During this week's Democratic presidential debate, Hillary Clinton said that putting together the right kind of stimulus package is "a part of economic justice." The remark reflected a major campaign theme for the New York senator, who has declared she would pursue "a new vision of economic fairness" as president.
That slogan should set off alarm bells for anyone who recognizes that economic outcomes result from myriad individual choices. To impose her vision of economic fairness, Clinton would have to override those choices, compromising freedom in the name of equality.
Clinton's aim is economic equality, not legal equality, and you really can't have both. As the economist and political philosopher F.A. Hayek observed, equal treatment of people with unequal abilities leads to unequal outcomes. In this sense social justice is, if not a "mirage," as Hayek argued, at least in conflict with procedural justice.
So it's not surprising that many of the policies Clinton believes promote economic fairness strike others as decidedly unfair. In 2006, for example, she endorsed a successful Commerce Department petition by Syracuse candle makers to impose a tariff of more than 100 percent on candles imported from China.
"Our manufacturers deserve a level playing field," Clinton explained, "and we owe it to them to make sure that others do not unfairly circumvent our fair trade practices." In Clinton's view, then, fairness demands that all Americans pay more for candles to subsidize manufacturers in her state.
More generally, Clinton advocates "smart" trade rather than free trade, insisting on "strong protections for workers and the environment" that reduce the competitive advantages of foreign producers. She wants "jobs that cannot be shipped overseas," which can be achieved only by interfering with companies' profit-maximizing (and consumer-benefiting) decisions. For her, globalization is not what happens naturally when people are free to exchange goods and services on mutually agreeable terms; it's a process that needs to be "managed properly."
Clinton wants to "curb the excesses of the marketplace," which in her view include not just foreign competition but high salaries for corporate CEOs, risk-based insurance premiums, and foreclosures on the homes of people who fail to make mortgage payments. Intent on implementing her "new economic blueprint," she overlooks the possibility that such practices developed for sound reasons and that arbitrarily limiting or abolishing them might have unintended consequences.
When it comes to fiscal policy, Clinton seems to see herself as a kindergarten teacher "fairly" doling out cupcakes, giving no thought to who baked them in the first place. In a recent New York Times interview, she worried that "inequality is growing" and waxed nostalgic for the "confiscatory" tax rates of the post-World War II decades.
Clinton would use higher taxes to pay for universal preschool, universal college, universal health care and universal high-speed Internet access, among other taxpayer-funded goodies. These she calls "the investments we make in each other," and they are just like investments except that there is no reliable test of whether they make sense since the people paying for them have no choice in the matter and are not the ones who stand to benefit.
There's a similar problem with Clinton's proposal to "create millions of new jobs by investing in clean energy" through a $50 billion Strategic Energy Fund. When a politician talks about the jobs government spending will create, it's usually a signal that the spending cannot be defended on its own merits. A Strategic Thumb Twiddling Fund could create millions of new jobs too.
In the Times interview, Clinton suggested that as president, she would be prepared to ram through her economic program on straight party-line votes. "If you really believe you have to manage the economy," she said, "you have to stake a lot of your presidency on it."
The history of central planners and their failures suggests a different lesson: If you really believe you have to manage the economy, you shouldn't be president.