The country's labor market is healthier than it has been in a very long time, but it could be even healthier for the poor and lower middle classes if our politicians had the education and the fortitude to simply follow Adam Smith. As our JAM Views readers have come to understand, a great majority of our corporate and national problems would disappear if we only allowed people to work in their own self interest and we compensated them for their results, not their time, or not as a gift based on their station in life (means testing).
We must memorize Mr. Smith's words that "(i)t is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." To surprise our dinner guests, we should also memorize a lesser-known "Wealth of Nations" passage which reads, "We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."
Currently, I am teaching a 25-hour course titled "Building Special Companies" to a room full of prior business owners, and I must admit that I have been a little shocked at their comments and case studies insisting on "only pay for performance." As I read and listen to the media, I had begun to believe that these simple truisms were dead, but I am re-invigorated when I get to converse with true business owners who have been in the trenches.
Unfortunately, two recent reports confirm that the Government still just doesn't get it (or as we have discussed, they do and this is how they control the masses by ensuring we do not prosper also). The Farm Bill is legislation which is meant to support our agriculture industry, but is actually a special-interests scam in which the large players, such as wealthy sugar producers (see Russian Oligarchs), pay congressmen to implement protective import restrictions and regulations to protect their own interests. Beyond this, 80% of the money allocated to this bill is actually for food stamps, but by calling it a Farm Bill less congressman will publicly oppose the redistribution economics.
Recently a few members of Congress attempted to ensure that the food stamps came with a 20-hour per week work requirement for able-bodied workers with no small children to care for. This 20-hours per week (3 hours per day) could be work, volunteering, or even government-funded education. What a wonderful gift to these 9 million able-bodied citizens, mostly men, to help them help themselves and improve their station in life. Also, this a huge number to add to our economy's worker participation ratios and productivity percentages. But, because the politicians either don't understand behavioral economics, or they are intentionally trying to keep their constituencies poor and uneducated, this part of the bill was canceled. You can't make this up. So, 40 million Americans now receive food stamps, more than double the number 20 years ago. It is a crime.
But, it gets worse. Daryl Purpera, Louisiana's legislative auditor, conducted a study in which they discovered 82% of Medicaid recipients should not have qualified for all the benefits they received. Most recipients had underreported their income and taken advantage of enrollment rules which now allow people to join Medicaid without any verification (Can you say "No-Doc Loans?").
According to Robert Doar, a fellow at the American Enterprise Institute and former commissioner of the New York City Human Resources Administration, the previous Presidential Administration streamlined the enrollment process in order to enroll as many people as possible (No-Doc & No Money Down!), and even prohibited states from verifying participant data. Next, in total disregard for Adam Smith, the state governments are responsible for enrolling participants and managing costs, while the federal government pays all the bills with "federal matching." The states are incentivized to spend more and care zero about cost. How ridiculous is that?
All of these debilitating programs, packaged and marketed as helping the less fortunate, only destroy our nation's middle and lower classes. Even worse, the government-designed inherent fraud steals our taxpayer dollars away from the families, and most importantly the children, who truly need the helping hand, the hand up, and the better opportunities. Dumb economics hurt real families. See through the rhetoric. Understand how the math works. Do something about it.
"Contradictions do not exist. Whenever you think that you are facing a contradiction, check your premises. You will find that one of them is wrong." - Ayn Rand