The Democrats will lead America into Britain's disastrous post-WWII economy
On Wednesday, Alexandria Ocasio-Cortez said that, to protest economic insecurity, Americans should refuse to return to work. This sounds merely stupid, but there's a sinister end goal here. We're already seeing that high unemployment benefits are creating a disincentive for low-income earners to return to work. This is a step on a path to soft socialism, which I've seen in action and know to be disastrous.
In the very early 1980s, when England was still a soft-socialist country, I lived there as a student. One of my English friends had worked at the local zoo the summer before college, cleaning up after elephants. It was an unpleasant experience. His twin sister spent the summer at home, watching soaps on television and — and this is the crucial part — collecting dole money.
At the end of the summer, after taxes, the sister had more money than my friend did. He learned a valuable lesson. He never worked again during college, and, after he graduated, he left England for a country with a lower tax rate.
For the first two decades after World War II, Britain's economy slowly improved. A rising young generation, new technology, and stable employment all helped to mask fundamental weaknesses in the economy.
The socialist economy inevitably began to fail, though, thanks to a combination of high debt, high taxes, and high welfare payments. The taxes either drove productive people out of England entirely or made the dole a reasonable alternative to working.
By the 1970s, Britain was drowning in stagflation. My friend's experience was just a microcosm. No wonder a desperate people elected Thatcher.
Alexandria Ocasio-Cortez and her ilk are too ignorant to know about Britain's miserable experience with its soft socialism. They envision a high-functioning economy with "rich" people working so that poor people can get a living welfare payment. They see the Wuhan Virus as the springboard for achieving this goal.
Last month, Congress legislated $600 per week in unemployment payments, lasting for four months. You can assume that the Ocasio-Cortez-led Democrats will seek to renew this indefinitely.
The follow-up to the unemployment benefits was predictable: low-wage earners don't want to work. A friend in the home health care industry told me last week that she cannot re-hire aides because their unemployment benefits are better than their wages.
In San Francisco, the Boba Guys, a chain selling bubble tea, wants to re-open but is having a hard time getting workers back. While some employees are staying away from fear, at least one honestly admitted liking the dole:
With the Hayes Valley store now ramping back up, the San Francisco-born bubble tea operation will also re-open its commissary kitchen in Brisbane today to produce drink essentials like jams, syrups, marmalades, etc. According to Chau, half of the employees he tried to re-hire in both Boba Guys' Hayes Valley location and the commissary kitchen were "not comfortable coming back." Most were now sheltered in place with parents or grandparents and didn't want to risk their health.
Chau, who along with co-founder Bin Chen is still not taking a salary, said at least one employee said they weren't returning because unemployment benefits were too good to give up. (Emphasis added.)
In Washington State, a spa owner is also finding it impossible to get her employees back:
CNBC reported that Jamie Black-Lewis received two loans from the PPP, one for $177,000 and the other for $43,800, to help her two spas in Woodinville and Bothell. Black-Lewis previously had to stop paying all 35 employees and herself due to coronavirus shutdowns forcing "non-essential" businesses like spas and hair salons to close.
Black-Lewis held a virtual employee meeting to explain that everyone would start receiving paychecks again thanks to the loans, thinking her staff would be ecstatic to get their income back. Unfortunately, due to the flat $600-a-week increase in weekly unemployment benefits included in the $2.2 trillion coronavirus relief bill, it meant some of her employees would earn more being unemployed than if they were to get their jobs back.
It's against this backdrop that Ocasio-Cortez is demanding that people refuse to work:
"When we talk about this idea of re-opening society, you know, only in America does the president — when the president tweets about liberation — does he mean go back to work. When we have this discussion about going back or re-opening, I think a lot people should just say 'no' — we're not going back to that," she said.
"We're not going back to working 70-hour weeks just so that we could put food on the table and not even feel any sort of semblance of security in our lives."
There's no doubt that the 22 million Americans currently unemployed badly need help. However, payments that are too big or go on too long spell disaster for the American economy. The British experience shows that, when people have no incentive to work, the money runs out, and then there's nothing left but reliving Britain circa 1977. The Ocasio-Cortez Democrats are leading us to disaster.