Higher Wages Through Government Contracts: Bizarre, Yet Vaguely Familiar

by: Bob McTeer

“In the end, businesses had to choose between lowering
wages and shutting down. Often, they shut down.”

Let’s see now. Government spending is out of control. So are budget deficits and debt generation. The taxpayers are in revolt. Tea parties are dominating the political scene. Yet, despite all this, we get an announcement that government contracts will be used to raise wages and other employee benefits. 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 subtitle quote above 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.”

It don’t make sense.