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Chapter 7: Trumponomics

FISCAL POLICIES AND UNIONS
There has been a decline in private unions (unions
that bargain with businesses), but an increase in public
unions (unions that bargain with governments). Private
unions have limited power because firms need to make
a profit. Public unions have more bargaining power
because the government does not have to make a profit
and politicians can raise taxes to pay for union benefits.
Because of this, state laws hold private and public
unions to different standards, placing more restrictions
on public unions than on private unions.

AUSTRIANS AND FISCAL POLICIES

Draw a line and label it “security floor.” This line
represents a financial level by which the government
will not allow most people to fall. Draw another line
above this and label it “success ceiling.” Where does
the money come from to maintain the security floor? It
has to come from the ceiling. When the security floor
rises too much, growth diminishes as the success ceiling
falls.
Austrians believe that if we had a king who had
absolute power, who possessed all knowledge, and who
always made the right decisions, then discretionary
fiscal policies would work. However, we live in a
democracy with 535 members of Congress (100 serve
in the Senate and 435 serve in the House of
Representatives) who have imperfect knowledge and
who are motivated by politics and not economics.

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