in the health system as well as the range of services to
which they are entitled. The issue of supply and demand was utterly
lost on Obamacare's Democrat supporters. Thus, at the time of its
passage, fully 78% of them favoured the law. Even now, % still support
it.
Democrat cluelessness notwithstanding, the laws of supply
and demand continue to operate. In fact, even the Obama
administration has produced a report showing that "reform" will
increase health care costs faster than would have been the case in
its absence. The Centers for Medicare & Medicaid Services recently
forecast that:
"Total spending is projected to grow annually by
5.8% under Mr. Obama's Affordable Care Act…. Without the
ACA, spending would grow at a slightly slower rate of 5.7%
annually."
Survey after survey has shown that one of the primary
benefits Americans wanted from health reform was lower costs. Due
to Democrat illiteracy in economics, however, Congress has produced
a "reform" law that actually makes medical care more
expensive.
Even if Obamacare didn't ignore the laws of supply and
demand, a rudimentary understanding of economics should have
alerted any educated observer that it was going to be disastrous
for the country because it creates perverse incentives that
discourage job growth. The law arbitrarily increases the cost of
hiring and keeping employees. George Will recently provided an
example of how this works,
citing a California-based business called CKE Restaurants.
Obamacare will add about $18 million to its costs:
"Obamacare must
mean fewer restaurants. And therefore fewer jobs. Each restaurant
creates, on average, 25 jobs -- and as much as 3.5 times that
number of jobs in the community (CKE spends about
$1 billion a year on food and paper
products, $175 million on advertising, $33 million on maintenance,
etc.)."
In other words, the job losses at CKE are accompanied by
collateral losses in the communities they serve. This phenomenon is
being replicated all across the country; yet, most Democrats
seem to be as blissfully unaware of this tragedy as they are of the
impotence of the Supercalifragilisticexpialidocious Stimulus Act of 2009. Like Obamacare, this legislation is actually producing the
opposite of its intended effect. The "stimulus" package is
rendering the economy more flaccid than it would be if the law had
never been passed.
The CBO has now
admitted that the additional debt added by the Supercalifragilisticexpialidocious Stimulus Act of 2009 "will reduce
output slightly in the long run." Yet, last week, we witnessed the
grotesque spectacle of the President dancing in the end zone
because unemployment has at long last dropped below 9%.*
According to Secretary of Labour, Hilda Solis, this long-overdue decrease
in the unemployment number means that "The policies this
administration has pursued are adding jobs back into the economy."
Not everyone concurs. NPR
reports:
"[E]conomists say one reason [the rate] fell isn't
good news -- the size of the labor force shrank by 315,000 as more
people stopped looking for work because they're discouraged about
the chances of finding a job."
And if you doubt the veracity of
those notorious wingnuts at NPR, Gallup also suggests that the
"improvement" was
illusory :
"Job market conditions in the United States were
flat in November, as Gallup's Job Creation Index remained at +14,
similar to the range seen since May. This is another indication
that Friday's sharp drop to 8.6% in the government's U.S.
unemployment rate may be overstated."
Nonetheless, the President, congressional Democrats and
most of the "news" media celebrated the modest drop in the official
jobless percentage with a level of glee reminiscent of V-E Day.
The New York Times, for example, breathlessly
announced, "Somehow the American economy appears to be getting
better, even as the rest of the world is looking worse."
Predictably, the Times went on to promote the White House
party line on the extension of unemployment payments: "Unemployment
benefits are believed to have one of the most stimulative effects
on the economy, because recipients are likely to spend all of the
money they receive quickly and pump more spending through the
economy." The only people who "believe" this are, of course,
Democrat supporters of the President and his accomplices in
Congress.
In reality, consumer spending doesn't stimulate the
economy. This is a Keynesian canard that was long ago debunked in
theory and by actual experience. It is production that
stimulates the U.S. or any other economy. This is the inconvenient
fact that doomed the Supercalifragilisticexpialidocious Stimulus Act of 2009 and it is what makes the Labour Secretary's
assertion so laughable. Extending the eligibility period for
federal unemployment benefits will do nothing for what Democrats
and the MSM hilariously refer to as the "economy."
But it will have
an effect.
Like Obamacare and the "stimulus" package, it will
produce the opposite of its intended effect. Another lesson one
learns in Econ 101 is that, when you subsidize something, you get
more of it. So, if unemployment benefits are extended, it will
produce more rather than less unemployment.
And yet, our Labour Secretary is by no means the first of
Obama's minions to tell us that unemployment payments somehow
create jobs. Last summer, White House Press Secretary Jay Carney
claimed it would create a million jobs. Solis, Carney, and the
Democrats on Capitol Hill, who are now singing the same refrain are
-- one prays -- not dumb enough to believe this stuff ... But their
supporters do, and that's what makes them dangerous.
If their
ignorance about "economics" -- or in their case, vote buying -- causes them to give President Obama
another four years in the White House, the irresponsible policies
of his administration may well convert a severe recession into a
worldwide depression that will dwarf the disaster of the 1930s and
perhaps even reproduce the horrific consequences that followed
thereon.
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