The Economics of Hillary Clinton
September 22, 2015
In a recent Labor Day speech to union workers in Illinois, Hillary Clinton declared that if she is elected president of the United States, she would make sure that “some employers go to jail for wage theft and all the other abuses they engage in.” Her incendiary comments were obvious “red meat” for the audience, but it also helped to clarify her own economic views and how she would govern if elected.
Even though Clinton is somewhat mired down in a scandal involving her email servers used while she was at Foggy Bottoms, it seems that she will survive it — as she and her husband have survived every other scandal that has defined their political careers — and be the official Democratic Party nominee. Given the current state of US politics and given the fact that there doesn’t seem to be a Republican challenger who can stand up to her star power, at least from this current vantage point, it seems Clinton will slide into the office for where she has been “destined” since 1992.
Given that there is a very good chance Clinton will march into the White House in January 2017, we should scrutinize her economic beliefs and her proposed economic policies, as we may well have to be living them in less than two years. Not surprising for people interested in economics of liberty (or, better put, the economics of prosperity), Hillary’s policies will disappoint and disappoint greatly.
If one combines that Clinton line with other things she has said about economic policy, as well as what is written on her website about what she calls “the economy of tomorrow,” a picture emerges that does not bring confidence to anyone who understands the role freedom plays in a market economy. Like Bernie Sanders, whose policies and viewpoints I already have covered, Clinton takes a hardcore statist approach to economic policies.
When she was First Lady, Clinton spoke of “channeling Eleanor Roosevelt.” In the current campaign, at least what she declares on her website and in her stump speeches, she also channels Eleanor’s husband, Franklin. Although Clinton claims that her proposals are part of “the economy of tomorrow,” the hard reality is that they essentially are the economy of the New Deal, and the part of the New Deal that created so much damage that a Congress dominated by Roosevelt’s own party repealed much of it. Like her primary opponent Bernie Sanders, Clinton is trying to revive a second New Deal.
While Franklin Roosevelt placed his policies under the umbrella of the “Four Freedoms,” Clinton has characterized her proposals under the aegis of the “Four Fights” in which she promises to “fight” for this and “fight” for that. She especially claims to be fond of the American middle class, so we should see how her plans advance middle-class prospects.
Actions vs. Rhetoric
Before examining Hillary Clinton’s economic proposals, however, I remind readers that this is not another screed to satisfy the Hillary-phobia Republicans and what they have expressed in the past two decades. This opinion piece does one thing: scrutinize her economic ideas, and allow readers to make their own decisions about her candidacy.
We also need to separate Clinton’s rhetoric from her own actions, and especially the economics of her current life, for there are no greater champions for what is derisively called “crony capitalism” than Clinton and her husband, and perhaps no two people in current public life have benefited from this economic hybrid more than the Clintons. Hillary Clinton will champion the middle class in her rhetoric, but the dynamics and the history of crony capitalism tell us that the middle class and the poor suffer the most from such an arrangement of political economy.
The Crony-Capitalist Clintons
(To the credit of some on the Left, a couple of Progressive outlets have exposed Clinton’s close ties with the firms that dominate an industry that she denounces in her campaign rhetoric.)
When Bill Clinton left office, he and his wife essentially had a negative net worth, as their legal liabilities well outstripped their personal assets. Thanks to some outside help, they were able to find lodging in the tony Hamptons, which is not exactly a middle-class suburb, and soon afterward, money began to fill their bank accounts. Because Hillary was tied to her US Senate salary, having been elected to office by New York voters in 2000, the couple depended upon Bill making speech after speech and collecting huge fee after fee.
The focal point of the Clintons and crony capitalism is not the huge speaker fees that both Bill and Hillary received (after Hillary left the State Department), however, but the role that the Clinton Foundation has played in turning the Clintons into multi-millionaires. To be blunt, the Clintons essentially ran a protection racket through the foundation that would have made Don Corleone blush.
When she was at State, Hillary would grant a firm some legal or administrative favors, and then the firm would make large contributions to the Clinton Foundation or had Bill make a speech with an accompanying honorarium that could take care of numerous middle class families for a year. For example, there was the case of the Swiss Bank UBS, as noted in a recent posting by The Atlantic:
The Swiss bank UBS is one of the biggest, most powerful financial institutions in the world. As secretary of state, Hillary Clinton intervened to help it out with the IRS. And after that, the Swiss bank paid Bill Clinton $1.5 million for speaking gigs. The Wall Street Journal reported all that and more Thursday in an article that highlights huge conflicts of interest that the Clintons have created in the recent past.
