3 August 2015

Clintonomics: It’s the stupid economy


“Don’t let anybody tell you that it’s corporations and businesses that create jobs.” Who said that? Oh, that’s a no-brainer – it has to be Jeremy Corbyn, the Pied Piper of Islington, leading the Labour lemmings towards the political cliff edge with the seductive music of neo-Marxist corporatism. Unhappily, that is the wrong answer. Corbyn did not utter that fatuous claim – though he would very likely endorse it. Its author was in fact Hillary Clinton, a much-touted candidate for the office of President of the United States.

That is an alarming consideration. Sentiments that could be laughed off if uttered by Citizen Corbyn of the Islington Liberation Front, competing for the dubious privilege of leading a shattered opposition party that increasingly resembles a suicide cult, assume a much more ominous significance when they reflect the worldview of a woman who has at least as good a prospect as any other likely contender of entering the Oval Office in 2016. Within 18 months, the most powerful individual on earth, presiding over the leading capitalist economy in the world, could be a US president who believes that businesses do not create jobs. Be very afraid.

Three days after she made that comment, late last year, Hillary Clinton attempted to backtrack in response to the derision it provoked, claiming she had “shorthanded this point” in the course of repudiating the notion of trickle-down economics. Her hastily sanitised opinion now was that “Our economy grows when businesses and entrepreneurs create good-paying jobs here in an America where workers and families are empowered to build from the bottom up and the middle out – not when we hand out tax breaks for corporations that outsource jobs or stash their profits overseas.”

That apologia could hardly be said to have improved her credibility. While she abruptly conceded that businesses and entrepreneurs do create jobs, Mrs Clinton qualified this surrender to reality by suggesting that only the creation of “good-paying jobs” grows the economy. In fact it is often low-paid jobs that enable employers to remain competitive and generate economic growth. Which economics manual did she read that taught her wage inflation was an undiluted economic benefit?

It’s true US wages have stagnated to the point where their real value is lower than in 1989, but the solution is to boost growth, which Clinton’s socialist, big government, high-tax instincts are hardly calculated to facilitate, and to enable many of the millions of Americans holding only part-time jobs to move into full-time employment. Hillary Clinton’s denunciation of corporations outsourcing jobs is no solution to that challenge, but politically opportunist and a reflection of her protectionist mindset.

And what was the meaning of that gobbledegook about empowering workers and families “to build from the bottom up and the middle out”? Qué? Workers do not “build” the companies they work for from the bottom up: they do the job they have contracted to perform and collect their pay cheque. The only sense in which they might be said to build their company from the shop floor is if they increase productivity, but it is unlikely this was what Hillary had in mind, having supported Barack Obama’s proposals to extend overtime to employees earning over $50,000. As for what she means by workers and families building “from the middle out” – go figure.

The undeclared candidate’s most recent speech on the economy, delivered in mid-July, was vintage Clintonomics. Higher minimum wage rates, revival of the influence of the labour unions, increased overtime pay, a rise in capital gains taxes, a tightening of the ratchet of regulation, billions of dollars to be spent on universal “quality, affordable child care”, “investments in cleaner renewable energy”, and so on.

As the clumsy U-turn on her “businesses don’t create jobs” gaffe demonstrated, the fragility and opportunism of Hillary Clinton’s pronouncements have rendered her incoherent on economic matters. Ramesh Ponnuru recently wrote, in a piece headlined “Hillary Clinton’s Bewildering Economics”, on BloombergView on 27 July, “Hillary Clinton can’t keep her story straight.” He attributed some of this confusion to her need to avoid criticising past Democratic administrations, including her husband’s. As he pointed out: “Bill Clinton even cut the capital-gains tax that Hillary Clinton now seeks to raise.”

But if her economic narrative is frequently erratic, it is underpinned by a remorseless consistency: the conviction that the economy is better managed, even micromanaged, by Government than by private enterprise. That was the deadly delusion of the twentieth century, now being revived by dinosaur socialists in the wake of recession. Its fatal flaws have been demonstrated again and again – are being exposed even now in the bizarre hybrid that is communist China, posing as a capitalist superpower.

Yet the tired myth of “the crisis of capitalism” is being rehearsed once more and finding credulous audiences in the aftermath of the banking crisis. This ignores the fact that the crisis was provoked by the US sub-prime mortgage collapse, created by the Federal government’s legal imposition of “inclusive” criteria on lenders, to the point where a $500,000 mortgage was granted on the security of an unemployment benefits cheque. When the Justice Department is controlling the housing market, that is a recipe for disaster, but that is precisely the kind of regulatory control to promote social engineering objectives that Hillary Clinton relishes.

Her utterances on economics are couched in the language of leftist “equality and diversity” rhetoric transposed to the world of business. Her rejection of “trickle-down economics” is an attempt to push water uphill. There is no way in which even the most selfish capitalist can avoid his wealth trickling down. Be he a playboy, gambler, gourmand, womaniser, innumerable businesses and jobs are going to benefit from his spending. Only by stuffing his money under the mattress can he prevent it fuelling enterprises, in which case he is a miser, not a capitalist.

Hillary Clinton is a wholly unreconstructed left-winger; she is also a frontrunner in the US presidential stakes. If she stands for the presidency it will be an intelligence test for the American electorate. In 2008 the appeal of electing the “first black president” provoked an emotional spasm that exempted Barack Obama from the objective scrutiny that would have averted a disastrous presidency. In 2016 the danger is that the mantra of the “first woman president” could lead to a worse catastrophe. Clintonomics are fiscally illiterate. They can most accurately be characterised by rearranging a famous Clinton slogan: It’s the stupid economy.

Gerald Warner is a political commentator and writer.