Bernie Sanders, should he be elected President, promises to raise the minimum wage to $15 an hour, make college tuition free or cheap, and to dismantle the big banks. How does he plan to pay for all of this? Well, he’s also admitted that he intends to raise taxes across the board- a move that would almost always make a presidential campaign sink like a stone.
But Sanders’ bid for the big office is still going strong, not as strong as Trump’s- but strong nonetheless. So it would seem that he has defeated the common criticism of liberal entitlement programs- ‘how will they pay for it?’ by confessing, (and surviving), his intention to raise taxes. But will the tax hike he proposes be enough to pay for his programs, and will their benefits outweigh the cost to taxpayers?
Extremist views rarely match up well with cold economic realities. Those, like Sanders, who would redistribute wealth in order to achieve some kind of democratic Utopia may mean well- but their ideas often run contrary to the laws of scarcity, supply and demand, the thrust of history, and the very nature of human ambition- which is expansive.
It’s the reason socialist institutions are often conflated with communist ones- because; in order to squash the natural human instinct to expand and grow a totalitarian regime would eventually have to be instituted. In such a system, punishments for high performance would invariably lead to unjust enforcement policies. It wouldn’t be hyperbole to say that such a system would in every way be un-American.
Sanders’ proposed 100% federal minimum wage increase would have dramatic effects on the world in which minimum wage earners live. First of all, not all of the states of the union have the same economies. Some are more delicately balanced than others. The increased costs would be more harmful to companies in certain regions than in others. This would mean a drastic alteration of the existing employment opportunities and is expected to destabilize many areas.
What’s more, there’s the high likelihood that imposing these costs on companies would force them to curtail employee benefits, to enforce layoffs, to cut jobs, and raise the prices for their goods and services. In the end, it would mean a much bleaker landscape for low wage earners where the money they earn may come in greater increments, but will be worth far less.
Sanders’ plan to tear down the big banks may seem like a very satisfying prospect in light of their all but intentional take down of the economy in 2008, but this- like Sanders’ wage hike- would have a massively destabilizing effect on the economy. The brunt of his hatred for the banks is aimed at Glass-Steagall, which he says must be retrained so that the big banks won’t be able to further damage the economy. But this point of view is misinformed.
Glass-Steagall has not been law in over 16 years, yet candidates at the democratic debates yammer on about it as if it is actively driving 47% of Americans into poverty. The law was instituted as a response to the belief that investment banking and commercial banking had become intertwined in such a way so as to cause the Great Depression of the 1930s. Otherwise known as the Banking Act of 1933, Glass-Steagall was intended to prevent commercial banking and investment banking from overlapping. It is meant to protect the middle class and the entire economy from abuse at the hands of Wall Street investors.
The law was repealed in 1999 by the Clinton administration, and experts believe that this disabled the regulations which were preventing another recession, and eventually lead to the real estate bubble that caused the collapse of 2008. From there one could easily form an argument that Clinton’s actions created a temporary boon based on speculation which eventually wrung the economy dry.
So why is Sanders, and the entire democratic party, up in arms about Glass-Steagall? If you think they are acting intelligently then their motivation must be to cause economic instability. That would be the rational explanation- however cynical. If you think they are acting unintelligently, then the logical conclusion is that the Democratic Party is grossly unqualified to have any control over the economy. Either way you look at it, Sanders is wrong for the job of president.
Anyone who is so ignorant about the history of the American economy over the last 100 years should know what Glass-Steagall is, and that it is not in effect. But most of all, you would expect a social justice warrior like Sanders to understand that the non-law, he is so vehemently against, is actually meant to protect the poor and the middle class.