Friday, October 10, 2008

U.S. Economy Ranks #1 for Competitiveness


Good News: Despite the financial crisis, the United States continues to be the most competitive economy in the world according to the World Economic Forum's "Global Competitiveness Report 2008-2009." (see top chart above) This is because it is endowed with many structural features that make its economy extremely productive and place it on a strong footing to ride out business cycle shifts and economic shocks. Thus, despite rising concerns about the soundness of the banking sector and other macroeconomic weaknesses, the country’s many other strengths continue to make it a very productive environment. The United States is ranked first for innovation, and its markets support this innovative activity through their efficient allocation of resources to their most effective use.

Bad News: However, the United States has built up large macroeconomic imbalances over recent years, with repeated fiscal deficits leading to rising and burgeoning levels of public indebtedness. This indicates that the country is not preparing financially for its future liabilities and is on the road to making interest payments that will increasingly restrict its fiscal policy freedom going into the future.

The three most problematic factors for doing business in the U.S. are 1) tax rates, 2) tax regulations and 3) inefficient government bureaucracy (see bottom chart).

18 Comments:

At 10/10/2008 11:01 AM, Anonymous Anonymous said...

Yes! The imbalances are a result of the credit bubble and malinvestments that were predicted by the Austrian Business Cycle Theory. Time to bone up on it! Mises wrote this stuff almost 100 years ago!!!

 
At 10/10/2008 1:29 PM, Blogger juandos said...

"The imbalances are a result of the credit bubble and malinvestments that were predicted by the Austrian Business Cycle Theory"...

Wow! The Austrian Business Cycle predicted the machinations socialist left and their collective inability to understand simple economics?

ROFLMAO!

Thanks for that bit of entertainment...

 
At 10/10/2008 5:18 PM, Blogger the buggy professor said...

1) Thanks for the link, Mark. Once again --- and once again, as has been the case for 16 of the last 17 years (ever since the Japanese and German economies tanked in 1991-92 and have vied for the worst GDP growth record in the industrial world since the 1930s) --- the US ranks 1st on the WEF list.

,,,,,,,,,,,

2) Turn now to an observation about fiscal irresponsibility and, more generally, whether the US economy flourishes better under Democratic or Republican presidents.

In particular, since 1959, Presidents have issued an annual report to the nation prepared by their Council of Economic Advisers. 1959, remember, was the third year of the second Eisenhower administration.


.............

3) It turns out that on 6of 7 key scores, the US economy has done better on an average --- average (hence includes the distressing Carter years in the late 1970s) --- under Democratic Presidents than under Republican ones.

.

The scores favorable to Democrats are listed below --- all except 3.

1. GDP per capita growth: Dems 4.04 vs. Rep 2.94

2. Inflation rate:
Dems 5.33 vs. Rep 6.21

3. Federal Taxes % GDP
Rep 17.97 vs. Dem 18.4

4. Federal Spending % GDP
Dems. 19.6 vs. Rep 20.67

5. Defense Spending
Dems 5.83 vs. Rep 5.70

6. Fed. Spending - Defense
Dems. 13.77 vs. Reb 14.96

7. Fed Defict/Surplus % GDP (with 1 year lag to capture changes in tax and spending):

Dems. -1.21 vs. - Rep. 2.7
.

Source: Economic Reports of the Presidents(s) 1959-2007, calculated at Slate:
http://www.slate.com/id/2199810/

.....................

4) We can go further (political scientists love to do this, particularly since economists generally don't):

Deficit Spending and National Debt:

Click below for a good chart tracing National Debt as a % of GDP since 1945, the end of WWII, under every president from Harry Truman to the end of September 30, 2008. George W Bush.

http://startswithabang.com/wp-content/uploads/2008/10/national-debt-gdp-l.gif
(copy and paste in your URL browser address).
.

Note how the federal deficit has soared from 30% of GDP at the end of the Carter era to around 70% in those 28 years, with the only reversal --- a slowdown in deficits, then a reversal to surpluses --- in the "high tax" years of the Clinton administration.


''''''''''''

5) Finally, under which presidency on an average since 1948 --- the year post WWII recovery ended --- does the stock market perform better?

