Someone might have to sit down with former Secretary of State Hillary Clinton and have the conversation with her — the one about where jobs come from.
At a recent political event in Massachusetts — a state represented by the populist liberal and potential 2016 Democratic presidential rival Sen. Elizabeth Warren — the former first lady made a puzzling utterance about how the economy works. “Don't let anybody tell you that it's corporations and businesses that create jobs,” she said. “You know, that old theory, trickle-down economics. That has been tried. That has failed. It has failed rather spectacularly.”
Clinton could be forgiven for believing such a thing — or for thinking that jobs really come from colleges and other institutions that can pay her six-figure speaking fees.
But she has since claimed that she simply misspoke — she meant to say the lowering of taxes on businesses and corporations does not create jobs. That proposition is more respectable, if debatable. But the fact that her original comment seemed like a plausible but clumsy attempt to move leftward for the 2016 presidential primary is a slightly jarring sign of the state of Democratic Party politics.
Moments before her comment quoted above, Clinton asserted that a government-mandated hike to the minimum wage is a completely victimless exercise that causes no job losses. And that comment does indeed imply that there is some separate source of wealth — the promise of which generates jobs and wages for workers — other than the private sector.
It almost seems trivial to note that this is false — that businesses are ultimately responsible for the creation of all jobs, including government jobs — but it has also become such a staple of Democratic campaign rhetoric this year. For example, a rise in the minimum wage is not just a “raise for working families” — it is a burden that one group of people places upon another, and it comes with trade-offs — in this case, the loss of up to one million jobs, according to the non-partisan Congressional Budget Office.
The private economy is what people do — it is the ecology of human survival, and it predates government. Governments were created to serve private commerce by protecting it from threats (including the dishonesty of its own participants). It is therefore fitting that the private sector accounts for 84 percent of American jobs.
But one must remember that the private sector also accounts for 100 percent of the wealth America creates. Meanwhile, government is funded exclusively through various taxes on private production and accumulation of this wealth — and that includes any taxes that fall upon the portion of privately created wealth that government collects and then uses to pay its own employees.
This insight should be brought to Clinton's attention, because Americans cannot afford to have one of their two major political parties reject basic economic principles. It's perfectly acceptable and expected for liberals to disparage “trickle down” economics and to insist on a robust welfare state. But it is quite another thing for politicians to pretend that government can create or run industries or set wages without simply getting in the way and causing unintended consequences.