Hillary’s Disastrous Economic Plan

National Review Online

Thursday, August 11, 2016

Hillary Rodham Clinton gave a speech on economic policy in Michigan, just after Donald Trump had laid out his own economic agenda. Mrs. Clinton’s presentation was an exercise not in economics, but in mythology.

A seemingly trivial but nonetheless illuminating example of her fundamental intellectual unseriousness on economic questions was her repetition of the ancient, repeatedly discredited myth that Henry Ford raised his workers’ wages on the theory that doing so would enable them to buy Ford cars, thus increasing his company’s profit. Nothing of the sort ever happened, in reality, and the economic assumptions behind this myth — that one can spend one’s way to prosperity — is preposterous. Economically speaking, this is flat-Earth stuff, pure hokum from a woman who likes to smugly proclaim: “I believe in science!”

It is economically illiterate, but Mrs. Clinton sincerely believes it, arguing that, in the same vein, raising the federal minimum wage would actually help U.S. employers by giving consumers more money to spend at their businesses. That money of course must come from somewhere, and where it comes from is businesses (who, of course, pass on some of those costs in a variety of ways). Some consumers would have more to spend, and businesses would have less to spend. Mrs. Clinton, who does not know very much about any business other than charging $10,000 a minute for speeches (which is, to be sure, an excellent business model) perhaps has never been informed that the biggest customer of the typical small American business is — pay attention here — another business, small and family-owned firms making the majority of their sales to commercial operations rather than to individual consumers.

Her policy isn’t bootstrapping — it’s pure magical thinking.

What it in fact resembles rather closely is the “trickle down” theory of economics that exists almost exclusively in the minds and rhetoric of opponents of the Reagan-era policies defamed under that label: Let the money slosh around through the right sluices, and it will somehow magically multiply itself. Mrs. Clinton proposes making large gifts to wealthy people and politically connected businesses in the hopes that doing so will make prosperity trickle down to ordinary workers and families in the form of jobs and higher wages.

Mrs. Clinton insists — again, preposterously — that Donald Trump’s economic proposals are little more than a “more extreme” version of Reagan-era policies. About that, two things: First, it simply is not true. Donald Trump is very much an economic interventionist whose vision is deeply at odds with the free-enterprise values of the Reagan movement. Second, that’s a pity: Those 1980s policies catapulted the U.S. economy out of Carter-era stagflation and malaise, producing the boom that continued, happily for Bill Clinton, until the turn of the century, give or take an inevitable bump or two.

​There is little reason to think that Mrs. Clinton’s policy would be successful. She proposes another Obama-style stimulus package, albeit on a smaller scale, only $275 billion instead of Barack Obama’s nearly $800 billion political slush fund. One would think that, having spent the better part of $1 trillion on economic stimulus and purported public goods, the United States would have a great deal of gleaming new infrastructure and smooth, open roads to show for it. Instead, at least three substantial studies of the Obama stimulus concluded that whatever effects it may have had were too small to detect. Not too small if you were a Solyndra executive, of course, or a happy beneficiary of stimulus pork for other politically influential businesses. But too small for an econometrician or an ordinary American looking for a better job.

Meanwhile, she proposes to out-socialist President Obama on the matter of health care, insisting on the creation of a so-called public option, i.e. a directly government-run health-care system designed and intended to make genuine competition in a functional marketplace eventually impossible, leaving the country with a federal health-care monopoly — an entire nation on Medicaid.

The spending side of Mrs. Clinton’s ledger is familiar enough stuff; so is the tax side. She lambasted Donald Trump’s proposal to abolish the death tax — a ruinous levy grounded in ancient class-warfare superstitions, which often falls on family-owned farms and small businesses — claiming that Trump had proposed this in order to benefit himself, being a man who presumably will leave an unusually large estate to his heirs. Trump is a mixed bag on taxes, on economic policy generally, and on everything else — but asserting bad faith is a poor substitute for genuine economic analysis. The death tax raises a minuscule amount of federal revenue, and exists almost solely for the moral satisfaction of hate-fueled leftists on the Elizabeth Warren and Bernie Sanders model. Mrs. Clinton’s defense of the death tax is at least as self-interested as Trump’s criticism of it, being an obvious sop to the economically illiterate college students who made up much of Senator Sanders’s movement — the same people she is trying to bribe with her laughable proposal for tuition-free university education for the middle class.

This is, of course, an exercise in counting the angels dancing on Washington pinheads: If she were to become president, Mrs. Clinton might propose this to Congress, which, in all likelihood, will not comply with her demands, provided that Trump’s current downward trajectory does not leave us with a Democrat-dominated Congress in January. But it is a statement of Mrs. Clinton’s priorities, which are giving handouts to her corporate allies, strengthening the whip hand of politicians over health care, bribing the Sanders-Warren element with new entitlements, and otherwise engaging in a great deal of wishful thinking about how this gets paid for and its long-term economic consequences.

That’s Hillary Rodham Clinton in short: Partly dishonest, partly ignorant, misrepresenting the very economic policies whose results are the sole reason for any surviving nostalgia about the presidency of her intern-bothering, perjuring, sanctimonious husband.

It is the worst sort of superstition to believe that putting another Clinton in the White House will revive the economic boom of the 1990s. Mrs. Clinton instead offers the cutting-edge thinking of 1964, when she isn’t distracted by the freshest ideas from 1916.