Under Democrats, over those 60 years, the S&P 500 index has averaged 16.0%. Under Republican presidents, it has averaged 11.0%.

.

Only fair to add that there are no doubt other influences at work on the stock market than just which presidential party is in office. Still, Democratic presidents and their policies seem not to harm the performance of the S&P 500 average . . . just the contrary.

'''''''''''

6)Oh, lest we forget. At the end of the Clinton 8 year presidency, only 6.0% of the American people surveyed said we were in a bad economy.

At the end of the Bush-W era, about 90% say we are in either a bad economy.

...............

Michael Gordon, AKA, the buggy professor: http://www.thebuggyprofessor.org

 
At 10/10/2008 6:59 PM, Blogger the buggy professor said...

1) Just dawned on me: the previous comparisons between Republican tax-cutting presidencies and big government-spending Democratic ones --- at least in the minds, it seems, of the average poster at Carpe Diem --- forgot to mention another key issue . . . this one going to the very heart of supply-side theory.

....

2) According to that theory, tax cuts will lead to more productive economic vigor by means of greater and more efficient business investments. Is it validated, this claim, over the last 27 years?

......

3) The answer: no. On the contrary, the fraction of GDP that went to non-residential investment declined from 13% to 11% in the 8 years of the Reagan administration --- which, recall, had cut taxes sizably after 1981. In the George H.W. Bush years (1989-1993), the fraction declined further from roughly 11% to about 10%.

.

In the “high” tax years of the Clinton administration --- those high taxes supposedly hurting the rich and very affluent --- the fraction of non-residential investment rose from 10% to 12% and did so steadily between 1993 and 2001.

As for George W. Bush’s tenure, the same reverse trend appeared again despite the big tax cuts in 2001 and 2003. Non-residential investment fell from roughly 12% to around 10% by 2004, with the percentage climbing a nick or two since then --- and no doubt it will have declined in the present year, and fairly noticeably by December 31, 2008.



(These figures, please note, I found at Economist’s View, October 10th, 2008 . . . a good web site run by Mark Thoma of the University of Oregon. Go here for the original Thoma post: http://economistsview.typepad.com/economistsview/2008/10/tax-cut-follies.html

.......

4) And so, on now 7 out of 8 key criteria to measure the performance of the US economy under Republican or Democratic presidents, Democrats do noticeably better on an average.

(I should add that the great service for our country of an impressive president, Ronald Reagan, was in foreign and security policies and in restoring the confidence of a battered American public coming out of the dismal Jimmy Carter years. I am happy to note this, not least because I am a non-partisan and pragmatic voter. I very much respect those Reaganite achievements.)

......

Michael Gordon, AKA, the buggy professor

 
At 10/10/2008 10:56 PM, Anonymous qt said...

Buggy Prof.,

One cannot help but observe that as a self ascribed independent, you seem to spend a great deal of time proselytizing on behalf of the Democrats. Perhaps, one should also consider the flip side of the coin.

But it's not so simple when you study that "study." First, not all Democrats act like Democrats, and not all Republicans act like Republicans. John F. Kennedy, for example, was an enthusiastic supply-side tax cutter, and George H.W. Bush raised taxes. Bill Clinton promoted free trade, and Richard Nixon imposed wage and price controls.

If you assign those four presidents to the opposite party based on that -- make the two Democrats into Republicans and the two Republicans into Democrats -- the numbers completely reverse. Now stocks average 14.7% under Republicans and only 10.5% under Democrats.

In fact, it turns out that if you do just one single switch -- if you make Richard Nixon into a Democrat -- it's enough to reverse the numbers. Then stocks average 14% under Republicans and only 12.1% under Democrats. This fact discredits this whole study more than it does Republicans, or even Richard Nixon himself. Any analysis that can be undone by omitting or changing a single data point isn't very robust.


Personally, I doubt whether the presence of politicians democratic or republican makes much impact on the business cycle outside of establishing rule of law, property rights and a relatively stable regulatory structure. I sincerely doubt that the economy is affected by the president's views on where life begins.

 
At 10/11/2008 2:08 AM, Blogger Paul said...

