Both are looking for ways to make the nation richer by helping … ordinary workers.
FROM POLITICO | AUGUST 04, 2015
Hillary Clinton doesn’t want to win over just the middle class. She wants to win over business elites as well. And in this tightening labor market, with business worried about losing workers to the growing demand for higher wages, there’s ample evidence that what she has started to advocate is increasingly aligned with what many businesses are beginning to do.
This past week Clinton picked up on the theme again, attacking Jeb Bush’s campaign for advocating a “right to rise” without at the same time advocating minimum wage increases, health care or educational aid. She also endorsed an aggressive expansion of the use of renewable energy for residential (read “middle class”) use. The week before, at a commencement speech at NYU, she supplied hints of how she’s attempting to stake a ground that is simultaneously pro-business and pro-middle class.
Much of what Clinton is proposing now has strong advocates in the business community, many of whom likely lean Republican. Walmart, McDonald’s and Target all recently announced higher minimum wages for their workers. And in her speech at NYU, Clinton also criticized the incentives that Wall Street creates for the managers of publicly traded companies to focus on quarterly earnings often at the expense of long-term (and job) growth—and how this is facilitated by the tax code.
It’s unclear if Clinton is leading or following here. Only a few months ago, the argument against Wall Street short-termism was articulated by the CEO of the largest asset management firm in the world: Larry Fink of Blackrock. In prose redolent of a Jerry Maguire manifesto, Fink penned a letter to the heads of the world’s largest companies urging them to focus on sustainable long-term growth. Fink also took aim at “activist shareholders” who push for immediate returns.
Coming from Fink, who is unequivocally part of the business elite and heads a company whose management of more than $2 trillion touches millions of Americans and their pensions, these proposals were quietly lauded and largely ignored. Coming from Hillary Clinton, they risk becoming yet another partisan piñata.
That would be a shame, because they are worthy ideas, and doable, and the changing economic environment might even make them politically viable. Raise the capital gains rate for holdings held less than two years and require much more disclosure on the part of so-called activist investors about what they are buying and when. Hardly an exciting proposal, but so what? It is a perfect example of using government not as a regulatory sledgehammer but as an exemplar of what Cass Sunstein and Richard Thaler “nudge” philosophy: small signals and slight changes by the federal government can alter trajectories in meaningful ways.
These three themes—wages, climate, and Wall Street—may seem unconnected but they all speak to middle-class needs and how businesses can be nudged as part of self-interest to meet them. Clean energy, if it means tax subsidies for home solar panels, translates into lower energy costs for American citizens and massive capital spending for U.S. companies; higher wages augment the purchasing power of American consumers, which in turn should help businesses generate more revenue; ending short-termism arguably boost the long-term profitability of companies, which in turn may make them more able to pay workers more. As Walmart et al have already realized in raising wages, better to act first than wait until action is forced upon them.
These initiatives create a potential virtuous circle, but since it is Hillary suggesting them, the reaction can be excessive in either direction. Her NYU speech was quickly criticized by left and right for being too harsh on business and at the same time not harsh enough, for not taking a sufficiently aggressive approach toward Wall Street and for being unnecessarily antagonistic to investors who use public markets both to profit and to pressure management. Her climate speech was ridiculed on the right for more tree hugging, but her stance on the minimum wage was excoriated on the left for being too business friendly.
And yet the mood is shifting inside the business community as the labor market tightens, and profits become harder to come by. Many businesses have begun to recognize that a minimum wage that is too low creates workers who can’t afford to sustain the companies they work for. That matters for Walmart, with its 2 million employees who themselves can be a powerful and important bloc of shoppers. Raising their wages isn’t altruism; its self-interest.
The same goes for the excessive focus on short-term earnings. Many business leaders believe that the proverbial needle has swung too far, and that the demands of producing quarterly earnings are undermining the strength of companies and the wages of workers to the detriment of overall economic prosperity. Clinton’s speech articulated that sentiment.
But because it comes from Hillary Clinton, this analysis immediately takes on a partisan taint. It is more than likely that even penning a defense of these ideas as eminently sensible and needed risks being seen as “pro-Hillary” rather than in favor of the ideas themselves. Yet as Larry Fink’s spring letter demonstrates, these ideas predate Hillary of the past few weeks.. She may be articulating them, but they are hardly hers and hers alone.
Many business leaders, and perhaps all, have soured on Washington. They have seen Republicans in the House kill the Export-Import Bank, and they have seen no one in Washington address a tax-code that encourages companies to park profits offshore. While individual business leaders may be Republican or Democrat, few have seen a Washington that attends to what they must every day: economic growth and a stable, healthy system that bolsters it. So businesses have been experimenting with solutions, ranging from higher wages to pushing back against short-term investors.
In this sense, Hillary Clinton isn’t leading a new charge; she is picking up a business gauntlet that is populist insofar as it seeks to improve the economic prospects of hundreds of millions of Americans. It’s a neat trick, being both pro-business and pro-middle class and crafting policies that satisfy both. It’s a stance we should demand of anyone entering public office.