The first part of the title to this post is a very common phrase amongst conservative circles. In it’s simplest form, the phrase means that as long as we can improve the general economy we will improve the lot of everyone actively involved in the economy. Generally, this statement is true. A growing economy grows total compensation for workers at all levels. The phrase is incomplete though. You can’t artificially raise the tide. You’ll drown a lot of boats.
The Obama Administration is set to do just that. From Friday’s New York Times:
The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan.
By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said.
Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class.
On it’s face, this sounds like a good move. Use your large bargaining power to raise wages for those jobs that fall under federal contracts. The problem is, you have to think about more than just the immediate consequences of your actions when you set economic policy. I’ll let Marginal Revolution’s Alex Tabarrok explain:
At a time of 10% unemployment when real wages need to fall this is bad business cycle policy. I am more worried, however, about the long term consequences of creating a dual labor market in which insiders with government or government-connected jobs are highly paid and secure while outsiders face high unemployment rates, low wages and part-time work without a career path.
Long-term unemployment is at shockingly high levels which in itself creates a dynamic of persistence because the longer a worker is unemployed the less employable they become (in part due to loss of human capital and signaling problems). Thus, getting these workers back to work is going to be hard enough as it is. Labor regulations which raise wages and make hiring and firing workers even more costly will make re-employing the long-term unemployed even more difficult.
Moreover, once an economy is in the insider-outsider equilibrium it’s very difficult to get out because insiders fear that they will lose their privileges with a deregulated labor market and outsiders focus their political energy not on deregulating the labor market but on becoming insiders[.]
The Obama Administration, through these actions, is going to assure that the easiest way to earn a decent wage is to have a government job. Why would you trade in your artificially inflated government salary for a public sector job that has depressed wages? Most wouldn’t. We really would be creating “two Americas”, only it won’t be Big Business leading the charge, it will be Big Government (and it’s ally in Big Labor). Don’t believe me about the Big Labor part? Read further in the NYT piece:
Two of Mr. Obama’s allies — John Podesta, the Clinton administration chief of staff who headed the president’s transition team, and Andy Stern, president of the Service Employees International Union — have repeatedly pressed the president to use procurement policy to push up wages and benefits. [emphasis mine]
That’s what you call payback for helping him get elected. [Aside: How many ways does Obama have to pay back Big Labor? On top of pushing for card check and an overwhelming portion of stimulus funds going to union jobs, he's now stacking the deck in government contracts too?]
So, how do we fix our phrase? I think it should be “A rising tide lifts all boats, as long as they aren’t tethered to the bottom of the ocean.”
P.S.: That insider-outsider equilibrium thing pretty much explains why Big Government seems to always get bigger no matter who is in charge, doesn’t it? That’s why it is going to take an extremely focused effort on the part of conservatives to slay the beast. Whatever we do, we can’t get discouraged. It’s going to take a lot of work. I hope you are in this one for the long haul.
h/t to Instapundit
Moe Lane
PG DeFreese
Victoria Coates
Daniel Horowitz
Dan Spencer
For you students of history....
Vassar Bushmills (Diary) Sunday, February 28th at 5:20PM EST (link)…even the Nazis in the mid-30s used a more-velvet glove than this. They actually tried to persuade them to come over.
Once again, they are jumping the gun. Either they know something we don’t, or they’re showing their hand.
Not too smart, either way.
They are politicians after all, Vassar.
Brian Simpson (Diary) Sunday, February 28th at 10:12PM EST (link)Not exactly a group that I would accuse of being smart.
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Important principles may and must be inflexible. ~ Abraham Lincoln
I betcha I could find a labor, environmental or "other" violation
Achance (Diary) Sunday, February 28th at 5:21PM EST (link)at any company in the Country any time I wanted to. Welcome to the world of arbitrary, capricious, and political enforcement. Remember when I was writing about how Red states should brace for the invasion. Well, Red companies need to brace too.
In Vino Veritas
That's definitely the truth Art.
Brian Simpson (Diary) Sunday, February 28th at 10:28PM EST (link)I haven’t worked at a single company that hasn’t had some violation of some law (either willfully or unintentionally). It’s going to be all to easy to see this Administration using it’s powers to go after the companies/industries it doesn’t like (as it already has with our electricity producers, foreign car companies, etc.)
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Important principles may and must be inflexible. ~ Abraham Lincoln
I'm sick of this obama using taxpayer money to push his Frankie the communist, billy ayers the terrorist, and rev wright I hate America aganda. NT
bobojake (Diary) Sunday, February 28th at 5:52PM EST (link)Obama the Keyan Socialist
10ksnooker (Diary) Sunday, February 28th at 6:03PM EST (link)Has lots of plans for America all of which lead to him being thrown out on his ass at the very first opportunity.
Starts in November, the House controls the budget …
spreading the wealth or bankrupting the country?
wbb1950 Sunday, February 28th at 6:04PM EST (link)Yet another wonderful way to spread the wealth, by extending the principles of Davis Bacon to all government subsidiaries.
Nuts.
If you look at who is pushing it, once again you see the ugly face of the SEIU.
Honest Andy Stern. Many of the contracts he has negotiated over the years have bee achieved wage rates equal to or slightly above minimum wage.