Mark, how does this competitive ranking compare to rankings on economic freedom, e.g. from the heritage foundation, which has the US at 5th in the world in economic freedom?

 
At 10/11/2008 12:08 PM, Blogger the buggy professor said...

"If you assign those four presidents to the opposite party based on that -- make the two Democrats into Republicans and the two Republicans into Democrats -- the numbers completely reverse. Now stocks average 14.7% under Republicans and only 10.5% under Democrats.

In fact, it turns out that if you do just one single switch -- if you make Richard Nixon into a Democrat -- it's enough to reverse the numbers. Then stocks average 14% under Republicans and only 12.1% under Democrats. This fact discredits this whole study more than it does Republicans, or even Richard Nixon himself. Any analysis that can be undone by omitting or changing a single data point isn't very robust"

--- QT

.....

1) QT: now I know why you've chosen to post with those initials --- say it out loud everyone: Cutie

Because these quoted words have to be a rollicking send-up, no?

2) JFK a Republican in disguise, aong with Bill Clinton? Guess ROss Limbaugh and all the Clinton-haters didn't and don't share your sense of humor, QT

2) Then, on the other side, Richard Nixon --- a two-term Republican Veep, a Republican candidate for Governor of California, and a two-term (elected anyway) Republican president --- a Democratic Trojan Horse in the Republican fold! Wow! And I mean WOW!

Then George W. Bush --- the Republican son of George Bush Sr (a Republican President and Congressman), a Texas Republican governor, and a two-term Republican President --- is also another Democratic Trojan Horse.

.....

3) I rub my eyes: you belong on Saturday Night Live, QT

Because with that logic, Sarah Palin --- a crass, populist-mouthing, ignorant rabble-rouser, with a flawed ethical record in two years of governing Alaska -- must be a stupid, populist Democrat, whereas Hillary Clinton (a very bright, highly informed woman for whom I gained considerable respect after two gruelling interviews with Bill O'Reilly)must really be a Republican in disguise and a moose-shooting field-dresser to boot.

.....

4) And with just a little change in my DNA, come to that, I could be another Albert Einstein and Time Magazine would choose me as the man of the 21st century as it did for Albert a decade or so ago.



Keep it up, QT. I'm still laughing.

.....

Michael Gordon, Aka, the buggy professor.

....
PS Oh, by the way. You question my credentials as a non-partisan and an avowed admirer of Ronald Reagan's foreign policy mastery.

Fact is . . . if McCain hadn't been slandered with success by Bush-W in 2000's Republican primaries, I would have voted for him. And until late spring, I was leaning toward McCain again rather than Obama.

It was Obama's foreign policy advisory group that reassured me, along with his cool and collected behavior and the effective way in my view he dealt with the Pastor Wright affair. Since then, McCain's choice of Palin --- the scariest Veep candidate in history (McCain an older guy, with a record of several deadly skin cancers) --- and his and her catering to vicious haters at their rallies and elsewhere, has solidified my choice.

.

Fortunately, for a day anyway, the John McCain I admired in the past came to life yesterday when he finally summoned the decency to assault the haters, bigots, and crassly vicious ignoramuses at a rally in Minn, yesterday.

 
At 10/11/2008 12:08 PM, Blogger the buggy professor said...

"If you assign those four presidents to the opposite party based on that -- make the two Democrats into Republicans and the two Republicans into Democrats -- the numbers completely reverse. Now stocks average 14.7% under Republicans and only 10.5% under Democrats.

In fact, it turns out that if you do just one single switch -- if you make Richard Nixon into a Democrat -- it's enough to reverse the numbers. Then stocks average 14% under Republicans and only 12.1% under Democrats. This fact discredits this whole study more than it does Republicans, or even Richard Nixon himself. Any analysis that can be undone by omitting or changing a single data point isn't very robust"

--- QT

.....

1) QT: now I know why you've chosen to post with those initials --- say it out loud everyone: Cutie

Because these quoted words have to be a rollicking send-up, no?

2) JFK a Republican in disguise, aong with Bill Clinton? Guess ROss Limbaugh and all the Clinton-haters didn't and don't share your sense of humor, QT

2) Then, on the other side, Richard Nixon --- a two-term Republican Veep, a Republican candidate for Governor of California, and a two-term (elected anyway) Republican president --- a Democratic Trojan Horse in the Republican fold! Wow! And I mean WOW!

