Sunday, March 06, 2016

Clinton's afterthought is Sanders' lead

Hillary Clinton laid out her economic vision in a speech in Detroit on Friday (March 4). There's a lot to like in it.  She's focused on wage growth, reducing income inequality, shifting back to labor the share of corporate profits it's lost over the last four decades. And of course she has a laundry list of proposals foster domestic manufacturing, boost wages support unions, and steer investment toward troubled regions.

I find her big picture narrative still a bit unfocused, or mis-focused, though.  Here's the heart of it (my emphasis):
Now, some of the blame for these changes in the economy rest with big, historic forces, like trade and technology.  Wall Street and some of our corporations also, however, bear a lot of responsibility.  Too many in the financial industry forgot that the purpose of banking is to get capital to main street to invest in new businesses or expand successful ones like this of any size, and to increase the opportunity for home ownership and community development.

It is not to create huge riches for a select few at the expense of everyone else.  And meanwhile, too many leaders in corporate America are prioritizing their short-term stock price over their workers and their communities.  And we can’t forget the damage caused by trickle-down economics and right-wing ideologues who believe in weakening government oversight, massive tax cuts for the rich, ripping away the safety net, and breaking the backs of unions.
What you "can't forget" is an afterthought, and it should be the lead. To my mind, Clinton has the optimal emphasis of causes exactly backwards: 1) big historic forces 2) bad corporate behavior, 3) trickle-down economic policy.

Elizabeth Warren, Bernie Sanders, and, to a somewhat lesser extent, Barack Obama connect better because they put the policy errors, the Republican policies funded and articulated by the one percent, front and center.  Contrast Warren's narrative to Clinton's:
When Ronald Reagan was elected president, a new economic theory swept the country, turning it in a different direction. Supply-side or trickle-down economic theory  came into fashion. Republicans claimed it would help the economy grow. When all the varnish is removed, trickle-down means just helping those at the top and telling  everyone that when the rich get richer, somehow you'll be better off too.

Trickle-down policies are really pretty simple. First,  fire the cops. Not the cops on Main Street, the cops on Wall Street. They called it deregulation and they railed against big government, but make no mistake: this was about turning loose  the big banks and the giant international corporations to do whatever they wanted to do. Turn them loose to rig the markets. Turn them loose  to outsource more jobs. Turning them loose to sell more mortgages  that exploded and credit cards that cheated people. Turning them loose to load up on more risk.

And then, when it all came crashing down, in the most telling twist of all, the deregulators, who hated big government, shoveled billions of dollars to the biggest banks, but pretty much everyone else was left behind.

Three things the country did right in a lost economic golden age. Three pillars of shared prosperity Republicans tore down in the Reagan era.
Three pillars: tax policy, labor policy, regulatory policy. Blam blam blam. That's the Warren-Sanders morality play: Reaganomics stole our patrimony and gave it to the owners. The villain in the piece is primarily Washington pols (though funded and incented by the Kochs and their ilk), whom the populists propose to unseat.

Clinton's villain is greedy businesses. You could almost get the impression at some moments that she's proposing mainly to shame them into good behavior:
First, corporations have to do right by their communities and our country.  Corporations benefit in so many ways from being right here in the United States.  But too often, this relationship feels like a one-way street.  Too many are not holding up their end of the bargain.  They don’t recognize that one of the biggest assets on their balance sheet in America.  And part of the problem is a casino culture on Wall Street that for too long puts short-term speculation ahead of long-term strength...

But we also have to understand how bad behavior on Wall Street and pressure to meet quarterly earnings expectations contributes to bad behavior across corporate America.  Look at companies like Nabisco, laying off 600 workers in Chicago and moving their production line to Mexico, even though the company has long received tax breaks from the state of Illinois.  They have no problem taking taxpayer dollars with one hand and giving out pink slips with the other.  Look at the growing number of companies moving their headquarters overseas just so they can avoid paying their fair share of taxes here at home.
Now, she does tack about to focus on incentives: penalties for outsourcing, tax breaks for crating jobs in the U.S. (and in some programs,in targeted depressed communities). She knows that incentives shape corporate behavior:
To discourage bad behavior, we’ll make companies pay for what are called inversions under the tax code, which means they pretend to sell themselves to a company overseas.  And then they pretend to move their headquarters overseas.  I call it a perversion, but under the tax code it’s called an inversion.  And we will make you pay for that with a new exit tax.  And if a company like Nabisco outsources and ships jobs overseas, we’ll make you give back the tax breaks you received here in America.     If you aren’t going to invest in us, why should taxpayers invest in you?  

Let’s take that money and put it to work in the communities that are being left behind.  And to encourage good behavior, let’s enact policies that promote long-term investment, like capital gains taxes that only scale downward for truly multi-year investments but are higher for short-term trading.  Let’s promote in-shoring, innovation, and investment with new tax credits that make it profitable to take the high road rather than the low, like Michigan Ladder Company, which has been operating in Ypsilanti for over a century.  They have stopped buying fiberglass ladders from suppliers in China and started making them here in Michigan.     I know it would make more financial sense, and we’ve got to help other companies discover what they can do as well.
But again, to my mind, she doesn't focus the laser, like Warren or Sanders. The unifying principle is missing, or tacked on as an afterthought: Republican polices got us in this hole; my policies will get us out.  Democrats need a clear corollary to Warren Buffett's dictum:
“There’s class warfare, all right, “but it’s my class, the rich class, that’s making war, and we’re winning.” 
It's that worker-friendly tax, labor, trade and regulatory policy will reverse those battlefield gains.

Getting the policies right, and getting them enacted, is far from simple. But defining the terms of political warfare should be.

P.S. In her Super Tuesday speech five days ago, I thought Clinton was onto something with her "make America whole again" mantra. That not only counters Trump's rampant racism and scapegoating, it also has a financial connotation: make American employees whole again after forty years of wage theft. Maybe the phrase didn't test well, or maybe it's not a good idea to make a mantra of a counterpoint to Trump. But I hope it resurfaces. I think it has resonance.

Hillary's short history of inequality is too short
Obama and Warren: A contrast in rhetorical styles

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