Former Gov. John Hickenlooper has just published a commentary in the Wall Street Journal entitled, “I’m Running to Save Capitalism.”
The thrust is “American capitalism is broken,” and Hick wants to save it using the federal government.
The system is broken — but it needs to be saved from the government, not by it.
For starters, you don’t save American capitalism by repeating Democratic shibboleths like, “the real average wage will only buy you about as much as it did in the mid-1970s.” Statements like these, which have been debunked many times, only foster discontent. Just watch these videos or, more simply, ask yourself if you would like to live with your mid-1970s car, TV set and channels, and house. Or with your mid-1970s smartphone, PC, internet, Netflix and Amazon — which capitalism hadn’t even invented yet.
Hick has some good policy ideas, like his support for free trade, but these are swamped by the bad ones.
For example, when less than two-thirds of the students who enter college graduate in six years or less and when up to 43% of the ones who do graduate end up with a first job that doesn’t require a college degree, this doesn’t exactly shout that we are sending too few students down the college track. Likewise, when a large number of students entering college require remedial education, this doesn’t shout that the solution for our skills shortage is doubling down on a "free" public education system that is doing a poor job already.
His proposal for a nationwide $15/hour minimum wage is just plain dumb. Even if you believe that a minimum wage is a good idea — which you shouldn’t — there is no sensible argument for having the same one for the entire country. Hick knows that Colorado’s “one-size-fits-all” minimum wage doesn’t even make sense for rural Colorado. How can it work for everywhere from Manhattan to rural Mississippi?
Hick is right that there is a large amount of discontent with the current system. But he misdiagnoses the causes and offers bad solutions. A real program to save American capitalism would start with what I call the Three Horsemen of the Middle-Class Apocalypse: Housing, Higher Education and Healthcare. Talk to any middle-class American, and these are the things that keep her up at night. And the government’s fingerprints are all over them.
Take the cost of housing. When a one-acre lot in Texas for every American family would still leave 25% of the state empty, and when the densely populated city of Tokyo develops almost twice as many new residences as all of California, the cause of the housing affordability problem is obvious: government rules that don’t allow builders to build. As Economics 101 tells us, an artificially restricted supply produces high prices. We don’t need the government to fix this problem. It just has to get out of the way.
The cost of higher education is another government failure. When anyone could get a sub-prime mortgage, the price of houses skyrocketed. Well, the biggest sub-prime lender in the world is the government with its $1.4 trillion in student loans, given to anybody, to study anything, virtually anywhere. This massive subsidy — combined with the misdirected drumbeat of support for universal college education from teachers and politicians — has driven up the cost of college and buried alternatives such as vocational schools, apprenticeships, on-line learning and bootcamps.
Probably the biggest myth in American politics is that we have a “free market” in health care and that it has failed. Nonsense. The full discussion is a lengthy one, but we have government policies that produce the worst of all possible worlds: a for-profit system where competition is severely restricted and consumer incentives to control costs are virtually non-existent. Any economist will tell you that this is a recipe for massive cost inflation and a lack of price transparency. And the recipe has worked.
Don’t get me wrong. If I have to choose between Hickenlooper’s policies and the outright lunacy of many of his competitors for the nomination, I’ll take Hick. A slow destruction of what he rightly claims is “the only economic system than can support a strong middle class, a growing economy and innovative entrepreneurs leading global technology advances” beats the fast one the policies of his colleagues would produce.
Roger Barris, an investor and entrepreneur from Evergreen, was the Libertarian Party candidate in the race for Colorado's 2nd Congressional District in 2018.