Then George W. Bush --- the Republican son of George Bush Sr (a Republican President and Congressman), a Texas Republican governor, and a two-term Republican President --- is also another Democratic Trojan Horse.

.....

3) I rub my eyes: you belong on Saturday Night Live, QT

Because with that logic, Sarah Palin --- a crass, populist-mouthing, ignorant rabble-rouser, with a flawed ethical record in two years of governing Alaska -- must be a stupid, populist Democrat, whereas Hillary Clinton (a very bright, highly informed woman for whom I gained considerable respect after two gruelling interviews with Bill O'Reilly)must really be a Republican in disguise and a moose-shooting field-dresser to boot.

.....

4) And with just a little change in my DNA, come to that, I could be another Albert Einstein and Time Magazine would choose me as the man of the 21st century as it did for Albert a decade or so ago.



Keep it up, QT. I'm still laughing.

.....

Michael Gordon, Aka, the buggy professor.

....
PS Oh, by the way. You question my credentials as a non-partisan and an avowed admirer of Ronald Reagan's foreign policy mastery.

Fact is . . . if McCain hadn't been slandered with success by Bush-W in 2000's Republican primaries, I would have voted for him. And until late spring, I was leaning toward McCain again rather than Obama.

It was Obama's foreign policy advisory group that reassured me, along with his cool and collected behavior and the effective way in my view he dealt with the Pastor Wright affair. Since then, McCain's choice of Palin --- the scariest Veep candidate in history (McCain an older guy, with a record of several deadly skin cancers) --- and his and her catering to vicious haters at their rallies and elsewhere, has solidified my choice.

.

Fortunately, for a day anyway, the John McCain I admired in the past came to life yesterday when he finally summoned the decency to assault the haters, bigots, and crassly vicious ignoramuses at a rally in Minn, yesterday.

 
At 10/11/2008 4:53 PM, Anonymous qt said...

Buggy Prof,

It is fun occasionally yanking your chain. You might try reading the article that is linked to the highlighted text.

You are going to get your wish...Obama will end up president. You might wish to re-read the transcripts of the presidential debates on the subject of foreign policy.

The one extremely disturbing feature raised by Obama is the elevation of morality above strategic considerations in the deployment of U.S. troops. Senator Biden suggested that U.S. troops should have been deployed to Lebanon after Syrian forces withdrew from the country to keep Hezbollah from gaining power. You might have missed this point given that he described the departure of Syrian security forces in the face of thousands of protesters during Cedar Revolution following the assassination of Rafik Hariri as the "U.S. kicked Hezbollah out of Lebanon".

Obama's response to the Georgia crisis which morphed over the course of a week is an ample demonstration of what you may expect...a far cry from the foreign policy of Ronald Reagan.

With regard to Rev. Wright, and the various dubious political allies that Senator Obama has used to launch his political career, they bespeak a man of over-arching ambition and few scruples.

Sarah Palin is hardly scary since she will never be VP. She is just a footnote in history, a gift to humorists everywhere.

Americans will pick the cool, suave, intellegent Senator Obama who moves like a cat over the old guy whose body seems broken by torture. Obama knows how to win, how to stir an audience, how to drop anyone who reflects poorly on his personna, but does he know how to run a country? With all of his nuanced positions, do we really know what he will do?

Obama is very accomplished at telling us what we wish to hear (like unilateral withdrawal from Nafta) and crafting an image of himself that others can admire but he remains unknowable, emotionally retracted, his words calibrated for effect. There is a pattern I have seen before with children of dysfunctional families.

The element strangely missing from the Democratic convention was any colleagues or friends of long standing who spoke about the man who would be president.

The presidency of the U.S. is the most powerful and influencial position on the globe.

I hope you're right.

 
At 10/11/2008 9:25 PM, Anonymous qt said...

DNA transplant technology definitely needs work.

The article cites George Herbert Walker Bush not George W. Bush.

 
At 10/12/2008 11:01 AM, Blogger the buggy professor said...

QT:

I agree: a little more DNA for me to become Albert Buggy-Einstein would be useful.

