Wednesday, September 14, 2016

Clinton 100 days

Hillary Clinton's 100 day jobs plan is mediocre at best. It focuses on building infrastructure, increasing science investments, green collar jobs, reducing regulation, and increasing US manufacturing.

As an economist I obviously agree with the first two planks. Investment is an essential part of GDP, and you cannot have economic growth without it. Both infrastructure and science are necessary for the future of America. Being able to do more with fewer people with an aging population is where our economy is moving in order to maintain our quality of life and increase access to a good lifestyle.

As an environmentalist I agree completely with green collar jobs, which is where we need to go.

She isn't specific about what regulations she wants to reduce, so this plank could be either good or bad. I personally hope she will cut the barriers to starting a business and increase the penalties for fraud which is where I believe we need to go. New college grads in finance should not be paying the regulatory cost of the Great Recession while Jamie Dimon gets yet another million dollar bonus. I have written about financial regulation before, particularly when it comes to advising. Having more places to do business will keep up competition and force them to be honest.

The final plank, increasing US manufacturing I disagree with. Manufacturing jobs pay far less than high skilled science and technology jobs, because they produce less product. We need to move towards increasing access to college and make it so more people get the math skills they need to succeed in college and get good jobs. We need to encourage the employment of new college grads because it is criminal that so much talent is going to waste. We should have programs for job placement for young people so that we can start our careers as soon as we leave college and give tax breaks towards hiring young professionals in real jobs, and outlaw unpaid work. This would do far more in terms of improving the American economy and spurring GDP growth than encouraging the creation of low pay jobs. The average machinist salary  (the jobs Clinton's plan would create) have an average wage of around $40,000 per year, which is not enough to support a family. Economists, scientists, and programmers make an average of $80,000 per year with a wider standard deviation, and many make 6 figure salaries.

The Mankiw-Romer-Wile model of economic growth is functional and makes it clear that if you want to grow your economy you don't just need technology to grow an economy, you also need an educated population. I can give a ten year old a complex data analysis program, but they won't know how to use it. I can have someone who can solve the mysteries of quantum physics but without a place to run experiments they won't be able to get hard data. We need to have both, and running backwards to a secondary economy is going to reduce our GDP and quality of living.

The fact that education is missing from her economic plan shows she is listening to bad advisors and doesn't understand much about economics. I still wish Elizabeth Warren was in her place.

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