Congressional Economics

Congressional Economics
By Ryan Young & Jacqueline Otto on 5.10.11 @ 6:09AM

The House of Representatives is not exactly a bastion of economic knowledge. But it can be a goldmine for economic educators if they know where to look. Illinois' 2nd District is a good place to start. Containing parts of Chicago and its suburbs, the district is currently represented by Rep. Jesse Jackson, Jr.

He recently gave two speeches on the House floor that inadvertently teach important economic lessons. In the first speech, delivered on March 2, Jackson teaches us that you can't legislate prosperity. (You can watch it here.)

He argues for a Constitutional Amendment guaranteeing everyone the right to a decent home. Jackson asks, "What would that do for home construction in this nation? What would that do for millions of unemployed people?"

The Constitution should also be amended to guarantee the right to decent health care. Jackson implores, "How many doctors would such a right create?"

Education needs an amendment, too. "How many schools would such a right build, from Maine to California?" Jackson goes on to wonder how many jobs would be created by giving every student an iPad and a laptop.

Suppose that poverty really can be abolished by passing a few laws. Jackson isn't going nearly far enough, then. The Constitution should guarantee everyone not just a decent home, but a mansion filled with servants to take care of every need.

Everyone should have the right to not just a doctor's visit every 6 months, but a cadre of specialists with access to the latest technologies and tests. This would be a boon for life expectancy.

And why only an iPod and a laptop for children? They deserve supercomputers! And the right to a Harvard Ph.D. Such a law would give America the most educated population in the world; though it would probably know the least.

Congress might as well pass a law guaranteeing an above-average lifestyle for all Americans. Jackson has the right intentions, but results are more important. Clearly a law guaranteeing a decent living standard won't give the results he's after.

Jackson's second speech, delivered on April 15, teaches us that wealth doesn't come from jobs. It comes from innovation. (That speech is online here.)

Jackson says that the iPad -- which he praised just six weeks earlier -- has cost thousands of jobs. "Now Borders is closing stores because, why do you need to go to Borders anymore? Why do you need to go to Barnes & Noble? Buy an iPad and download your newspaper, download your book, download your magazine," he said.

Congress's top priority should be job security. Publishing companies and paper companies are under attack. Government needs to protect them.

If this is the way to full employment, then Jackson is again being too moderate. In fact, Congress can guarantee full employment by passing a single law: just ban the use of farm machinery. Everyone will have a job -- as a subsistence farmer. That's how we know that the number of jobs doesn't have much to do with actual living standards.

Wealth comes from doing more with less. The iPad gives people access to more information while using fewer resources. When competition eliminates legacy industries like paper and publishing, it releases those resources into growing sectors instead.

Supercomputers for children? Subsistence farming? These reductiones ad aburdum show how unrealistic Jackson's economic beliefs are. They also show the way what is right.

Jackson's first speech shows that giving people a legal right to a product does not magically create an abundant supply. People need economic freedom to be able to react to ever-changing wants and needs, let alone supply them.

His second speech says that innovation kills jobs. By simply taking him seriously, we can learn why that isn't true. Yes, new technologies and processes often put older industries out of business. But this is not a bad thing. The economist Joseph Schumpeter described innovation as "creative destruction." Jackson ignores the creative part of that process at our peril.

Congress might be economically illiterate. But the rest of us can -- no, we must -- learn from its mistakes.