Maybe too, come to that on your side. Assuming you're already an intelligent and attractive woman, a tad change in your DNA and voila! you could become Angelina Cutie-Jolie.

......

Needless to say, after our genes change that way, we would be slated soon afterwards to run into one another at, say, a posh Beverley Hills Hotel.

Wham! Love at first sight between Buggy-Einstein and Cutie-Jolie . . . our hormones working frankly all at once. We rush to the reception desk, rent the Penthouse, swoop up to it,and then go like rabbits for hours and hours . . . both of us soaring, with rapture, into emotional interstellar space.

I the guide naturally . . . me the new genius who relates General Relativity to quantum mechanics and explains the entire universe, who will keep the two of us from plunging into a dangerous black hole in another emotional galaxy.

.......

Following which, we continue our rendezvous sessions on the sly, with just one danger.

Namely? Your new husband --- Brad the Pitt(s), who could become suspicious of your nightly meetings with the girls at the bowling alley (so you say). So much so that he would, a la O.J., wait one night in the dark shadows along the driveway of your mansion . . . decked out, of course, in his Achilles movie-drag: little skirt, armor, big slashing sword.

And, like O.J., seek to cut us to pieces . . . convinced that he would find a lawyer who would play the race-card anti Ancient-Greek bias by the investigating detectives.

.......

Not to worry though. With your tad change to become Angelina Cutie-Jolie, you will also be 1000 times brighter --- and one million times more informed about the world than Sarah Palin, our esteemed Republican Veep candidate --- and so you will have armed yourself with a 45 caliber automatic, pumping Achilles-Pitt(s) before he can damage us and allow me to be accompanied by you the week after to my Nobel prize ceremony in Sweden.

......

A dream? Yep, about on the level that Bill Clinton was a Republican in drag, while Richard Nixon and Senior Bush --- no doubt now for Luskin as our government nationalizes our banking system, also Junior Bush --- are really Democrats, thanks to their lousy economic records.

.......

Yours faithfully,
The Bugged-Out Buggy-Einstein

 
At 10/12/2008 12:15 PM, Anonymous qt said...

Buggy Prof,

Won't comment on the middle aged craziness other than I think you missed the point I was trying to make, namely that both Democrats & Republicans are equally talented at tweaking statistics in their favor.

Are there not better reasons for voting for Senator Obama than the claim that "democrats are better"? The few crumbs that you have offered in Obama's favor are:

"It was Obama's foreign policy advisory group that reassured me, along with his cool and collected behavior and the effective way in my view he dealt with the Pastor Wright affair."

I have severe reservations about the foreign policy of Senator Obama who switched his response on Georgia 3 times in the course of a week, who has chosen Senator Biden who has advocated partitioning Iraq and during the VP debate suggested that U.S. troops should have been deployed to Lebanon.

Unlike you, I am not comfortable with the way the Wright affair was handled. Senator Obama joined Wright's church to make political inroads in the black community in Chicago and jettisoned him when the association became a liability. Rev. Wright summed it up by saying that Obama "did what politicians do".

What you have said is that McCain lost your vote when he chose Sarah Palin. I can understand that because the choice was disasterous.

What you have not provided is a compelling narrative for voting for Senator Obama. I would like to know what it is that you see because quite simply I see a consumate politician and a charismatic leader.

I see Pierre Trudeau. What is it that you see?

Is the question not a simple one?

 
At 10/12/2008 1:26 PM, Anonymous qt said...

Buggy Prof,

I guess that I really do feel the need to respond to your previous post. When one feels diminished and demeaned as a human being, it does deserve to be mentioned.

Whether I am a man, a woman or a eunich is utterly irrelevent to this or any other discussion. You presented statistical data and I question its relevance to evaluating the potential performance and policies of a future president Barrack Obama.

I have asked for a compelling case in favor of Obama on the basis of his words, actions, policies and vision for the country. I fail to see why such an inquiry should be greeted with disdain, comtempt and disregard.

I prefer to think that you were trying to be funny rather than offensive.

 
At 10/12/2008 4:48 PM, Blogger the buggy professor said...

