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Swamponomics: Nevada Democratic Debate Edition

Employee-ownership, pollution, and government’s redlining problem.

Don’t Be So Socialist

During the last presidential election, Hillary Clinton added profit-sharing to her plethora of campaign promises, a policy that would force private businesses to allocate more of their profits to employees. But Sen. Bernie Sanders (I-VT) does not believe that proposed mandate went far enough. Sanders wants to force companies to hand over a slice of ownership to workers, which is one of the most socialist things you can do.

Under Sanders’ proposal, the government would require that all large companies transfer 20% of their ownership to employees, over time. Former South Bend Mayor Pete Buttigieg was asked about this suggestion and said it was a good idea, but that he did not think it made “sense to command those companies to do it.” Former NYC Mayor Michael Bloomberg dismissed the concept by comparing it to communism, adding that “I can’t think of a way that would make it easier for Donald Trump to get re-elected than listening to this conversation.” This was one of the few times, during the Nevada primary debate, that Bloomberg got something right.

Sanders noted that he was proud of this policy. Would he be just as proud if employees were ordered to take on the risk that comes with business ownership, too? If a company loses money, will the losses come out of the workers’ paychecks as well? What happens if the firm faces litigation?

The chief problem with this plan is that workers would ostensibly enjoy all of the gains without enduring any of the losses. Just because a lot of corporations are posting record profits today, it does not mean it will last forever. When the next recession strikes and quarterly earnings reports show the businesses’ bottom lines slipped into red territory, Sanders probably would not want the workers to witness a decline in pay. But why not? They are part owners in the firm.

Whether it is profit-sharing or employee-ownership, these socialist policies would only hurt workers.

Polluting on a Parade

Former Vice President Joe Biden suggested that he would imprison executives who are “harming our planet.” When he was pressed on this recommendation during the latest debate, he went on a tangent about minority communities, climate change, and the Paris Agreement. The moderator told Biden he did not answer the question and specifically asked how he would rein in companies responsible for destroying the Earth. He said that, if they have been found guilty of wrongdoing, then they should be sued.

To quote Biden, “here is the deal.” Under the libertarian theory, he is somewhat correct. Pollution violates the non-aggression principle because it is a form of aggression and property owners would be permitted to file lawsuits against the aggressors who pollute the air, land, or water.

Legendary economist Murray Rothbard wrote about this issue and posited that environmental regulations incentivize and promote pollution. In the early 20th century, big business influenced the federal government to adopt a more systematic regulatory approach to the environment that supersedes local levels of control, which were litigation-driven. The specialist interests encouraged politicians to pass legislation and implement rules at the national level that took away the power from municipalities and property owners.

Since the government essentially owns the sewers, the waters, and even the air, cronyists are permitted to pollute without any concern about homeowners in small towns. So, a polluter might be permitted to emit dangerous toxins in the air to the maximum level outlined by government laws, which is what cap and trade does. It is akin to a building that collapsed and killed 99 people, but the builder or owner was let off scot-free because the property met all the government criteria, regulations, and codes.

The left likes to blame free-market capitalism for global warming, but the free market position is less tolerant of pollution than the politicians. If Bernie is right that climate change will be the end of our world in seven years – down from Rep. Alexandria Ocasio-Cortez’s (D-NY) 12 – it’ll be because of cronyism, much like what you see between the green industry and the government.

It is time for environmental capitalism!

A Thin Redlining

The subject of redlining made it into the Democratic debates as Mayor Bloomberg assured everyone that he was against the discriminatory practice of refusing to lend money or extend credit to borrowers in certain areas. The odious act has largely impacted minorities, but it was mostly a government-created issue that proves why the government is an awful institution.

In the 2017 book, The Color of Law, author Richard Rothstein uncovered an uncomfortable truth: Housing policies under the New Deal were nothing more than a state-sponsored system of segregation. He revealed how government efforts under former President Franklin Delano Roosevelt contributed to the separation of races.

“In many cases, the federal government did create…segregation in metropolitan areas and in cities that had never known segregation before. In other cases…it did reinforce segregation that was already in existence. But the country was much, much more segregated as a result of these federal policies than it was before, or would be today without them.”

GettyImages-1130583112 Bernie Sanders

Bernie Sanders (Photo by Sean Rayford/Getty Images)

Rothstein cited one case in Richmond, CA. He reported that the city’s population soared from 24,000 to about 100,000 from 1940 to 1945 due to the surge of war workers. Richmond’s black population also climbed from a few hundred to 14,000. To accommodate the massive population growth, the federal government intervened and erected public housing, which was “officially and explicitly segregated.” For black tenants, housing was poorly built and “located along railroad tracks and close to the shipbuilding area.” For white residents, state housing was constructed with more permanence, the infrastructure was sturdy and durable, and the locations were more inland and closer to white residential areas.

“Because Richmond had been overwhelmingly white before the war, the federal government’s decision to segregate public housing established segregated living patterns that persist to this day,” he wrote.

Republicans in Congress presented an amendment in 1949 that required that all future public housing had to be integrated, and the practice of segregation had to be abolished. Unfortunately, northern liberal Democrats opposed integration, and segregation in public housing was the de facto policy for Washington. In a free-market economy, racial separation would be tried – blacks can exclude whites and Asians can prohibit Hispanics. The market would act comparable to a schoolmarm and determine that the public does not appreciate this behavior, according to the Chicago economics doctrine. So, the perpetrators would eventually be punished by the invisible hand as customers may not frequent the store or social media campaigns would expose the odious company policy.

Whether it is the government guaranteeing mortgages for subprime borrowers or politicians who want to make amends by penalizing today’s generation for the iniquitous acts of yesterday’s leaders, the state should keep its nose out of something as important as housing. It has done way too much damage already – leave everyone alone.

~

Read more from Andrew Moran.

Read More From Andrew Moran

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