Taxpayers get ripped off by Andy and his union benefit by being what? Why “insiders” of course.
Once again
DerKrieger (Diary) Sunday, February 28th at 6:20PM EST (link)…proving that Democrats are economically ignorant. Or simply that damn cynical and devious. Conservatives need to make eliminating government unions a priority. It can only, and has, lead to corruption.
“In questions of power, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.” – Thomas Jefferson
“I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” – James Madison
Whenever the legislators endeavor to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any further obedience.” — John Locke, 1690
Only those who Obama deems appropriate...
traversecityconservative (Diary) Sunday, February 28th at 6:21PM EST (link)The Obama administration is going to have no success with its “targeted” approach – giving money to the greens & unions. Even our local fire department had to build in a “green” way to get their funds. It’s disgusting how they are controlling the economy (continuing to keep it down) with their meddling. God help us until November.
Origin of "A rising tide lifts all boats."
barrypopik (Diary) Sunday, February 28th at 6:43PM EST (link)“A rising tide lifts all boats” was a popular phrase in the Kennedy era.
Unfortunately, if it’s an Obama “Big Government” tide, we’re all going to drown.
The rising tide lifting the SS Obama
izoneguy (Diary) Sunday, February 28th at 7:36PM EST (link)is the Tsunami that will be caused by the political earthquake coming in Nov 2010……..
The point cannot be made often enough: Modern liberalism, as embodied in the Obama presidency, is the defender of the status quo. And the status quo is a road to economic ruin. Political forces cannot redistribute the wealth that the economic system does not produce.
I note, without surprise
persiflage Sunday, February 28th at 7:18PM EST (link)that this proposal does not appear to require any of the favored employees to actually PRODUCE more to support their higher wages and benefits – that bounty will just magically appear. In truth, that bounty will be extracted, by coercion, from the non-favored persons and companies.
It is necessary to introduce an element of unpredictable whimsy in the application of the law, if you wish to destroy a Republic.
“A republic, if you can keep it…” – B. Franklin
"Improving Wages and Benefits" equals higher cost
reddog53 (Diary) Sunday, February 28th at 7:36PM EST (link)This then drives government spending up, further increasing the deficit.
So, the talk about being concerned about government spending is all hocum…as we’ve all known for the past year.
This is Chicago Way gone National…and it will accelerate our problems.
Great Stuff!
Ah, Marginal Revolution
aesthete (Diary) Sunday, February 28th at 8:11PM EST (link)Great blog. Considering that the phrase “A rising tide lifts all boats” was spoken by a Keynesian (JFK), it isn’t surprising that some modification is needed to make it more acceptable as a conservative truism. Good post, I would recommend if I could.
The act of defending any of the cardinal virtues has today all the exhilaration of a vice – G.K. Chesterton
Hoover Tried The Same Thing
C.S. McCoy (Diary) Sunday, February 28th at 8:42PM EST (link)Herbet Hoover sought to increase wages during the Great Depression with the Davis-Bacon Act in 1931. We know how that one turned out…
"Those who don't learn from history..." -nt-
Brian Simpson (Diary) Sunday, February 28th at 10:10PM EST (link)| My RedState archive |
Important principles may and must be inflexible. ~ Abraham Lincoln
welcome to Greece
jackhammer Monday, March 1st at 4:52AM EST (link)Greece has exactly this sort of system, where 25% of the population is directly employed by the government (the only cavaet is they have a large military becasue they border the very heavily militarized (at least in terms of manpower) Turkey, and the rest of mainland Europe is sorely negligent in their military spending), where they enjoy rather high wages, and astounding benefits….we see where that has gotten them….
and ask anyone who has ever done business in a former communist country (or current communist country)…they just love instilling arbitrary laws that give them excuses to deny opportunities to anyone they see fit….In Croatia they still have old Yugoslav laws ont he books, whcih are directly contradictory regarding import….of the sort: nothing which includes white may be imported wihtout prior written consent…and ….nothing which does not contain white can be imported without prior written consent….and then another catch all….and anythign which is imported can be denied entry if it is not deemed to be of good enough quality at the discretion of the import authority….
It was great to foster corruption….
and this osunds like a great way to get more freezers full of cash, and stifle competiton…the union way!
Reverse true??
talgus Monday, March 1st at 9:01AM EST (link)Government agency, found to have same issues would be shut down and work reissued to private sector. Too bad this is just a dream, as, they are more than others guilty of multiple transgressions.
Main issue is favored by government. Sounds Facist to me.
when the young, do not know their history
olddog Monday, March 1st at 3:44PM EST (link)fascism raises its ugly face once again, but I never thought I’d see it so prevalent in our (the USA) society. See the ugly face of fascism, as it grows it constricts freedom much as a boa does its victims. And there are many such, snakes in our Congress, who took an oath which they gleefully ignore, with lies and subterfuge. Ignoring the people and their God given rights, as put forth in those documents that were paid for with blood and fortune by our founders. on Rush, today he spoke about the ignorance of our young college people failing basic historical knowledge in standardized tests. “Those who do not know their history are bound to repeat it.”
Support our Troops!! The Marxists will not!
One Old Dog