QT:

Fair enough request about Obama and my preferences for him. And I add, before I get to answering it, I did not mean to demean you --- rather, just have a little fun, the way you said you were when you enjoyed “pulling-my-chain.” And if you still feel demeaned, I unqualifiedly apologize.

………….

1) I will begin by repeating what I posted two or three months ago here at Carpe Diem in another thread.

It deals with Obama's intellect and character. As you'll soon see, too, it involves a comparison between those Obama traits and FDR's.

.....

2) Specifically, a very good friend of mine in L.A. --- whose integrity is unimpeachable (he's also a Republican) --- had a guest for dinner who had been an assistant legal consul in the 1st Bush-W administration.

He was also on the Harvard law review the year that Obama ran for the review's presidency --- the president enjoying the privilege of awarding articles for the 20 or so law students whose grades merit their being put on the Law Review.

.

The consul, it turns out, headed a small conservative group of Law Review students. After getting their approval, he approached Obama and said that his group would support Obama if, in turn, Obama committed himself to giving them --- the conservatives --- a fair share of the "good" articles.

......

3) The former consul's conclusion?

It was two-fold:

• Obama was a gentleman, who lived up to his word.

• Obama was and is the single brightest person he has ever met in his life.

........

I add that my friend --- a convinced Republican --- then began re-evaluating his views of Obama. And since the Sarah Palin candidacy, he has decided to vote for Obama . . . the first time he's voted for a Democrat in decades.

...........

4) Our current economic crisis, the Great Depression, and FDR and Obama:

Enter another carefully considered reason for my Obama-choice:

It used to be said about FDR, who entered office in March 1933 in a country suffering from 4 years of dismal political leadership and economic trends --- GDP down by about a third since 1929, unemployment about 25% (no unemployment insurance or any social security benefits for handicapped people), a severe credit-crunch, and banks and a public fearful of lending money --- and he showed impressive character and a remarkable ability to communicate with the public. So much so that within a few weeks, the banking crisis was over, the credit-crunch eased, and unemployment started to come down steadily.

From a height of 25% or so, to be specific, unemployment fell to around 9.1% by 1936 (these are the corrected Darby-figures for the official ones, Darby's work including 3.5 million workers employed in public works projects). Click here for charts showing GDP in 2000 dollars for the Great Depression era, as well as unemployment and --- down toward the bottom --- the Darby corrrections for the official Lebergott figures

......

Note though:

(i.) In late 1937, the US economy --- alas --- started to head into a serious but fairly short-lived recession again ---it ended about 14 months later in the fall of 1938.

(ii.) The two major causes:

• the Federal Reserve --- worried about inflation --- raised the reserve requirements of banks, and in the process a new credit crunch was caused.

• The new taxes on the new social security (passed into law in 1936) started flowing into the Treasury, and the federal deficit went into a tailspin and ended up in near surplus.

(iii.) Fortunately, these errors were rectified --- especially deficit spending --- and the economy quickly recovered. By late 1941, before we entered war, GDP had risen to $1.2 trillion (in 2000 dollars), compared to $800 trillion in 1929 before the stock market crash.

• But employment lagged behind. It didn't fall below 10% again until 1940. Why? Economic historians debate this, but the most recent work stresses that the recovery from late 1938 on until the war (December 8th, 1941 . . . day after Pearl Harbor) was mainly productivity driven, so that unemployment didn't fall any faster than it did, remember, in 2002 and until the summer of 2003 after the recession of 2001 ended (Oct that year). In fact unemployment continued to rise throughout 2002 and peaked at 6.3% in May 2003.


......

5) The key point here about FDR and how it relates to Obama and our current dismal situation.

FDR was described by someone as a man with a 2nd-rate intellect but a 1st-rate personality. As David Brooks notes apropos of the current economic crisis and the two presidential candidates, Obama has both:

* a 1st-rate intellect

* and a 1st-rate character . . . exactly what the former Bush-W White House consul had told my friend this last summer.

………….

5) Beyond all that, I have been reassured by advisers that Obama has assembled for security and foreign policy matters. In fact, on June 28th --- to emphasize his bipartisan concerns --- Obama lauded Secretary of Defense Gates and said he would be delighted to have Gates stay on in that post in an Obama presidency.

