Economist Morici: Govt Policies Creating 'Disincentives' to Work

Monday, 30 Jun 2014 03:34 PM

By Sandy Fitzgerald

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Forecasts may show the economy is looking better, but in reality it has made very little growth, and "these are not great times," University of Maryland economist and business professor Peter Morici said.

He told Newsmax TV's "MidPoint" host Ed Berliner on Monday that he blames the media in part for the rosy outlook, but there are many factors that are keeping people from being interested in going back to work and building the economy back up.

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"Increasing healthcare costs and entitlements all over the place is creating enormous disincentives to work," Morici said. "The marginal tax rate's about 50 percent — and not just of you and me, but also for people who are getting food stamps or whatever they call them now that they're on a card, subsidized healthcare, a negative income tax,and so forth, the earned income tax credit."

And as a result, Morici said, many people don't want to work more than part time because they believe they will lose their benefits.

"I've even gotten letters from people saying, 'Why are you against long-term unemployment benefits? I can't go back to work with the benefits I already have. I just need them topped up a bit,'" he said.

And while union leaders and others are calling for raising the minimum wage, the increased buying power that could come as a result would be cut into by "a big subtraction" that includes layoffs, rising prices, and inflation.

"Overall, the pie, the real economy would shrink," said Morici. "You can't get around that. You just absolutely can't get around that. Also, we're in a global competitive environment and simply raising the wages that we pay less skilled workers in America makes them less competitive with people abroad and negative things happen to them."

The economy is also being hindered by union intervention that keeps businesses from easily opening, he said.

"Stuff that takes three to six months in China takes a year to two years here," Morici said. "That's just terribly costly, and it's encouraging employers to go abroad. Not all of them."

President Barack Obama, Morici said, "is doing his very best to put the jack boot on any kind of initiative in those areas and after all, who gets those jobs? There are people in North Carolina, South Carolina, that might work in a furniture factory or an auto parts factory in southern Ohio or, God forbid, West Virginia. They don't vote for Democrats anyway."

Instead, Morici said, the Obama administration chooses to give people government benefits.

"You make it too expensive to create jobs, and then you try to create clients out of the people that don't have them," said Morici.

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