Friday, June 15, 2012

It's going to be a rough ride

It's June--we have a national election coming up in November. It's going to get ugly. Both parties are out there, running ads, both candidates making speeches.  The stakes are high.  We're going to be subjected to tremendous loads of misinformation from both sides.  We don't know what's going to happen, of course, but the competing campaign narratives are taking shape.  Here are a few claims that will be made.

1a) Mitt Romney's record at Bain Capital, the private equity firm he co-founded, will be scrutinized.  He will be accused of destroying jobs, of predatory investment strategies.  We will see ads in which we see blue-collar workers describing how their lives were ruined by Bain.  In fact, they already exist.  Nobody likes the guy who fired them, but the reality is much more complicated than that.  Here's what wikipedia says about the company. In fact, private equity firms invest in failing companies, and try to turn them around.  About 75% of the time, Bain's been successful.  Essentially, what Bain does is what President Obama did with the auto industry.

The Republican narrative is that the federal government needs to be restructured and downsized, much the way Bain did with private companies.  Private firms are not the US government.  But if you think that this approach should be tried, then Romney would be a good choice as President. 

1b) President Obama is going to be accused of spending money foolishly,  Expect phrases like 'spending spree,' and 'spending like a drunken sailor on leave,' and similar phrases suggesting wanton profligacy.  It's all nonsense.  In fact, even counting Obamacare, Obama hasn't overspent. It is true that the federal deficit has grown under Obama, but that's almost entirely due to the recession.   (By the way, I've tried to go with reputable, non-partisan sources for these links.)

One argument that we've heard and will continue to hear is a moral one--it is immoral, say conservatives, to rack up large debts our grandchildren will have to deal with.  I agree with this argument, but with this codicil--I think our current levels of unemployment are similarly immoral. It's immoral to sustain an economy in which my son's generation, graduating from college, can't find jobs.  If we can stimulate employment--and there's not much question that government can--it seems immoral not to try.  

2) Expect both the budget plans of Governor Romney and President Obama to be characterized as unrealistic and damaging.  Romney's plan is, if anything, worse than his critics have suggested. President Obama's plans are much vaguer, and similarly unrealistic.  I should add that I plan to vote for the President, largely based on this factor--I think the President's plans, though inadequate, are a step in the right direction: Romney's plans, in my view, are economically unsound.

3)  The biggest issue in this campaign is certain to be the economy.  Democrats have generally argued that the US remains in a demand-side recession, and that expanding deficits are a symptom, not a cause of our economic woes.  In general, Democrats want more stimulative spending to boost employment, and more aid to states. Republicans reject Keynesian economics, and believe that large federal deficits harm the economy, making investment more difficult. 

The most outspoken liberal economist is almost certainly Nobel laureate Paul Krugman of the New York Times.  He has been highly critical of Obama, because he doesn't think the stimulus package Obama called for was anywhere near adequate.  He has a new book out called End This Depression Now, which I have read, and recommend highly.  Krugman's blog is a daily must-read.  But Krugman's views are actually pretty mainstream--most academic macro-economists agree with him.  My son just graduated from BYU with a degree in economics--he said, when it came to macro, what he was mostly taught was basically Keynesian. 

Conservatives like to cite various Austrian school economists--Hayek and von Mises--both of them long dead. Most libertarians cite the 19th century French satirist Frederic Bastiat (who is really very witty and entertaining), and Henry Hazlitt's Economics in One Lesson.  (Hazlitt had no formal training in economics--he dropped out of college after one semester, and spent his life as a journalist.  I honestly think that's one of the reasons libertarians like him, and one reason academic economists disdain him.)  I've been known, on occasion, to waste time arguing on the internet with libertarians, and they always have a book they want you to read.  I've read a few--Murray Rothbard, Gary North--and found them interesting, but ultimately, unpersuasive. Certainly there are no conservative economists as outspoken or well known as Krugman. 

There's also an historical argument we should expect.  We're in the worst recession since the Great Depression--Krugman calls it, The Lesser Depression.  So people want to re-litigate the New Deal.  Arguments will be made that Roosevelt's policies didn't work, that they made the Depression worse.  This kind of counter-factual speculation strikes me as foolish and unproductive; there's no actual evidence to support the idea that the New Deal didn't save our nation. 

In this next election, I don't think social issues will matter much.  Gay marriage is an issue neither side seems very interested in touching on, because public opinion on it is shifting so rapidly, neither side can be sure where the political advantage is.  Abortion is tricky--Democrats want to highlight states that impose restrictions on abortion rights, and unmarried women are an important Democrat demographic.  But because of Romney's changing positions on abortion, he's not a terribly plausible pro-life zealot.  And I think a lot of Americans share my own feelings about abortion--a profound ambiguity and unease. 

I am, as I said, going to vote for President Obama.  But it's going to be a close and ugly election, and I hope we can at least vote on actual policies, and not partisan distortions of them. 


  1. Yep, looks to be an ugly election. Maybe not as ugly as Adams/Jefferson or Adams/Jackson, but getting there. And it'll be in our face 24/7.

    Would disagree in part about The New Deal being an unqualified success...even the Roosevelt administration was lukewarm about how successful the NRA's price controls had been, and their pursuit of those policies after around 1935 wasn't as vigorous as it had been (Supreme Court decisions notwithstanding). Most would contend that programs like the WPA and the CCC were much more successful, and helped a lot more.

    There've also been those who contend that the Fed could've been more proactive during Hoover's tenure and done more of what it was created for, and the depression's depth and length could've been significantly lessened. Pure hindsight, but WTH...hindsight is fun!...Mike/Indiana

    1. Agree on all points. This wasn't the post to get into all the history. Keynes himself called for twice the stimulus that Roosevelt used. But that's a far cry from saying it was an unqualified disaster, which you hear some in libertarian circles.