Political economist Robert Reich has produced a series of videos that purport to educate the public on - well – “the dismal science”. According to Wikipedia, “‘The dismal science’ is a derogatory alternative name for economics coined by the Victorian historian Thomas Carlyle in the 19th century”, adding, “Many at the time and afterward have understood the phrase in relation to the grim predictions drawn from the principles of 19th century ‘political economy’’.

Toward the end of the 19th century the term “political economy” was replaced by the term “economics”, with British economist William Stanley Jevons expressing the hope that it become “the recognised name of a science.” I’m afraid that Jevons’ hopes up to this point have not been realized. Again, according to Wikipedia, “Today, political economy, where it is not used as a synonym for economics, may refer to very different things, including Marxian analysis….”

Which brings me back to Robert Reich — whom I would call a political economist. An extremely political economist. He has endorsed Bernie Sanders for President. Bear in mind that like his left leaning colleague, economist Paul Krugman, Reich is a multi-millionaire, although Reich is reputed to be the wealthier of the two. With apologies to Jerry Seinfeld, not that there’s anything wrong with that.

Over the past holiday season, Reich released a video and posted it on Facebook with this intro: “How will you cope with your right-wing relatives over the holidays? Check out our latest video for a survival guide.” In the video, Reich’s “right wing relative” is Uncle Bob, “brilliant businessman I’m sure he is”, says Reich.

Says Reich about Uncle Bob, “every holiday season I hear about this job creator stuff” but “Uncle Bob can only hire people if he has customers…the real job creators are the vast middle class and the poor who’s spending motivates companies to add jobs”. Yes, he really says that.

Astoundingly, Reich, who calls himself an economist, completely misses the role of the entrepreneur in the process. According to (18th century French economist Jean-Baptiste) Say’s Law of the Markets, production is the source of demand. Per Investopedia’s definition: “when an individual produces a product or service, he or she gets paid for that work, and is then able to use that pay to demand other goods and services”. It continues, “Say’s law is frequently misinterpreted [as] ‘supply creates its own demand,’ which is evidently false. If it were true, anyone could do whatever they wanted for a living and be successful at it”. Which is something that Marx believed.

Says law says that production must come first in order for consumption to occur, Robert Reich notwithstanding. You can’t consume something that hasn’t been produced. In order for production to happen, an entrepreneur, like Uncle Bob, needs to make it happen. That involves risk - a risk that may or may not pay off. The economic landscape is littered with bankrupted entrepreneurs and/or established companies that made products and services that consumers didn’t want. Consumers don’t create jobs, but they can destroy them. And so they should if the product isn’t useful.

Apparently Reich doesn’t realize that the consumers never even knew they wanted an iPhone until Apple produced one. Otherwise, according to Reich, pure consumer demand (or greed) would have created the iPhone out of thin air. By magic. When Reich talks about consumers as job creators, he’s actually taking a more corporatist approach. He’s referring to established businesses - perhaps even big businesses. But even there, if the producer miscalculates the financial consequences for the business can be catastrophic.

Miscalculations on the part of government don’t suffer the same consequences - at least for those making the miscalculations. Those consequences are borne by the taxpayer. Take prevailing wage - which was repealed by the West Virginia legislature in the current session. Enacted in the 1930s, prevailing wage was a set of fixed prices for labor set by the state government for government projects. Contractors were bound to pay those rates for labor in all government contracts.

The problem is that Government is not particularly good at pricing. In fact, government is incapable of ascertaining a true market price. This is something that they should leave up to business people/entrepreneurs like Uncle Bob. That is their field of expertise. Putting a project out for bid and then fixing the price of the labor component defeats the purpose. As a result, as Delegate John Overington (R- Berkeley) has said, with regard to the construction of roads, the taxpayer was paying for a mile of road, but only getting 7/10 of a mile.

I remember attending a meeting back in 2010 down in Charleston regarding prevailing wage. There were members of the legislature, the West Virginia Department of Labor and others. One consultant offered that West Virginia was at the bottom of the rankings with regard to per capita income and that the prevailing wage law is designed to mitigate that. The problem with that line of reasoning: the prevailing wage law in West Virginia was enacted in the 1930s. In 1934 West Virginia was 30th in the nation in per capita income. It wasn’t until after its passage that West Virginia fell to the bottom.

Clearly the prevailing wage law did not work as intended. That’s why it belongs in the Robert Reich/ Bernie Sanders School of economics.