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July 16, 2015

Growth and Fairness in a Clinton-Style Economy

During a recent economic address by Hillary Clinton to soft-launch her “growth and fairness economy” plan, she rightfully noted that we “need new ideas” to combat slow economic growth and the lack of opportunities for some Americans. But then she proceeded to offer outdated and failed policies that would guarantee the United States remains stuck in the 20th century forever. Nowhere was this more visible than in her attack on the sharing economy — a term used by my colleagues who are experts on technology policy at the Mercatus Center to describe “any marketplace that uses the Internet to connect distributed networks of individuals to share or exchange otherwise underutilized assets.”

During a recent economic address by Hillary Clinton to soft-launch her “growth and fairness economy” plan, she rightfully noted that we “need new ideas” to combat slow economic growth and the lack of opportunities for some Americans. But then she proceeded to offer outdated and failed policies that would guarantee the United States remains stuck in the 20th century forever.

Nowhere was this more visible than in her attack on the sharing economy — a term used by my colleagues who are experts on technology policy at the Mercatus Center to describe “any marketplace that uses the Internet to connect distributed networks of individuals to share or exchange otherwise underutilized assets.”

Without mentioning companies such as Uber, Airbnb and Lyft by name, Clinton explained that “many Americans are making extra money renting out a spare room, designing websites, selling products they design themselves at home or even driving their own car.” As she remarked, that’s a good thing because this “on-demand, or so-called gig, economy is creating exciting opportunities and unleashing innovation.”

But don’t get too excited. She immediately tempered her praise for the ability of consumers to contract directly with producers because it raises “hard questions about workplace protections and what a good job will look like in the future.” That reflection was quickly followed by a promise to stifle those disruptive forces with more “workplace protections.”

So she promised to fight this innovative arrangement in the workplace and “crack down on bosses who exploit employees by misclassifying them as contractors or even steal their wages.” Then she proposed a mix of government “investments” (read: spending) and strong-arming of businesses to institute a higher minimum wage, paid family leave, earned sick days, a right to child care, President Barack Obama’s mandated overtime and all that good stuff (read: more tried and failed policies), which hasn’t worked out so well in Europe.

In May, for instance, The New York Times ran what should have been an eye-opening piece that looked at the many ways numerous Clintonian policies backfired, discouraged employment and cut wages in countries where they have been prominently implemented.

But forget about that silly data, because her policies would “(break) down barriers so more Americans participate more fully in the workforce.” In her mind, Uber and other permissionless innovators are exploiting workers. At the least, these innovators need to be told what to pay their employees by know-it-all politicians.

At a time when policies she endorsed — such as the war in Iraq and the Affordable Care Act — have helped even more Americans realize just how incompetent lawmakers are at creating policies, not to mention the negative consequences politicians’ decisions can have on their lives, Clinton is trying to make us respect the wisdom of politicians and the laws she intends to enact.

Innovators who invent new technology that creatively destroys old workplace arrangements are also changing the lives of millions of Americans and people around the globe, lowering our cost of living and making the world a better place. They should be able to do so without having to constantly fight with politicians.

Here’s a new idea for Clinton: The government shouldn’t get in the way of innovation and progress; it should watch from the sidelines and be grateful that there are private actors who are willing to risk their own money and effort to produce the benefits government can never deliver.

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