I wanted to dissect the economic piece of Hillary’s speech, but thus far the text is not available. So I’m going by a slide from her web site. I come neither to praise nor condemn, but to illuminate. Of course in general the reliability of campaign promises is a long-standing joke. Nevertheless, they are signals that merit interpretation.
I don’t want to get sidetracked into the problem of how to pass anything good when the House of Representatives is controlled by loons. HRC will have to answer that question herself. My interest in this post is in policies that may not have immediate practical political relevance. You have to start by imagining things for them to have a chance in the real world. The Teabaggers understand that. In the states, they’ve done well for themselves crippling trade unions, gutting public education, brutalizing welfare recipients, and making abortion extremely difficult to obtain. Their vile dreams are coming true.
When it comes to promises, some need to be taken more seriously. There are clichés, but there can also be real markers that stick to the candidate and have some power when they are invoked later. Taking a look at the economic component of Ms Clinton’s “Four Fights” (“Building an economy for tomorrow”), we have the following bullet points (quoted verbatim, numbered by me):
1) Reward businesses that invest in long-term value;
2) Rewrite the tax code so that it rewards hard work and investments at home;
3) Give new incentives to companies that give their employees a fair share off the profits;
4) Unleash a new generation of entrepreneurs and business owners;
5) Restore America to the cutting edge of innovation;
6) Make America into the Clean Energy Superpower;
7) Connect workers to their jobs and businesses with 21st century infrastructure;
8) Establish an infrastructure bank;
9) Make college affordable to all;
10) Provide lifelong learning for all workers.
1) I’m only a Ph.D. economist. I have no idea what “long-term value” is supposed to mean here.
2) How? If we’re shifting the tax burden away from labor to “reward hard work,” it has to go to capital, posing a problem for rewarding investment. If we’re reducing taxes on both sides, we’re now into bankrupt 1980s style supply-side economics. (Side note: rewarding investments ‘at home’ instead of in, say, Malaysia, raises all sorts of technical problems.)
3) What incentives? Tax cuts? What’s a “fair share”? How do you replace the revenue? Maybe Paul Ryan knows.
4) Let’s note that most business start-ups FAIL. It’s wonderful that some are willing to take the risk, but the well-being of most depends on what they are paid working for somebody else. In any case, do I have to ask how this happens?
5) The “cutting edge of innovation” takes the prize in this list for vagueness. The vaguer the promise, the less vulnerable the promiser is to pressure later on.
6) This is one of the better ones, which I’m all for, since the results or lack thereof are relatively tangible, hence more pressure is implied on the promiser. Kind of like a promise to close Guantanamo. It’s pretty clear whether it gets done, or not, relatively speaking.
7) I like this one too. It can only mean more and better rail systems and broadband. Once again the results are susceptible to monitoring by ordinary citizens. As in #6 I’m not worried about finance, since such investments are best financed by borrowing, which for the Federal government is absurdly cheap these days.
8) I’m all for an infrastructure bank. Will it have any money? From where? If you’re promising a bank you’re promising that some capital will be available. Will the Gov be raising money by selling bonds to rich people that get favorable tax treatment or benefit from guarantees against default? That would take some of the juice out of this item. (Note: politically under most any circumstances, it’s hard to see any Congress surrendering investment decisions to an independent agency.)
9) This is good. I like the idea of hammering on this problem, even with no specific fixes, since it raises the odds of some remedies later.
10) Lifelong learning is just yesterday’s mashed potatoes. I don’t see a huge role for the government here. We might expect yet another tax credit of some type. What we really need is a tight labor market. That will cause wages to rise and pressure business firms to pay for worker training.
In summary, there is some hot air, some potentially wrong directions, and some constructive themes. Naturally, compared to any Republican candidate, this is all mother’s milk. More interesting would be how it plays in comparison to Bernie Sanders’ Twelve Point Program. A subject for another post.