Liberal Rhetoric 101: Theory Over Experience

"You're just going to have to trust me on this one...I'm the one with the degree in Economics, remember?"

This was an argument I once heard from a liberal when I had the audacity to question the predicted results of a minimum wage increase. The general point of this was "I'm an expert, you aren't, so my opinions are above your questions."

This is different from true expert testimony, by the way. A true expert, when giving testimony, has to do more than establish their credentials by their vocation or degree, at least with a person who does not know enough about them to trust them at their word.

Often times, it usually focuses on education, rather than real world experience. Academics (that is college professors or researchers) tend to think their book smarts far outrank the real-world experiences of others. To give an example, having a degree in Economics often gives a person knowledge of Economic theory, but given the diversity of theories it doesn't necessarily give them understanding of what actually works in the real world (often it doesn't, actually).  A person who has actually run a business understands more than a person who studies theories.

When it comes to the effect of a minimum wage increase on both the real spending power of a minimum wage employee as well as on the employer, I can claim real-world expertise. Why is that? Because I managed a national chain restaurant for a few years and oversaw a minimum wage increase. During that time, I saw the effect on pricing of our product and discussed how it effected some of my long-term employees (especially those who were actually making above the minimum wage because they earned raises).

I told this person that the real impact of the increase would be an economic drop because business owners would have to increase prices and cut hours. Further I explained it would be a real money loss to the employee who had already earned raises over minimum wage and a zero real dollar gain to those who were making the old minimum wage.

I was told my real-world expertise doesn't matter, because they had a study from an Economist that proved the increase was positive.  The Economist quoted hadn't run a business. They just knew the theory behind the increase.

It's the same mentality that claims that Keynesian Economics works based on theory. Keynesian Economics doesn't have real-world success stories, just failures. If we were applying real-world success to our choice of economic planning we'd follow a school of economic thought like Supply Side Economics or the Austrian School of Economics, both of which have seen historical success.

Bottom line is this: Real world experience means more than theory, because it's been exercised in practice.

Debunking the New Deal Argument (Part 2)

On Monday we began dealing with the New Deal Argument that liberals love to present: "The New Deal got us out of the Great Depression." Today, we're going to handle the second part of this argument, known as Military Keynesianism.

There is a second aspect of the New Deal Argument, which admits that it was indeed World War II was the reason that the United States got out of the Great Depression but claims that the government spending of World War II was the specific impetus for recovery, thus claiming the World War II spending by the government and subsequent recovery was an example of successful Keynesian Economics.

Now first of all, Keynesian Economics in it's pure form speaks to government spending in terms of investment. The World War II spending by the United States government was not  investment it was consumption. Two, and this is far more important, the branch of Keynesian Economics known as Military Keynesianism essentially preaches that this military spending CREATES demand, rather than the other way around.

For those of your from Palm Beach County, this akin to saying "We produce a lot of military supplies so we therefore will HAVE a demand because of that increased supply."

In reality, what occurred in World War II was an organic demand not a created demand. (It turns out, no matter how much effort government makes to create a demand, if people don't organically want or need a new product they will not fly. See: Chevy Volt.)

Secondly, the argument of Keynsianism is that government can "invest" in various industries and therefore stimulate the economy. (Somehow government spending stimulates the economy, but letting people keep their own money doesn't. If your head hurts, well, so does mine.) Investment, however, involves a level of control. If I "invest" in a company I am somewhat of a partner. To some degree I have a say over what that company does. This is what President Obama has tried to do (to massive complete lack of success) with "Green Energy" leading to huge embarrassing failures with taxpayer dollars like Solyndra (and other, less buzz-worthily named but otherwise equally unsuccessful companies).

Compare this to what the United States government did during World War II. During World War II, the United States government didn't "invest" in military supplies. No. They BOUGHT military supplies. They were not INVESTORS, they were CONSUMERS.

The government acting as a consumer for a Constitutionally valid and appropriate reason is both not a front to freedom and also is not the premise behind Keynesian Economics. Government consumption and government investment are not synonymous. Otherwise, purchasing the Presidential limo would be considered "investing" in Cadillac and replacing Air Force One would be "investing" in Boeing. Also when I bought a can of soda earlier, I "invested" in Pepsi.

Yet again, this example of Keynesianism "working" is based on a faulty premise. Then again, what would liberal "successes" be if they couldn't move the goal posts?

Debunking the New Deal Argument (Part 1)

Liberals seem to have two big arguments to back up their messes of policies: the Clinton Argument, which we debunked here on Biblical Conservatism nearly two years ago, and the New Deal.

The claim from liberals is that the New Deal is what got us out of the Great Depression. Somehow, they claim, all the government spending in the New Deal created a recovery.

History tells a different story.  To what degree the unemployment dropped due to the New Deal it was a prop up, caused my government make-work agencies like the Public Works Administration.

Now, given the choice, I'll pick the government hiring people to build bridges over the handouts of the Welfare State. However, once you take away these government make-work programs you'll find unemployment at it's lowest of 17.9%.

You'll notice that unemployment began it's genuine and permanent recovery in 1939. Gee, what happened then? Oh, right, the United States started selling war supplies to France and Great Britain. Then you look at the difference betwen 1941 and 1942.

In fact, many economists surmise that the New Deal's massive taxes may have slowed the recovery, thanks to such policies as a LOWEST top marginal income tax rate as 63% (the highest was a whopping 94%).  Who knew that taking tons of money from those who produce might stop them from producing. Shocker.

Thursday, we're going to talk about a second aspect of the New Deal Argument that other Keynesian argue. In short, they argue that sure, it was World War II that got us out of the Great Depression, but the spending during the war was Military Keynesianism therefore it was a success of Keynesian Economics.