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Published On: Thu, Jan 31st, 2013

Robert Reich says unionization of Walmart will get the economy growing

The Keynesians have really brought flawed theories to the forefront during the past month by two of their preeminent thinkers.

Robert ReichImage/United States Department of Labor

Robert Reich
Image/United States Department of Labor

Earlier in the month, it was Paul Krugman who suggested the minting of a $1 trillion platinum coin and depositing it in the Fed to “sidestep the debt ceiling”.

Now it’s former Clinton Labor Secretary and current Berkeley professors, Robert Reich, who in an Huffington Post op-ed Tuesday claimed that the way to get the economy growing is for Walmart, McDonalds and hospitals to unionize. (more details here)

Reich claims, “If they (wealthy Americans) were rational they’d even support labor unions — which have proven the best means of giving working people a fair share in the nation’s prosperity.”

He later takes jabs at America’s favorite punching bag, Walmart, for not being unionized saying, “The average pay of a Walmart worker is $8.81 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t qualify for benefits.

“Walmart is a microcosm of the American economy. It has brazenly fought off unions. But it could easily afford to pay its workers more. It earned $16 billion last year. Much of that sum went to Walmart’s shareholders, including the family of its founder, Sam Walton.”

He continues saying, “Walmart should be unionized. So should McDonalds. So should every major big-box retailer and fast-food outlet in the nation. So should every hospital in America.”

Where do people like Reich get these thoughts? Really, hospitals? Isn’t the cost of healthcare already at  exorbitant high prices due largely in part to government intervention into health care? Now, we should make costs even higher with union wages and the associated negative aspects that inevitably follows?

The most successful business and largest private employer on the planet, Walmart, who offers a plethora of low cost goods to the American consumer, should unionize so customers would have to pay more for a new lamp or a toy for their kids? So they can employ less people? So unions can bully the company and make a very successful business less successful?

Obviously, Reich has no clue on the concept of job creation, in fact,  I would lay odds that he never was a business owner. Safe bet?

Reich’s ideas I believe would generate the kind of response like that of Rick Santelli Wednesday, “When you act like Europe, you get growth rates like Europe.”

I asked Frostburg State University economics professor and  Ludwig von Mises Institute adjunct scholar, Dr. William Anderson on his thoughts of the Reich thesis.

Anderson said:

What Reich is claiming is that the way for an economy to grow is for the government to impose higher costs for the factors of production. Now, even in basic economics we know that if the government makes producing something more costly, then less of it will be produced, which means that real costs increase.

Economies do not grow because government makes it costlier and more difficult to produce goods. They grow because entrepreneurs find ways to produce more goods using methods that allow them to use fewer and less-costly factors, thus allowing the freed factors to be applied elsewhere.

If what Reich says is true, then most Americans have a lower standard of living than they had 30 years ago. That clearly is not the case, although if Reich were able to implement his plan, standards of living definitely would fall for all but the wealthiest.

An economy is an entity that allows people to produce goods to satisfy their needs. It is not and never should be a moral theatre to be manipulated by politicians and their ilk.

Why does anyone take what Reich and Krugman say seriously?

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About the Author

- Writer, Co-Founder and Executive Editor of The Global Dispatch. Robert has been covering news in the areas of health, world news and politics for a variety of online news sources. He regularly writes about infectious disease news for Examiner.com and administers the Outbreak News section of The Global Dispatch.

Displaying 4 Comments
Have Your Say
  1. Not one critique of an issue, just attacks on the person, you folks are better than that.

  2. Jason says:

    I know who Robert Reich is and his resume, and I’m aware of John M keynes and his resume, who are you Harriman?

    What school of economics did you attend? Where does your credibility on this subject come from?

    • Robert Herriman says:

      Jason,
      Thanks for inquiring. No I didn’t attend a school of economics; however, is that a prerequisite in understanding economics, really?
      I may not be degreed in economics, but I also didn’t suggest minting a $1 trillion coin to deal with the debt ceiling.
      Who lacks credibility?

  3. Phil says:

    Why would anybody take what you write seriously when you obviously have no clue as to what you are talking about? You and your opinions are dangerous.

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