The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan.
By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said.
Economist Bob McTeer says the following about this policy:
The announcement did not say the government would try to get the best deal for the taxpayer. The goal is more nearly the opposite of that. The goal is the best deal for labor at the expense of the taxpayer. The means is not less spending but more spending, higher deficits, and more debt. It’s bizarre.
Bizarre, yet vaguely familiar. The sub-title quote (“In the end, businesses had to choose between lowering wages and shutting down. Often they shut down.") is from Amity Shlaes’ book on the depression, The Forgotten Man, page 94 of the paperback edition. During the depression, both the Hoover and Roosevelt administrations sought to deal with deflationary forces by dealing with symptoms rather than causes. If wages are falling due to weaker demand for labor relative to supply, prop them up. If farm prices are falling, destroy some crops and drown some piglets.
Measures like the Davis Bacon law are destructive enough during good times. Measures like using government contracts to prop up wages during bad times—high unemployment—are . . . well, bizarre. One would think that getting the best deal from the expenditure of taxpayer dollars would be a no brainer. Apparently not these days. I, for one, will stick to the advice given in the classic Texas book, Don’t Squat with Your Spurs On: “If it don’t make sense, don’t believe it."
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