Friday, June 20, 2008

Review: American Politics

I apologize for wandering into this area. Really, I do. I'll break down how I see the relevant economic issues.

1. Trade. Most economists would give McCain the edge, I think. I'm certainly a free-trader. Obama has threatened to pull out of NAFTA numerous times, and Goolsbee was gone after leaking to us Canucks that maybe it was all huff and no puff. However, Obama has raised objections so far on the basis of labour and environmental standards, and I can't imagine Canada and the States diverge significantly on either of those topics. I doubt either candidate will significantly affect our bilateral relationship, but I have to suspect Obama is less likely to push forward on trade internationally.

2. Fiscal: Even though the economics profession can't really put numbers on how big a deficit must be run for how long before things get really bad, I don't think there is anyone out there that says that large, long-run deficits are sustainable. Eventually, someone has to pay the piper - as we're all so fond of saying, there's no free lunch. McCain plans to tax less, but neither candidate is anywhere near to a balanced budget. Flip a coin: anything we see now probably means nothing. Remember, it's almost a full year before either of these people can put ideas into practice.

3. Everything else: Insufficient detail to differentiate. They both want cap-and-trade. Neither of them is going to shake up the Fed, or bring back the gold standard, or diverge on anything else that is the primary purview of economists.

4. Potential for facepalming: Well, we have McCain on record as saying he doesn't understand economics, but the potential for protectionism/populism rests moreso in the Democratic camp, I think. Whichever Administration it is, I expect some sighs of frustration from academic economists.

The problem is is that this post is pointless. Neither of the candidates have stepped up to actually deal with the issues. Obama has a giant uncosted and unelaborated health care liability. McCain would presumably require still more money for Iraq than is currently budgeted. Social Security has to be fixed somehow, but McCain doesn't have a plan, and Obama wants to turn it into a welfare scheme instead of a pension plan.

Either way, talking about their economic plans should lie more in the domain of the psychologists than the economists: given that they say they will react this way, how will they act when confronted with reality?

And so I will not post on American politics again until after the person who wins the White House can actually do something. Well, at least federal politics - I might develop an interest in New York politics this fall.

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