Let’s start with the few positives.

On the issue of raising the national minimum hourly wage to $15, Hillary Clinton said she took “seriously” former Obama White House economist Alan Krueger’s warning on the riskiness of such a steep increase. Clinton also didn’t seem much interested in the super high income tax rates — 70 percent? 90 percent? — mentioned by Bernie Sanders and Martin O’Malley. And she reiterated her opposition to free, universal four-year college.

Here is Sanders: “You have no disposable income when you’re making 10, 12 bucks an hour. When we put money into the hands of working people they’re gonna go out for our goods. They’re gonna go out for our services. And they are gonna create jobs in doing that. And O’Malley: “And if our middle class makes more money, they spend more money. And our whole economy grows.”

In a recent report, economist Robert Atkinson offers a good reply to this thesis:

But this demand-side formulation fails on two counts. First, to the extent companies respond to growing demand, it is by investing in more of the same machines, used by workers doing similar jobs to produce the same goods and services for more customers. If the economy is not at full employment, this increase in demand would increase output and GDP, but it would likely do little to increase productivity (e.g., output per hour worked). If the economy is at full employment, stimulating more spending will only increase inflation and interest rates, likely reducing investment.

Second, this framing does not explain the long-term per-capita growth patterns of the last half century, which have been driven more by the development of and investment in productive technologies rather than growing demand. In fact, over the last half century, years with high consumption growth are actually associated with lower productivity growth three to five years later. Productivity growth slowed considerably in the 1970s despite continued increases in the workforce size and growing demand that followed. In the late 1980s and early 1990s, employment growth moderated, but productivity increased in the following decade. This pattern might be expected given that higher consumption is likely to mean less investment. In fact, new growth theory shows that most growth in productivity and per-capita income stems from innovation (the development and adoption of new technologies).

And economist Casey Mulligan from back in 2013:

High levels of consumer spending are a consequence of economic growth, not a cause of it. Economists have been investigating the determinants of economic growth for decades, and conclude that investment is crucial for an economy to grow. High rates of investment in the present make possible future consumer spending. The debate continues as to the type of investment that is most important, and whether specific types of investment might be counterproductive (think of Stalin’s five-year plans). …

All of the books look closely at investment. All of them note the three flavors of investments: physical, human and ideas. None of them say that a high marginal propensity to consume might be a way to create sustained economic growth. …

Economic growth begins with investment and ends with consumer spending. Not the other way around. To the degree that policy makers are confused on this point, it should be no surprise that they are delivering low economic growth rates.

Let me return to Sanders and O’Malley on taxes.

First, O’Malley seems to think a top 70 percent marginal rate is no big deal since “under Ronald Reagan’s first term the highest marginal rate was 70 percent.” Of course, the 1981 Reagan tax cuts reduced that rate to 50 percent from the 70 percent rate he inherited — and then lower after that. So O’Malley got that wrong.

Second, Sanders said his proposed top rate wouldn’t be quite as high as the 90 percent rate under President Eisenhower in the 1950s since “I’m not a socialist compared to Eisenhower.” On this issue, let me refer you to my post, “Returning to the 90 percent top tax rates of the 1950s would probably be terrible for the US economy.”