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More On H. Clinton, Investment Advisor

Here’s a letter to the Wall Street Journal:

Andy Kessler convincingly argues that Hillary Clinton’s plan to end what she calls corporate “short-termism” will do more harm than good (“The Clinton Plan to Distort Market Signals,” August 25).

One other point deserves mention: politics is afflicted with far more chronic short-termism than are financial markets.  The flows of expected future costs and benefits from how assets are used today are reflected in today’s asset prices.  To keep these prices and portfolio values as high as possible, business executives and investors have strong incentives (as Mr. Kessler explains) to act today with real regard for tomorrow.  No such future-oriented pricing mechanism operates in politics.  Each politician’s time-horizon thus extends only to the next election.  So trusting a politician with the task of assessing and addressing short-termism makes as much sense as trusting the Imperial Wizard of the KKK with the task of assessing and addressing racism.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

Also, someone should ask Ms. Clinton – who allegedly worries about “the tyranny of today’s earning report” – if she also worries about the tyranny of today’s polling reports.


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