Yves here. The one reason I preferred Obama to Hillary in 2008 was that Hillary would bring back the old Clinton economics team. Then as soon as he was elected, Obama did his bait and switch and swapped out Paul Volcker, who’d been his most visible economics advisor during his campaign, for Rubin gang member Timothy Geithner. I’d also have a slightly different litmus test list, but it is good to throw down concrete demands.
By Thomas Palley, a United States-based economist who has served as the chief economist for the US–China Economic and Security Review Commission. His latest book is Financialization: The Economics of Finance Capital Domination. Originally published at his website
Hillary Clinton does not want to talk about past economic controversies. And it is easy to understand why. There is much that is troubling. But let’s not go along with her wishes. You can learn a lot by studying recent history and even more by watching how politicians react to that history.
The big “let’s move on” story of the Clinton campaign is the refusal to answer journalists. According to the Washington Post in the first 29 days after she announced her campaign she took just eight questions. The campaign’s response to all this? Blah. Reporters whining as usual.
Now, I’m not going to be impolite and focus on questions about the Iraq War which have been getting Jeb Bush in deep trouble with some liberals. Instead, I’m going to focus on economic policy which is my area of expertise. It also seems to be the focus of Mrs. Clinton’s campaign.
If you take a look at the list of big name economists who have significant influence on Mrs. Clinton, you will find that nearly all of them agreed, back during “Bill’s boom”, that NAFTA was good for the economy. So too was giving China access to the US market without effective labor standards, environmental standards and protections against currency manipulation. They also thought financial deregulation was a must and financial concentration was cool.
Mrs. Clinton’s economics team includes Robert Rubin, Larry Summers and Peter Orszag. In the 1990s, Rubin and Summers put in place the trade, deregulation and competition policies that have gotten us in so much trouble. The housing bubble that ended so badly also began on their watch. Above all, they argued persistently for fiscal austerity and even toyed with privatizing Social Security.
Following in the footsteps of Messrs. Rubin and Summers, for the last several years Mr. Orszag has been collecting booty on Wall Street. Before that, his starting job in Washington was to write papers showing that budget deficits increase interest rates, thereby preparing the political table for a menu of fiscal austerity and entitlement cuts.
In Clintonworld, it seems that playing a central role in catastrophic policy failure or peddling bad economics doesn’t disqualify you from future influence. If anything, a record of being disastrously wrong on economic policy seems to be a required credential.
Mrs. Clinton wants us to think things have changed and that she’s become a real deal populist. Well, talk is cheap. It’s costless to mouth bromides about supporting full employment and reduced income inequality.
That means the challenge for the rest of us is to make presidential candidates commit to policies that are ‘big” enough to determine an administration’s character and specific enough to tie a candidate down.
Here’s my list of three policies that Mrs. Clinton must adopt to show she’s the real thing:
1. Expand Social Security.
2. Add a public option to Obamacare.
3. Reject all trade agreements that lack currency manipulation protections or include investor – state dispute settlement provisions.
Argentine President General Peron once said “A country is like a guitar. You pick it up with the left hand and play it with the right”. Team Clinton have been masters at this. Until Mrs. Clinton answers these three questions affirmatively, I’m not buying her new populist song and dance.
N.B. This article borrows shamelessly from Paul Krugman’s original version of “Fraternity of Failure”, New York Times, May 15, 2015.