Clinton ‘Quarterly Capitalism’ Attacks Rebutted By Ex-U.S. Treasury Official/UMD Expert


COLLEGE PARK, Md. – July 29, 2015 – Hillary Clinton’s recent proposals to fix quarterly capitalism – reliance on quarterly reports and quarterly profits as opposed to long term planning – have drawn a rebuttal from Phillip Swagel, a University Maryland public policy professor and former IMF and U.S. Treasury official.

Phillip Swagel rebuts Hillary Clinton’s ‘quarterly capitalism’ attacks

Swagel says he doubts that quarterly capitalism poses a great threat to the national economy. Second, even if it were a threat, he doubts that the Clinton proposals would change corporate behavior much

Society needs both short- and long-term investors: “The [proposal for a] higher tax rate on short-term capital gains is a solution in search of a problem. It’s valuable for society to have both short-term and long-term investors. After all, long-term investors eventually sell their holdings and the presence of short-term investors, even high-speed traders, ensures market liquidity that is beneficial for the long-term investors. Market liquidity is also beneficial for society, since it means lower financing costs — it’s easier for a business to raise money — and thus more investment and job creation.  Raising capital gains taxes is harmful for growth, period.”

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Some companies act irrationally in the short term, but:  “There are mechanisms for those companies that act irrationally to be punished: Investors will sell … Imagine that you buy stock and then discover that the management is terrible? Why would you want to have people locked in?”

Indeed, that observation renders ironic the Clinton proposal to financially punish people who sell a stock after a relatively short period, he suggests: “Imagine that you buy stock and then discover that the management is terrible? Why would you want to have people locked in?”


Swagel, also a senior fellow at UMD’s Robert H. Smith School of Business Center for Financial Policy,

Read more in a related Smith Brain Trust post.