Hillary Clinton seems to forget basic economics all too frequently and this time her Marxian rhetoric has finally come out in full force. We have to tackle this stupidity, there is no way we can let someone like Mrs. Clinton say something so terribly misinformed as this.
The genius economic philosopher Ludwig Von Mises disagrees with Hillary. He says “Minimum wage rates, whether decreed and enforced by the government or by labor union pressure and violence, result in mass unemployment.”1 This makes perfect sense from inductive reasoning and the study of human action. Wage rates are a price. In a freemarket, the employer does not own the employee. Rather, the employee is selling his skills, labor and time much like how any other entrepreneur sells a commodity. The employer must then purchase the employees skills, labor and time at set market prices or wages.
From this logic, the rates paid for labor of various types must be profitable for the employer and satisfactory for the employee. Much like when you walk into the store and see a product you may want, you check the price. If the price is higher than you are willing to pay for the product, you decide to hold onto your money as you believe that you will be better off keeping the money rather than spending it on the high priced product. If the product is priced appropriately, and you judge it better to have the product than your money, an exchange will occur.
Labor is just like this product in our example. If the wages are higher than what the employer deems the labor worth, the employer will not hire anyone. The fact that Hillary Clinton thinks that she can ignore this basic economic truism shows that she either does not understand economics in the slightest, or she is being purposefully deceitful. Either option shows that she has no business leading anyone in anything pertaining to economics. The facts are rather simple. The higher wages are, the higher the cost of production is. Higher production costs means higher prices. Higher prices mean less demand for products. Less demand means a smaller quantity of goods are produced. Smaller quantities of goods being produced means less jobs available.2 It’s really that simple.
If only Hillary would listen to Murray Rothbard on the subject:
“In truth, there is only one way to regard a minimum-wage law: it is compulsory unemployment, period. The law says, it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum-wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.”3
Perhaps Hillary is confused. Hazlitt says that many of the confusions about wage rates occur in economics because wages, which are a price, are given a separate name other than “price” which leads the economically impaired to believe that the rules of other prices do not affect wage rates and that wage rates are somehow “special”.4 Hillary Clinton is most assuredly, economically impaired.
Business Doesn’t Create Jobs?
The central claim in this clip of Hillary is that she claims that business and corporations, or the private sector, do not create jobs. She is really trying to convey the idea that our supreme overlords do (our supreme overlords being her and her government friends). This idea is something that progressives and liberals are always trying to propagate, usually, without facts. Like Hillary, they simply proclaim it as truth, hoping that saying it over and over again will somehow make it true. Unfortunately, economic facts show the opposite. In order for government to “create” anything it must take resources and capital from individuals.
This leads to another problem. Hillary is just flat out proclaiming communism and Marxism at this point. She wants the Federal government to direct all economic activities. As F.A. Hayek points out, the more a government plans, the harder planning becomes for the individual.5 Central planning necessarily leads to a limitation of choices for the individual as well as market distortions. Ludwig Von Mises explains these market shortages and distortions rather well in the two following examples:
“The government believes that the price of a definite commodity, e.g., milk, is too high. It wants to make it possible for the poor to give their children more milk. Thus it resorts to a price ceiling and fixes the price of milk at a lower rate than that prevailing on the free market. The result is that the marginal producers of milk, those producing at the highest cost, now incur losses. As no individual farmer or businessman can go on producing at a loss, these marginal producers stop producing and selling milk on the market. They will use their cows and their skill for other more profitable purposes. They will, for example, produce butter, cheese or meat. There will be less milk available for the consumers, not more. This, or course, is contrary to the intentions of the government. It wanted to make it easier for some people to buy more milk. But, as an outcome of its interference, the supply available drops. The measure proves abortive from the very point of view of the government and the groups it was eager to favor. It brings about a state of affairs, which, again from the point of view of the government,is even less desirable than the previous state of affairs which it was designed to improve.”6
“The whole entrepreneurial class is, as it were, in the position of a master builder whose task it is to erect a building out of a limited supply of building materials. If this man overestimates the quantity of the available supply, he drafts a plan for the execution of which the means at his disposal are not sufficient. He over sizes the groundwork and the foundations and only discovers later in the progress of the construction that he lacks the material needed for the completion of the structure. It is obvious that our master builder’s fault was not over investment, but an inappropriate employment of the means at his disposal.”7
The “creations” of government never economically work. This is because these government creations and interventions ignore human action. They view men as raw material that can be formed much like how an engineer forms materials into a machine or a bridge. Unfortunately for would be social engineers like Hillary, men are not raw materials to be formed in whatever image she chooses. Men act to better their own circumstances in the future, otherwise they would not act. As stated above, the more economies are centrally planned, the more they ignore and make difficult the actions of individuals trying to better their circumstances.
Lastly, Hillary makes fun of “trickle down economics” saying it doesn’t work. But isn’t she one of the biggest advocates of trickle down economics? She clearly advocates for government stimulus which is government giving money to its rich friends in order for them to create jobs. Clearly, Hillary and her followers are economically illiterate.
What is Hillary Saying?
Hillary Clinton is essentially saying that you are too stupid and ineffectual at making your own choices. You need a strong central authority that can point guns at one group in order to support you. You are a raw material, a slave, and what ever dreams and goals you may have are unimportant to governments goals and plans. This is the underlying message she is giving you.
1. Mises, Ludwig Von. Planning for Freedom, and Other Essays and Addresses. South Holland, IL: Libertarian, 1962. 27. Print.
2. Reisman, George. “How Minimum Wage Laws Increase Poverty.” Mises.org. Mises Institute, 14 Apr. 2014. Web. 30 Oct. 2014. <http://mises.org/daily/6714/How-Minimum-Wage-Laws-Increase-Poverty>.
3. Rothbard, Murray N. Making Economic Sense. Auburn, Ala.: Ludwig Von Mises Institute, 1995. Print.
4. Hazlitt, Henry. Economics in One Lesson. London: n.p., 1952. Print.
5. Hayek, Friedrich A. Von, and Bruce Caldwell. The Road to Serfdom: Text and Documents: The Definitive Edition. New York: Routledge, 2008. Print.
6. Mises, Ludwig Von. Middle-of-the-road Policy Leads to Socialism. South Holland, IL: Consumers-Producers Economic Service, 1951. Print.
7. Mises, Ludwig Von, and Ludwig Von Mises. Human Action: A Treatise on Economics. N.p.: n.p., n.d. Print.