The Corner

Watch Hillary Pull a Brian Williams

Much of the attention to Hillary Clinton’s dishonesty the past couple years has focused on her mishandling of classified information in her emails. But it’s worth remembering that she can be breathtakingly dishonest about policy matters, too. The other day, I looked at the absurdity of her claim that as president she won’t “add one penny to the federal debt,” but there are plenty of other examples, too.

Take an interview she did a while ago in which she appears to invent a study about business executives’ decision-making — and then claims to have had a highly unlikely conversation with one of said executives about it.

Here’s the interview, and the key quote:

There was a recent survey with the heads of major American corporations, and they were asked this question: If you could make an investment today, that you know would make the company more profitable . . . and you knew that within five to ten years you’d have so much good returns to show, but it would cost you a penny off your stock price to do it, would you do it? And every one of them said no.

In trying to explain the problem of “quarterly capitalism” — executives making short-term decisions against their companies’ long-term interests — Hillary seems to have invented this whole story or, at least, grossly exaggerated the facts.

Does this sound like a remotely plausible story at all — a survey in which executives unanimously say they won’t do something because it’ll cost “a penny” off their stock price? Or does it sound more like an extreme caricature presented as actual social science?

She says later in the video she cited the same study during a 2015 economic speech, which includes a survey that’s similar but has different details and, in fact, has a finding that contradicts Hillary’s claims in the interview.

She says in the speech (and in her campaign book) that a study found “more than half [of corporate executives surveyed] would hold off making a successful long-term investment if it meant missing a target in the next quarterly earnings report.”

That finding bears only a passing resemblance to what she said in the interview, and while we’re at it, even the speech’s characterization is not a correct description of the actual survey question, which was whether companies might “delay starting a new project” in order to hit an earnings target. I’m not saying Hillary had to get the exact details right on the fly, but she massively exaggerates the drama of the study and offers no indication her facts might be hazy.

The study, in fact, happened to ask a question that is closer to the one she cited in the interview: Would you put off a definitely profitable investment if the investment would cause you to miss your earnings target? (Which would deal a heck of a lot more damage than “a penny off your stock price.”) To that question, most executives said yes, they’d do it, even if it means a substantial earnings miss. It’s interesting that a bunch of them did say no, they’d put off a surefire profitable investment, but Hillary said all of them would, when only a minority said so.

It gets even weirder when she says she knew someone who took this survey. It’s sort of plausible if you think the survey is of CEOs of major U.S. corporations and Hillary guesses, say, Warren Buffett took it, but it’s actually of CFOs, and a survey of thousands of them from 2003. How would Hillary have called one of them knowing he had been surveyed? I’ve asked her campaign about this and the other details and never heard back.

Hillary might have a point about quarterly capitalism — the study she cites argues that the earnings obsession seems to destroy real economic value by causing corporations to put off various investments in order to maximize earnings.

But the study actually suggests this is a surprising finding (i.e., not one we have a broad base of evidence for), and then Hillary pulls results out of thin air to make her case even more shocking. The real study may have discovered a real problem, but it bears little resemblance to the cartoonish, irrational decisions Hillary claims executives make.

(As an aside, Hillary has proposed various remedies for this “quarterly capitalism” problem; I don’t know if they’re any good. Phil Swagel, a former Bush administration economist, has cast doubt both on the problem and her remedies. And in his new book, Ed Conard points out that one of the commonly cited facts about the problem, that U.S. corporate investment is at historically low levels, is not that meaningful in an age when American companies increasingly need smart people, who don’t count as “investment,” rather than plants and equipment, which do.)

Patrick Brennan was a senior communications official at the Department of Health and Human Services during the Trump administration and is former opinion editor of National Review Online.


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