Written by Ralph R. Reiland
People are still debating the old riddle: “Does it make a sound if a tree falls in the forest and no one is around to hear it?”
To apply that riddle to a current occurrence, what if Hillary Clinton reveals herself to be excessively nonsensical and anti-business by declaring that businesses don’t create jobs and then the top three Sunday political shows — NBC’s Meet the Press, ABC’s This Week, and CBS’s Face the Nation — don’t even mention her inane statement? Does that mean Hillary didn’t make a sound?
“You know that old theory — trickle-down economics,” she continued. “That has been tried. That has failed. It has failed rather spectacularly.”
Those anti-market, anti-business comments are reminiscent of Mrs. Clinton’s haughty reply in 1993 when she was told her Rube Goldberg health plan could bankrupt small businesses in America. “I can’t be responsible,” she declared, “for every undercapitalized small business in America” — even if it’s her proposed mandates and fines that are the source of the undercapitalization.
There are multiple levels of fundamental misinformation contained in Hillary Clinton’s aforesaid economic analyses.
First, During President Reagan’s “trickle-down” economics the nation’s unemployment rate dropped from 7.1 percent in 1980 to 5.5 percent in 1988. Similarly, the inflation rate dropped from 10.4 percent in 1980 to 4.2 percent in 1988. Overall, double digit misery turned into job growth and across-the-board gains in inflation-adjusted income.
Second, the vast majority of U.S. workers are employed in jobs that were created in the private sector, as reported in a March 2014 Congressional Research Service publication, Selected Characteristics of the Private and Public Sector Workers: “In 2013, public sector jobs accounted for 16.0 percent of total employment.”
That means that 84 percent of total jobs in the U.S. economy are created in the private sector. In fact, the 84 percent actually understates the role of the private sector in the overall economy’s job creation since the taxes paid by private sector companies and their employees supply the bulk of the funds that pay the salaries and benefits of those employed in the public sector.
Maggie Haberman, a senior political reporter at Politico, reported that “some Democrats who back Clinton said privately she appeared to be trying too hard to … adjust to the modern economic progressive language, much in the way President Barack Obama did during a campaign rally in 2012, when he said, ‘You didn’t build that.’ ”
Obama’s message to those who built businesses and created jobs: “Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen.”
In point of fact, the top 10 percent of U.S. income earners in 2011 paid 68 percent of all federal income taxes while earning 45 percent of all income. Those earners can say, correctly, that they not only built something, built businesses, but that they also pick up a disproportionate share of the tab for the roads and bridges.
Ralph R. Reiland is an associate professor of economics and the B. Kenneth Simon professor of free enterprise at Robert Morris University in Pittsburgh.