Not only did UBS pay Bill directly, but it also contributed more than $600,000 to the Clinton Foundation, and this hardly was the only time something like this happened. There are no direct examples of the quid pro quo in which someone might have hard evidence that Hillary sold favors at State, but one cannot help but look suspicious.
The critics of Hillary’s actions correctly note that trading favors for large sums of money and running a populist campaign do not go together. Furthermore, as this article examines her “populist” economic platform, one suspects that competition from Bernie Sanders and the shadow of Elizabeth Warren in the background have had a lot to do with Clinton’s newfound “discovery” that Wall Street has some shady characters (including those who have donated to the Clinton Foundation or paid Bill and/or Hillary a tidy speaker’s fee).
There is no doubt that Clinton, like Sanders and Warren, has a “zero-sum” view of economic activity, and thus believes she is fully-justified in promoting her own versions of economic statism. Furthermore, she and her husband, along with about everyone else in her circle, has done well personally by pushing “protection racket economics,” and has come to see businesses and business owners as bottomless wells from which to draw funds both for herself and for her pet projects.
Clinton, Alinsky, and “New Era” Politics
Unlike her husband, Hillary Clinton was a disciple of Saul Alinksy, the radical Marxist who employed social activism as a means of destroying both private and governmental institutions so that a “new era” could take its place. Like so many other radicals, Alinksy was a master of destruction and knew which buttons to push and how to organize people to demand favors for themselves, but he had absolutely no understanding of how economics works, and, he had no interest in finding out. The entrepreneur, in his view, was a bloodsucker, and eliminating that parasite was foundational to all of his activism.
While Hillary is not as ideological in her economic approaches as are Sanders and Warren (and even Barack Obama with his “you didn’t build that” mentality to entrepreneurship), she is just as destructive. An examination of her economic proposals in the campaign website demonstrates that hard fact. While she does not claim to be an outright socialist like Bernie Sanders (who apparently believes he can turn the entire country into Sweden, or at least Minnesota), nonetheless it is clear that Sanders — and Elizabeth Warren — have greatly influenced her campaign.
Campaigning for a New New Deal
Like Sanders, who wants our future to look a lot like the era of eighty years ago, Clinton’s “Economy of Tomorrow” looks a whole lot like FDR’s economy of 1937, as she channels Bernie Sanders (and maybe Eleanor Roosevelt again) for the newest edition of the New Deal:
Build “Infrastructure”: Once again, a Democrat trots out the “infrastructure” line complete with the promise of the massive public works programs that are reminiscent of the old Public Works Administration (PWA) and, of course, the Works Progress Administration (WPA);
“Invest” in Research and Education: One is reminded of Bill Clinton’s old stump line, “We’re gonna invest in education and the environment.” That means Hillary looks to increase federal appropriation for government-directed research and federal education programs that are dominated by standardized testing;
Raise the Minimum Wage: While not endorsing $15 an hour, Clinton still repeats the old saw that raising the minimum wage magically raises all worker’s pay, suddenly making everyone wealthier;
Bring Back the Unions: No Democratic presidential campaign is complete without a call to return to the 1950s when a vast swath of the US economy was dominated by labor unions. It also was a time when massive strikes and deadly labor-oriented violence ruled the day. Clinton has vowed to do whatever is possible to shore up the generous-but-usually-underfunded union pensions;
Further Subsidize Higher Education: A Hillary administration promised to vastly increase student subsidies for college and “forever make college affordable and available.” How she will pay for this vast new entitlement is not on the website;
Expand Day Care: This has been standard Democratic presidential fare since Michael Dukakis based his 1988 campaign on day care for working mothers. Enough said;
Promote Universal Healthcare: What people were calling HillaryCare in 1994 is now ObamaCare, and Clinton promises to protect and expand it, all while both trying to “slow the growth of overall health care costs and deliver better care to patients;”
Expand Social Security Benefits: Increase Social Security payouts and bring more people under the SS umbrella. Again, Clinton does not state how her government will fund this huge new entitlement.
