Hillarynomics, Cont’d

giphyWe are being told Ms Clinton will deliver a major economic policy speech tomorrow. What are we in for, and what should she say? A preview is offered here, though we’ve already had a preview of the preview (scroll down to here, then scroll up for the assorted installments of my Clinton oeuvre).

Here are some categories for statements that aim to make sense of the whole thing.

1. Choice of themes

2. Implicit principles and their implications

3. Relatively binding policy commitments

4. What do we really need to hear?

Themes. Choice of themes reflects what the candidate would like you to think he or she places high in importance. As such, they are potentially foundational to #2 and #3, or possibly just hot air.

Principles. Rhetoric about policy always rests on deeper principles, not necessarily made explicit. These principles may be constructive or specious. Whether they are politically effective is a different matter, one beyond the scope of this note.

Commitments. Some promises are relatively explicit and their fulfillment or lack thereof is observable. Others may be empty. For instance, a call for closure of Guantanamo is relatively serious, since everyone can see whether it happens or not, and it is under the power of the president. By contrast, a call for more infrastructure while good on the merits is weak, since the extent to which it actually happens is not obvious, and because failure to follow through can be blamed on the loons in the House.

Priorities. Some matters are real priorities, on the merits, even if they are very difficult to put across politically. A real leader would talk about such things.

Now we’ll consider what is being reported about the Clinton speech in light of this framework.

The first of these in the article is middle class incomes and wage growth. This is fine as a problem, though one test is whether a Republican could easily put forward the same issue. In this light the theme is weak. All politicians want you to get paid more. Inequality is more to the point. Republican efforts to encroach in this dimension have been more comical than substantive. I went into detail on that in prior posts. The summary is that HRC is saying relatively little of interest to the poor, and the tax the rich bits are more like sound bites than far-reaching tax policy. Aggrandizing labor is central to addressing inequality.

In principle the remedies should follow from the causes. The article says Clinton’s causes are “globalization, automation, and even consumer-friendly ‘sharing economy’ firms like Uber and Airbnb.” There’s something to globalization, very little to the vaunted sharing economy, and nothing at all to automation. On balance this all is about 80 percent bullshit. Not an auspicious start. The real cause is a forty-year assault on organized labor, facilitated by trade policy that is indifferent to the interests of domestic production workers.

I’ve discussed her purported remedies before, which include an infrastructure bank (will it have any money? from where?), small business tax cuts (why oh why?), energy projects (see ‘money,’ above), and child care (ditto). Why any of this would generate ‘good paying jobs’ as opposed to the other kind is left to the imagination, though some job is usually better than no job. The other problem is that all of this depends on Congress, the public tolerance for more government spending, and the disposition of the deficit. Bill Clinton said the era of big government is over. What will HRC say?

More politically relevant are her regulatory measures that I’d say have more political juice. These include paid family leave, medical leave, and the minimum wage. A tougher lift is supporting the right to organize unions. Somebody has to ask why this promise has been repeatedly abandoned by Democratic presidents.

The most rotten apple in the barrel is the talk about incentivizing ‘long-run thinking’ by corporations. I’m so old I can remember chatter about ‘patient capital’ from back in 1992. This translates into new tax cuts for corporations, something also supported by the Obama Administration. Message to HRC: it’s hard to make business firms do what they don’t want to do.

I am all for putting forward proposals that will cost money. The credibility of these proposals depends in part on the fiscal policy (deficit) stance, where HRC so far has been reticent. A more pragmatic issue is what we can expect for spending proposals in the current Congress. There is somewhat more weight deserved for areas where the president has more scope for independent action.

Everybody is out to uplift the middle class, as far as rhetoric goes. The Clinton platform is still light in this dimension. There is somewhat more beef in the inequality discussion. Both areas lack any meaningful treatment of causes. This brings us to what a candidate ought  to be talking about, as far as merits go.

There are immediate and somewhat less immediate hot buttons that ought to be pushed. All of them are germane to the “middle class” and inequality. In the immediate term, the missing themes are:

*  The Fed should be jawboned out of raising interest rates this year, since the labor market and wage growth are still weak;

*  Puerto Rico needs help this week, but that should not obscure the more general fact that the states have yet to recover from the Great Recession. It’s time to start talking about general fiscal assistance, A.K.A. ‘revenue sharing.’

*  The U.S. should be weighing in with the Germans to help Greece, rather than flush it down the  toilet.

Somewhat less immediate but of more lasting relevance:

*  The decline of living standards points up the need for more social insurance, which in the same breath reduces inequality.

*  The public sector — Federal, state, and local — needs to be restored, minus the bloat in the defense and homeland security establishments, which by the way also reduces inequality.

*  Getting serious about climate change will require more than a scattering of clean energy projects. We will need carbon taxes, international diplomacy, and probably more foreign aid to enable under-developed nations to leapfrog fossil fuel dependence.

*  ObamaCare lives, now the challenge is to increase the ACA subsidies and further expand Medicaid and Medicare.

*  Reform welfare reform.

*  A jihad against Wall Street, in terms of regulation and the financial transactions tax.

None of this should be taken as a political criticism. I don’t doubt that Clinton Inc. knows more about winning the election than I do. These arguments are directed at activists outside the Clinton machine.

My famous friend Jared Bernstein has a rosier view than I. He says diagnosis is important, but in the HRC story I don’t see a good diagnosis, as I indicated above. The increase in inequality is not a diagnosis, it’s a symptom of something else. Globalization/automation/Uberismo is mostly baloney. The promises on things that cost money depend on unstated views on revenues, budget reallocations, and deficits. On balance, HRC still needs some good stiff criticism, not because it will change her mind, but because it will improve the minds of her supporters.

Also, Jared, my dog could eat your cat:



Hillarynomics, Cont’d — 6 Comments

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