And then there is his choice of a very well-qualified man for his Vice President running mate --- a remarkable contrast with McCain’s astonishing, half-demagogic tactic to appoint a loud-mouthed, brazen clapper-clawing ignoramus to consolidate the Republican base . . . a woman so inclined to hateful rabble-rousing that McCain himself had to call a halt the other day to the vicious haters and their outbursts for Obama’s hide.


........

There are some other reasons, QT --- but as important as the ones I've mentioned though.

........

Michael Gordon, AKA, the buggy professor

PS:

I dealt with the scholarly controversy about FDR’s economic policies and the Great Depression yesterday at the Marginal Revolution, with a key biographical link. Click here for the buggy comments about FDR and, to repeat, the scholarly controversy about his recovery programs.

 
At 10/13/2008 10:14 AM, Anonymous qt said...

Buggy,

Thank you for explaining some of your reasons for supporting Obama although the post does not related directly to specific issues raised in my previous posts.

I still have concerns about what an Obama administration would do in terms of international trade agreements, taxation, public spending, and rationale for the deployment of U.S. troops. Would have appreciated your comment on foreign policy issues raised in the debates by Biden and Obama.

Funnily, I was relieved to learn that an Obama administration would finance its programs by taxing the middle class rather than going into deficit. Still concerned that foreign tax credit and capital cost allowances are described as examples of "tax loopholes" for oil companies in Obama's platform which seem to me to be perfectly legitimate business deductions.

We are both rather different in our approach. I look at detail and specifics of public policy whereas it would appear that you are more focused on the vision, management style, and team. Hence, without referring to the details of policy, the information seems to fall short of my need for detail. It is not that one approach is correct just a difference in personality.

It is of interest to hear the impression of others of Senator Obama. These views of Obama as an extremely bright man are supported by what I have read and those of my friends who have had contact with him.

Thank you for the apology.

 
At 10/13/2008 12:52 PM, Anonymous qt said...

Buggy,

You have presented FDR as an argument for Obama providing a detailed list of accomplishments of America’s longest serving president. While this argument would certainly influence one's opinion of FDR, how does it apply to Obama aside from the reasonably intelligent person theory (ie. any intelligent person will come likely perform about the same as any other plus or minus)? Can we for example imagine that the foreign policy of the U.S. under Ronald Reagan would have been the same irrespective of who sat in the oval office?

While one can readily concede the intelligence of the candidate, this theory does not take into account the philosophy, political orientation or life experience of the nominee. Doesn’t the basic phiilosopical approach affect how one interprets a problem, how one weights the factors involved and determine the fundamental approach to public policy.

Do we not need to examine the legislative record, the speeches over the last 18 months, and the extensive writings of the nominee to determine what philosophical leanings guide Senator Obama’s decisions? The past which needs examination is not the presidency of FDR or Bill Clinton but the more immediate history of the candidate himself.

As a fiscal conservative with a free market orientation, the red flags go up around Obama's emphasis on “collectives”, “morality” as a guiding principle in foreign policy, “unilateral withdrawal” from free trade agreements, and anti-corporatist rhetoric. There are many pundits and economists who readily dismiss these kinds of statements as high spirited campaign rhetoric. Perhaps, they are correct.

There is only one thing I wonder. What will a President Obama do? Will he embark on a program of trade protectionism, and an major expansion of social services on the scale of the New Deal? I don't know. Do you?

If one takes him at his word, his positions have shifted on many subjects. Is this pragmatism, better knowledge, flexibility or political positioning...again, I really don't know.

 
At 10/13/2008 3:21 PM, Blogger the buggy professor said...

QT:

Thank you for your replies, with a question still left hanging: what will Obama do with free trade?

1) Right now, I do not know --- and what's more, whatever any candidate says now will be influenced in my view by three developments that will confront any new administration, and for at least a year or two . . . and maybe longer.

2) To wit:

* What happens to the real economy in that interval --- especially GDP growth and unemployment levels.

.

* What happens in public opinion . . . which will be reflected not just in survey polls, but in the behavior of Republican and Democratic Congressmen and Senators. Specifically, will the unleashed populist backlash against globalization and freer trade --- as well as the rage unboxed and directed at big finance and big business (as well as slow if not stagnant growth of average wages) --- start ebbing, remain the same at virulent levels, or even grow?

