The Command-and-Control Economy
In watching/listening to the two acceptance speeches by both candidates one thing struck me. Both appear to believe, or at least promulgate, this notion that the President of the United States can control and/or has great and precise influence over the economy. Lets take a look at John McCain’s acceptance speech,
But let there be no doubt, my friends, we’re going to win this election. And after we’ve won, we’re going to reach out our hand to any willing patriot, make this government start working for you again, and get this country back on the road to prosperity and peace.
These are tough times for many of you. You’re worried about keeping your job or finding a new one, and are struggling to put food on the table and stay in your home. All you ever asked of government is to stand on your side, not in your way. And that’s just what I intend to do: stand on your side and fight for your future.
This kind of language has become standard form for both parties nominees for quite some time. Note that times are tough, possibly that the other guy/party has the wrong plan is taking us in the wrong direction, and that only by electing “Me” will we get back on the right track. Jobs sent over seas will come back, wages will rise, benefits will get better, and by golly it will be morning in America again.
How will all work? Specifics aren’t usually given, but McCain has been rather specific this time around.
My tax cuts will create jobs. His tax increases will eliminate them.
Maybe. President Bush cut taxes pretty much right after he got into office. And was there a boost to unemployment? No. In fact, unemployment wouldn’t peak and start to decline until 2003. Now maybe Bush’s tax cuts helped keep unemployment from going higher and brought about the end of the recession quicker. But even the Bush Administrations own projections of unemployment were pretty much a return to trend–i.e. there was no lasting decrease in the unemployment rate anticipated as a result of the tax cut.1
Keeping taxes low helps small businesses grow and create new jobs. Cutting the second highest business tax rate in the world will help American companies compete and keep jobs from moving overseas.
Again, maybe. See the preceding reason as to why. At best this would have an impact at the margins. How large? Probably not large.
We will prepare them for the jobs of today. We will use our community colleges to help train people for new opportunities in their communities. For workers in industries that have been hard hit, we’ll help make up part of the difference in wages between their old job and a temporary, lower paid one while they receive retraining that will help them find secure new employment at a decent wage.
Is this some sort of modified living wage argument? And exactly how long is this welfare going to last? Six months? A year? Four years? And what about college kids going from high school to college? Shouldn’t they get a break too? And what kind of training? Something that is needed today or something that they like to do? The question may sound silly, but many people like studying things that pay very poorly. Exactly what is a decent wage?
The view expressed by McCain is that “The economy is something I can have control over, and I’ll make it work for you, the voter.” Obama is pretty much the same way. He has his magic energy pony that is going to lead us to new and economically viable alternative energy so we don’t have to buy from those Middle Easterners anymore. He subsidize companies that keep jobs here as opposed to sending them overseas, corporate welfare?
The actual reality is that the President of the United States, irrespective of party, has limited policy tools that are clumsy and imprecise when it comes to influencing the economy. Think about it, if President Bush had precise and strong influence over the U.S. economy why let the recession lnger for so long and so close to his second election? Why would his father have let the previous recession last so long it would cost him his re-election bid? Why would Carter allow inflation to run amok ruining his shot at a second term? They are all stupid? All of their advisers are stupid? This kind of pandering is now standard political fare and I don’t doubt that neither candidate really believes. That they keep right on using it tells us something about them. They are both dishonest, and that the American public is a gang of cry-babies who apparently can’t handle reality. Long live the Nanny State. Father Obama (or Grandpa McCain) is going to take care of us.
1Don’t get me wrong, I don’t like paying taxes. I like having my taxes lower. I want them to stay low or even go lower. What I am disputing is this notion that we will have a permanent decrease in the unemployment rate due to a tax cut. I might happen, but I doubt it.