So far, the proposals look to be something akin to New Deal Lite. However, unlike Sanders and former Maryland Governor Martin O’Malley, who has declared in no uncertain terms that regulations place no hardships whatsoever on small or even large businesses, Clinton at least gives lip service to some of the difficulties small businesses face. Unfortunately, she also continues her party’s attack language on businesses in general, especially larger corporations.
“Cut Red Tape for Small Business”: Clinton says she will offer regulatory relief for small business enterprises and entrepreneurs. However, this is puzzling, given her open disdain for private enterprise, including her infamous remarks given earlier this year at a rally in Massachusetts: “Don’t let anybody, don’t let anybody tell you that, ah, you know, it’s corporations and businesses that create jobs. You know that old theory, trickle-down economics. That has been tried, that has failed. It has failed rather spectacularly.”
Provide Tax Relief for Small Businesses: She is not specific, but claims her administration will lessen tax burdens for small businesses, but not for “big corporations that can afford lawyers and lobbyists.”
Tap New Markets: Clinton promises to aid businesses in expanding domestic and overseas markets. She claims to support innovation, yet has brutally attacked the “sharing economy,” which has been a large creator of new wealth;
Improve Access to Capital: Clinton promises to bring together the “the best ideas from the private sector and government” to bring about more capital directed toward small business. The problem, of course, is not a lack of “ideas,” but rather the fact that so much capital has been misdirected, thanks to both Federal Reserve System policies and direct governmental interference;
Force Investors to Hold onto Stocks and Bonds: Clinton has resurrected the bogus criticism from the 1980s that market participants are myopic and only short-term in investment outlook, while politicians and bureaucrats care more about the long-term future. Commentator George Will even called for a law requiring anyone who purchases stock to hold onto those shares for a minimum of two years. (Economist Robert Higgs has noted that when governments are overtly hostile to private enterprise, business owners become uncertain about the future and are forced into making short-term decisions in order to survive the ordeal.)
Expand Employee Benefits and Force Up Minimum Wage: Clinton claims on her website, “When workers feel secure, they are more productive, efficient, and successful,” and proposes to require employers to add family leave and other benefits as well as increasing the minimum wage;
Rein in Wall Street: There is rich irony here, as few people have benefited more from Wall Street largess than Clinton and her husband. She defends the Dodd-Frank Act and vows to defend all its particulars, despite the fact that Dodd-Frank actually has favored larger and more politically-connected banks over the smaller community banks that Hillary claims to favor. In other words, she supports the supposed intentions of regulatory measures but quietly favors the results which turn the intentions upside down, all the while feigning outrage at the inevitable outcomes;
Promote “Green Energy” at the Expense of Conventional Energy Sources: This is standard fare for many in the political classes who claim that the “clean energy” sector is “creating jobs.” In reality, the new “green jobs” gobble up far more resources per unit of output than do conventional sources of energy and kill employment opportunities elsewhere.
Despite Clinton’s newfound populist rhetoric, her economic agenda reflects her own lifestyle of practicing crony capitalism. Other than her promise to remove “red tape” for small business startups, Clinton’s economic propositions follow the same depressing line that we have seen from Bernie Sanders and Elizabeth Warren: private enterprise extracts wealth from the economy, while the expansion of government power builds wealth and employment opportunities.
If one briefly can summarize Clinton’s policy-making viewpoints, it is this: Hillary Clinton believes that an economy should be a tool of the state and reflect the political interests of Washington. Anything else is called “greed,” or “profits before people.” Private employers and business owners should not seek to be profitable, but rather to be virtuous, with the necessary virtue being decided by Clinton herself.
Hillary Clinton, a beneficiary of the very worst aspects of crony capitalism, has decided after all that she is an economic populist who wants to “share the wealth.” No one is mistaking her for Bernie Sanders or even Huey Long, but, nonetheless, she is a thoroughgoing statist telling voters that the way to improve the economy is to make it more difficult to produce things and force up business costs.
She clearly is not claiming to be a free-enterpriser and stands by her view that state control of economic exchanges will result in more exchanges and improved employment prospects and increased income. What she does not say is that the very economic burdens she promises to lay upon businesses will further erode the prospects of the American middle class she claims to support.
The economics of Hillary Clinton is first and foremost about expanding the power and scope of the US government, and as government gains more control, the more employers and business owners need to be in the good graces of American politicians. To be blunt, Clinton believes that people like herself can continually loot US businesses, with business owners paying their protection money without complaint. After all, Hillary knows best; just ask her.