There are quite a few diaries with the premise that “Clinton Democrats” (which I suppose refers to supporters of Secy Clinton) dont understand the premise of free stuff. That we have forgotten the premise of the new deal etc., and that we have adopted Reagan’s premise.
I submit that Clinton Democrats understand free stuff, and that it is the Sanders Democrats (which I will use to refer to supporters of Sen. Sanders) who dont understand free stuff.
Let us start with a couple of premises (a) first, just like the old adage says… there is no free lunch. You cannot have free stuff. (b) second, sometimes you can add two and two and end up with five. And if you do this, you can have free stuff.
Let me illustrate this with the example of health care.
Consider the following question: Why is it important for everyone to have access to cheap affordable heathcare ? Will the Gods be displeased if health care is not uniformly available ? Will the Oceans rise, and the Glaciers melt ? Will my dog stop trying to escape from my backyard ? Or will the butterfly flutter in Beijing ?
No, none of those things will be impacted. Sure, some lives will be impacted, but the Universe will carry on as it is, and there are lots of ways by which lives can be impacted.
And yet, it is critically important that we do have cheap affordable healthcare for everyone. So why is it so important for everyone to have access to cheap affordable healthcare ?
The answer lies in risk perception, and how it impacts growth. The engine of the US economy is the small business ~ small businesses create most of the jobs, and most of the growth. It is not Goldman Sachs, or GE, or GM… it is the small business. And the US used to be (and still is) the most favorable place on the planet for the creation of a small business. If you create lots of small businesses that succeed, then you have lots of tax revenue, lots of good paying jobs… and it is morning in America.
But things are changing. A 22 year old college graduate will open up a small business (as opposed to taking up a job working for someone else) if she feels that: (a) there is a significant upside in there for her & (b) the impact of the downside is manageable. The upside is described by the business plan, which cannot be altered by societal conditions. But the impact of the downside can be mitigated by societal factors ~ if the 22 year old has to worry about debt (incurred for college tution), and health care, and food, and shelter if the small business does not work out, then she will not create that new business.
And that is where we are headed. The US is still a very favorable place to create a small business, but high college debt and health care costs are starting to have an effect.
For instance, look at this article on entrepreneurship, which describes the problems via 5 charts, some of which I have reproduced below
We are not seeing new business creation as before
While the rate of business formation has slowed, the pace of business closures, which had held steady over the previous decade, started to ascend in 2005 and spiked in 2008, according to data compiled by the Brookings Institute. Consequently, business deaths now outpace business births for the first time since researchers started collecting the data in the late 1970’s.
Millenials are not creating new businesses like the older generation
And as Clinton Democrat, I blame the millenials… who are all voting for Sanders. Jokes aside, this is a serious issue. And the data clearly indicates that millenials are not creating as many new enterprises as the older generation. This came as a shock to me ~ when I was fresh out of school, and watching my nieces and nephews growing up, I had assumed that the millenial generation would be more enterprising than ours. But that is not what happened.
Here’s the problem: they aren’t starting businesses. In fact, the rate of business formation by Americans ages 20 to 34 has fallen sharply since 2010, and millennials aren’t starting nearly as many new enterprises today as baby boomers were creating when they were the same age.
Kauffman researchers argue in their report that the recession has “dealt a permanent blow to Millennials’ entrepreneurial potential.” In part, that’s because home ownership among millennials – traditionally a prime source of savings and potential loan collateral – plummeted during the downturn. Others may be deterred from taking the entrepreneurship plunge in light of the soft labor market and the fear of not finding work should their company ultimately fail.
Obtaining all those upper-level degrees didn’t come cheap, either. The ever-growing mountain of student debt has left many young adults without the savings they might have had to put toward a business venture.
“Many [millennials] are starting their careers from a negative financial position, and the burden of student debt certainly isn’t helping,” Guillies said.
Zandi and Guillies urged Washington’s elected leaders to turn more attention to the decline in entrepreneurship and pursue policies that encourage more Americans of all ages and backgrounds to think seriously about starting new businesses.
“Unless this changes, unless we do see more entrepreneurship, the kind of economic growth we’re seeing now will not continue,” Zandi said.
What the article is saying (and I agree) is that the millenials have more debt (college tution), and less access to a collateral (homeownership has been affected), and more worries about health care etc (with the added burden of the mandated costs under Obamacare). And so they are not able to create new businesses …… they have serious concerns about the impact of failure.
And so the average age of the corporation is increasing
The result of all this is that the average age of the US corporation is increasing
The result, as shown below, is that long-established companies represent an increasingly large share of U.S. firms, with those that have been in business for more than five years now accounting for more than two-thirds of companies. Meanwhile, the proportion of companies of every age from one to five years old has shrunk over the past 35 years.
That wouldn’t necessarily be a problem, except that previous research has shown that young businesses account for nearly all net new jobs (job gains minus job losses) created annually in the United States. Older businesses, by comparison, tend to collectively shed from their payrolls almost as many workers as they add.
There is a free lunch. Because two plus two will make five.
So this is where we come back to the issue of the free lunch. But first a diagnosis of the problem that the Sanders democrats rail against.
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Are you worried about corporations, and their fat cat CEOs, the billionaires and millionaires, having too much power and too much influence in the political arena ? Did you ever wonder why they have too much power ? It is not because those guys are evil ~ this is where I think I disagree with the Sanders democrat. It is because they can. We, as a society, have shut down the spigot of new business formation, which means that the fat cat CEOs dont have any competition. And so they can ! And you can rail against them all you want, but as long as they can, they will.
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Are you worried about insufficient job creation. And that the middle class dream is disappearing ? Did you ever wonder why ? It is not because of NAFTA/CAFTA/PNTR etc ~ anyone who tells you that either does not understand the issue himself, or is trying to con you. It is because we have shut down the spigot of new business formation.
And so we come to the free lunch. The reason I support a solution to the college debt problem, and for enabling affordable healthcare to all (and also robust unemployment benefits ~ although that is not a political hot potato) is because it will enable new business formation… specially by the young millenial. And the increased tax revenues that results will pay for all the costs involved…. as long as we do it in a “smart” way. Which means listening to the evidence, and consulting with the best available experts on each topic.
The problem is that if you do it without enough thought and care, then you can just as easily bankrupt us all ~ and that is what Sen. Sanders is proposing to do.
So yes.. this Clinton Democrat has a fairly good understanding of free lunches. I am voting for Secy Clinton largely because I want the free stuff that I think she can deliver on.