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White House strategy: Fabricating fear and injustice

By Dr. Peter Morici
web posted April 21, 2014

Facing mid-term elections and burdened with persistently high unemployment, President Obama is playing the race, gender, and class cards. Fabricating fear and injustice, such tactics keep the economy in slow gear and make worse the very people the president professes to help.

The financial crisis hit African-Americans much harder than whites—more jobs and wealth were lost in the black community and in neither category have blacks since recouped as much as whites. The fundamental problems are slow growth, especially in blue-collar manufacturing and construction, and deep seated problems in the African-American community—lagging educational attainment, high rates of teen pregnancies and the like.

Instead of effectively addressing those, the president and Democratic members of Congress offer palliatives—more Medicaid, food stamps and other entitlements. And raise alarm among blacks that Republican-dominated state governments are conspiring to steal their right to vote, and charge the GOP is contaminated by racists. The inconvenient truth is that in 2012, 66.2 percent of blacks voted vs. 64.2 percent of non-Hispanic whites, even though some 34 states have voter ID laws.

Ad nauseam, the president pounds women earn 77 cents for every dollar men earn, and he touts the proposed Paycheck Fairness Act, which essentially would require employers to justify for federal courts all differences in pay between men and women.

Earning differences mostly reflect women's choices, such as occupational preferences or taking time off to be with small children. The real discrimination is against young men in high schools and colleges—they earn many fewer degrees than women.

The most recent bit of gender engineering was the 2009 Lilly Ledbetter Fair Pay Act, which opened the door to more gender discrimination lawsuits—and more opportunities for Democratic trial lawyers to earn big fees.

No surprise, five years later the gender pay gap has actually increased, because the Ledbetter Act raises the cost of doing business in areas where women are more heavily concentrated, and shifts investment elsewhere. Free markets generally punish overzealous regulation, and in this case worsen conditions for women.

The Paycheck Fairness Act would impel the same pay for workers in the same job classification, regardless of most differences in productivity and performance. Just like the public schools, where U.S. competitiveness versus other industrialized countries is abysmal—despite much higher expenditures per pupil, U.S. students continue to lag in international assessments in math and science.

Let's do for America's private employers what teachers unions have done to education, and millions more will be unemployed.

The working poor surely need a raise. Since adjusted in 2009, inflation has seriously eroded the value of the $7.25 per hour minimum wage.

By insisting on raising the floor to $10.10, which the Congressional Budget Office estimates could kill 500,000 mostly low-wage jobs, Obama forces congressional Republicans to block an increase and paints them as enemies of the poor. Meanwhile, this tactic precludes a reasonable adjustment to $8.25 an hour, which would cause few employment losses.

Just as with higher taxes on entrepreneurs to burdensome health care mandates, to gain political advantage, the president's policies burden the working poor. He plays champion of fairness while behaving more like a manipulative character in a Dickens novel.

While presidents can't fool all the people all the time, they can fool enough of the people enough of the time to maintain a tight grasp on power. ESR

Peter Morici is a professor at the University of Maryland Smith School of Business, a widely published columnist and five time winner of the MarketWatch best forecaster award. He tweets @pmorici1






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