Dark times ahead?

With the economic outlook for the nation looking somewhat bleaker than it did a couple years ago, I want to review each potential candidate's proposed economic proposals. I am basing my reactions off of a piece I heard on NPR last week, so each will be only my impressions - I can't find a (free) transcript anywhere.


Both campaign stressed one thing above all else - Americans are hurting and need help. Now aside from the tenuous nature of the presumed answer to the question (do Americans want help from the government? Is it the government's responsibility to help people out when they screw up their finances?), the whole notion that government can provide an effective solution to most, or any, problems is debatable. Social Security, Medicare, Welfare, etc., are all example of government programs designed to help people that ultimately have proven a sinkhoke for taxpayer dollars. Regardless, both candidates seem convinced of the governmental mandate to do something, anything, to help people out.


McCain wants to make the Bush tax cuts permanent, but doesn't seem concerned that the deficit will grow under his plan. Obama wants to nationalize health care, subsidizing both the medical program and his tax cuts to poor and middle-class with greatly increased taxes on the wealthy. Obama's plan would do less harm to our deficit, but the point that struck me while listening to the program is that neither candidate is too concerned with the deficit, and both are enchanted under the illusion that it's possible to spend one's way out of an economic quasi-depression.


This frightens me for more reasons than I can count. At some unspecified point in the future, foreign nations will begin to trade their US bonds for money. Although it is true that the US is currently seen as a haven for currency, a "safe investment," that condition is anything but permanent. There could be a run on the Federal Reserve just as there was on the gold standard. The Euro is already looking like a safe(r) place to park cash than the US, as it's inflating less rapidly than the dollar. The candidates ought to be concerned with keeping our currency competetive in the world market, not to mention the crowding out that always occurs with government deficits.


Obama is more concerned with the deficit, insofar as his economic program does less damage in that area, but his philosophy seems to be that it is government's responsibility to help people - whether it be with medical care, or mortgage trouble. Compared with McCain, he's much less worried about keeping marginal tax rates low, and much more worried about taxing the wealthy to pay for a host of government programs, including nationalizing healthcare, and potentially the mortgage industry.


Both McCain and Obama are focusing on the help they can give Americans. Although this might be just the natural, election-year course of action, it could just as easily be an ideological shift backed by men who will act if given the chance. So vote for McCain! Vote for Obama! They'll each solve all your problems, put an HD-TV in your house and pick up after the kids, all with the help of the government.


What gives them the impetus to act in such a manner, aisde from trying to steal votes from the other side? I do not know. What is scariest to me is that times right now aren't even that bad. What will they do when things really blow up?

Striving for the center

McCain and Obama both want to be thought of as moderates, at least now that they've got their respective nominations locked down. All the verve and vigour of the primary season has been replaced by more moderated positions. Whether you have McCain saying that he wouldn't now vote for his immigration reform or Obama stepping back from the hard line for withdrawal from Iraq, both candidates have tempered their image. The fact that all the rhetoric, all the extreme policy proposals, and at least some of the anger of the primaries disappears ought to be examined more closely.


I find that a simple diagram or two serves me greatly in analyzing these issues. This is mostly economic theory, combined perchase with a bit of my own penchant for tidy analysis, but the fact that this simple a concept can be used to illustrate such a wide diversity of political phenomena makes it worth mentioning.


First, one must bear in mind that the audiences to which potential nominees must appeal during the nominations are decidedly different from those that receive the brunt of candidates' attention. Only Democrats and Republicans can vote in their respective primaries. If we posit that the two camps can be divided into conservatives, centrists, and radicals, (where conservative refer to voters that most prefer a politically neutral candidate and radicals to those who most prefer an extreme candidate), we get a very pretty standard bimodal distribution curve. Since the bulk of either party's voters will lie some distance from the political middle, nominees have an incentive to appeal to (gasp!) the fundamentalist right or the socialist left.


The true moderates - the ones near the center in the grand political scheme of things - are unable to pick a candidate from the other party, and since their votes can be supposed to make up a minority of the party votes in each respective caucus, they are largely ignored. Court the (more extreme) majority, and ignore the (more moderate) minority, or else some other potential nominee will move to the left or right of you, and steal a substantial portion of your party's votes..


What happens when we move to the national elections? Suddenly the political landscape is greatly changed. Instead of a bimodal distribution of moderate Democrats and Republicans (which gives politicians the incentive to wax partisan) suddenly we are presented with one single distribution. Politicians now have to court the average voter, the Democrat or Republican who was too disheartened by the extreme rhetoric so typical of the primary season. Just as important are the undeclared, the so-called swing-voters who might evaluate policies based not on the party stance, but on the real implications of implementation. The nominee no longer cares so much about the radical-partisan voters. For example, a socialist would never vote Republican - he'd just be less enthusiastic in voting Democrat. As long as the party base remains loyal and actually votes (which is a tenuous proposition - more on this some other day) then each candidate has the incentive to move as close to center as possible while still remaining on his party's side of the political divide.


So the movement of the candidates to the middle should be no surprise. Both are touting their bipartisanship, and both certainly seem to believe fervently in bipartisanship. The question in my mind is whether Obama, with his scanty record, will be able to match McCain's long history of bipartisan effort. Obama's speeches are very "new" sounding, to use his own words, and if he is elected president we'll see how his promises pan out. Because the incentives a president faces are completely different.


I will try and scan in some diagrams, to help clarify the explanation.

A (purportedly) nonpartisan endeavour

It's coming up on election season, and with that being said, I would like this to be a (somewhat) political blog. However, I don't want this to be too partisan a blog. I recently acquired my undergraduate degree in Economics, and after four years of studying the dismal science, I feel I have become relatively proficient at analyzing issues not based on which party supports them, but on what their likely social effects are.


With that being said, I want to try and analyze McCain and Obama's positions on the various issues facing our nation today, in as objective a manner as possible. In the future, I will analyze the candidates' current positions on issues, as well as the popular media's take on those issues. The candidates' websites seem like logical places to start.