“Affordability” is one of the issues foremost on Minnesotans’ minds as they head to the polls this November, and candidates have been offering their solutions. Last week, the Minnesota Reformer reported: “Peggy Flanagan boosts affordability message with pledge to back labor’s populist economic agenda.” Alas, populism has often made for poor economic policy in recent years.
“Flanagan is the third U.S. Senate candidate to sign on to the working-class commitments, following Democrats Troy Jackson in Maine and James Talarico in Texas,” the Reformer reports. “The commitments were developed locally through surveys with workers and vary from state to state.”
Irrelevant ideas
But it is hard to see how many of Lieutenant Governor Flanagan’s commitments have anything to do with affordability. “The 12 “Commitments to working Minnesotans” span a broad swath of populist economic proposals,” the Reformer explains, including “eliminating the income cap on Social Security contributions that winds up lowering taxes on the wealthy” and “banning elected officials from trading individual stocks…”
Rarely mentioned by those who advocate “eliminating the income cap on Social Security contributions” is that Social Security payouts are also capped: is this cap also going to be eliminated? If not, how can anyone continue to say that recipients are simply getting out what they paid in?
Neither is it clear how “banning elected officials from trading individual stocks” — an admirable policy — will make one single thing more “affordable” for one single Minnesotan.
Bad ideas
“[C]reating a public option for health insurance” might help with affordability if it is cheaper, but how would these savings be achieved?
Perhaps by offering lower quality healthcare, as in Canada or the United Kingdom. Whenever someone is asked to list the positives of Briain’s National Health Services, the fact that it is “free” is always offered before any suggestion that it is “good,” which ought to tell you something.
Another way a public option could be cheap would be by forcing healthcare providers to accept lower payments, as they do for Medicare. In this case, the difference would have to be made up from either taxpayer subsidies or hikes in premiums on private plans, as is happening in Minnesota, either of which would be a blow to affordability. There really is no such thing as a free lunch.
Oddest of all Flanagan’s proposals to aid affordability is “raising the federal minimum wage from $7.25 to $17 an hour.” A wage is a price and hiking prices is not how you lower prices.
Ignorance
Perhaps Flanagan’s faulty cures are the result of a faulty diagnosis.
“The rich keep getting richer, while the rest of us are told to settle for less, to stay quiet, and to accept scraps. That’s Donald Trump’s America,” the Reformer reports her as saying. That is not what Census Bureau data show.
As Figure 1 shows, in 2025 the share of American households with incomes under $35,000 annually in inflation adjusted numbers hit its lowest figure since records began in 1967 — 19.2% — while the share with incomes above $100,000 annually hits its highest share — 44.7%.
Figure 1: Households by Total Money Income
As Figure 2 shows, between 2016 and 2025 — what one might call “Donald Trump’s America” — the incomes of the 10th percentile of American households — the bottom 10% — grew by 12.4% in real terms. True, the incomes of the top 10%, the 90th percentile, grew by 17.1%, but it isn’t clear that reducing that rate would do anything to boost the rate of growth in the 10th percentile. Either way, it is certainly not true that “The rich keep getting richer, while the rest of us are told to settle for less.”
Figure 2: Real growth of household income at selected percentiles, 2016 to 2025
Flanagan is, to be generous, grossly misinformed about the true state of income in the United States. All Americans are getting better off and all Americans can continue to get better off. The enrichment of one group is not a result of the impoverishment of another. Sound policy must be based in reality, not tired old cliches.