The WaPo Sounds a Note of Caution on the Dems’ Economic Agenda

By November 17, 2006General

Sorry we’re a day late, but yesterday’s lead editorial in the WaPo was quite good, cautioning the Democrats against some very bad economic prescriptions as they move forward. Said the Post:

“…[A] populist drive to impose a surtax on energy companies will guarantee higher energy prices by deterring investment in new sources of supply. A populist attack on pharmaceutical companies will produce a lobbying war without solving the problems of health care. The real waste in the system is not that people overpay for drugs, but rather that they consume tests and other services without regard to their cost.

As for economic nationalism, …restricting imports would push up prices for people in the service sector, which includes hotel janitors, fast-food workers and other modestly paid groups, so the net effect on poor and middle-income families would probably be negative. Restricting immigration sounds like a good way to push wages up…But economic studies find this effect is either negligible or nonexistent. Restricting the supply of low-wage labor may simply cause labor-intensive industries to shift abroad, or it may drive employers to buy extra tools and machines and so get by with fewer workers. Either way, a reduction in the supply of workers may be matched by lower demand for workers, which would explain why U.S. cities without immigrants haven’t experienced more wage gains than cities with lots of them.”

We don’t agree with everything they say in this piece, but we think they happened to be right on the above points. As we said, a cautionary tale for the Dems about to take the reins of government. Let’s hope they’re listening.