.

In the latter two cases, some sort of restrictive trade practices might be likely with either candidate in office: such as Reagan's policies to strong-arm countries into opening up their markets on pain of American retaliation. Or Bush's demagogic protection for the steel industry in order to boost Republican Congressional gains.

.

I suspect too, whoever is president, there will be bilateral talks with the Chinese -- as occurred in the 1990s --- to achieve more market-opening for US goods (which talks achieved little, if nothing: it was the huge economic crisis in Japan that simply led businesses to begin buying cheaper goods and inputs.)

.

Beyond that, I suspect that an Obama or a McCain administration will struggle and maintain free trade with West Europe, Japan, East Asia (except for what I said about China), and India . . . the latter emerging as a major ally of the US. Not just in the war on terrorism, but as a potential balancing Asian giant against Chinese power.

.

* And finally, day-to-day challenges that have obliged even Bush-W to extend government regulations and government support over the entire financial system in ways fully at odds with his anti-regulatory, free-market views.


.......

3) The analogy with FDR: it will take a 1st-rate intellect, advisers, and pragmatic outlook for any president to deal with both our economic and foreign policy challenges. The economic especially. And John McCain --- whose behavior last Friday in fighting the bigots, the terrorist-catcallers, and the viciious other haters at his and Palin's rallies has restored at least some of my respect for a man I very much admired in the past (before this spring and summer) --- is both an older guy, subject to deadly cancer, and does not have a 1st-rate intellect . . . however much his political know-how in the past made him a bipartisan champion in many key areas. (As well as a critic of Bush-W's torture-sanctioned policies and stance on the environment.)

...

4) More generally, whether you like it or not, the deregulation over the financial system --- as opposed to non-financial services and industries --- is over. And, I suspect, the same is true of tax-breaks that favor (yes, favor) the tremendous incomes of the very rich.

When the top 1% of income earners in this country found their incomes growing annually between 2002 and the start of this year by 13%, and the average growth of income for the other 99% --- 99%! --- was 0.9% (see my post and use of an outstanding study by an economist in another, more recent thread) --- then populist rage will be partially appeased by ending those huge tax breaks for the very rich.

The same is true, I suspect, of a thorough revamping of our health system insurance . . . and while I think it's a toss-up between McCain's and Obama's policies, the independent non-partisan Tax-Policy Center finds that McCain's policies (including health) will cost more for taxpayers in the end.

.......

4) Oh . . . I am myself now 69 years of age --- younger than McCain. And I can tell you bluntly: though I still have a pretty good mind, it does not function with the speed, recall, or inspired leaps the way it did even five years ago.

Time for a younger, fresher president. Maybe like JFK again --- and though Obama has had less experience in Congress than JFK did before he was elected, Obama has in my view an even better character --- a cool, collected, pragmatic one (yes, pragmatic: his left-wing original supporters see him as a sell-out) --- and an even better intellect. (Lots of my professors in grad school were JFK's main advisers, and I think I know whereof I speak in Kennedy's case.)

......

Hope this clarifies my own views.

Take care,
Michael (Gordon)



1)

 
At 10/13/2008 4:16 PM, Anonymous qt said...

Michael,

Agree that events and trends in public opinion do shape a presidency by defining the possibile.

In the area of mental acumen, Obama would appear to be the brighter bulb. Hopefully, the more populist ideas espoused by Obama were the necessary window-dressing to win far left element of the Democratic party.

Fortunately, the U.S. system of government requires the executive branch to work with the other branches of government. The founding fathers were very forward looking in pitting different interest groups against one another so that the country is not shaped by any individual but arises from the aggregate. This approach may be acrimonious and partisan at times, but it would appear to have definite advantages over the Canadian system where a government with a majority can pretty much do what it likes.

By contrast to U.S. democracy, I am currently reading 900 Days: The Seige of Leningrad by Harrison Salisbury which provides a wonderfully researched and rich portrait of Russia under Stalin.

I doubt this forum would long be tolerated even in modern Russia.

 

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