Friday, September 7, 2012

What This Year's Presidential Election is Really About

The 2012 election is perhaps best described as about the proper role of government in creating prosperity compared to the proper role of the individual.

Accordingly, it's essential that We the People are well informed with respect to how economic growth, prosperity and good jobs can be best created and sustained.

Two Divergent Paths to Prosperity contains an excellent analysis of the two competing points of view seeking the electorate's approval this November:

"Republicans gathered last week in Tampa, Fla., to sketch out their vision of prosperity. Democrats gathered this week here in Charlotte, N.C., to sketch out their vision of shared prosperity.

This difference—between a theory of prosperity and one of shared prosperity—may not sound like much. But in fact it is profound, producing potential differences in tax burdens and spending decisions that can be measured in trillions of dollars in the decades to come. . . .

In some recent elections, serious people have argued there were no meaningful distinctions between the two parties. No serious thinker, and certainly no one listening over the past two weeks, could possibly claim that this year.

The core of this difference lies in the parties' views on which economic philosophy produces prosperity in the 21st century. The argument isn't really about the past. . . .

Instead, the important differences lie in what the two parties say should happen now.

The Republican case is that Americans prosper when, and only when, the country broadly prospers, and that only private enterprise can lift it to that level. And right now, the GOP asserts, a combination of over-taxation and misguided attempts by Washington to steer the economy have left private enterprise hobbled and financial markets warped by government borrowing, while the growth of an entitlement society has made the government too expensive and put Washington essentially in charge of at least one entire industry, the health-care sector.

In this view, it is pointless, and in fact harmful, to try to lift the prospects of middle-class Americans by using government policies to bring them a bigger slice of the economic pie—for that doesn't work if the whole pie isn't growing.

Republican vice-presidential nominee Paul Ryan summarized the GOP position best by saying in his acceptance speech, "The choice is whether to put hard limits on economic growth or hard limits on the size of government, and we choose to limit government."

Democrats have long called that trickle-down economics, and argued it produces a profoundly unfair world. This year's convention was significant because the party launched a more coherent effort to link its call for economic fairness to an argument that fairness also produces a more prosperous country.

Often this year, Democrats' calls for fairness have seemed designed mostly to acknowledge that there is pain out there and it's only right to spread it around—that is, that the wealthy should pay more in taxes so the burdens of reducing the deficit, paying for health care and providing education and infrastructure don't fall disproportionately on the middle class. The main point was that it was simply the just way to operate in a time of economic distress.

But increasingly Democrats here in Charlotte began making a different kind of case. They argued that spreading more of the tax burden to wealthier Americans in order to continue government programs would produce a middle class made up of strong consumers and well-educated workers, providing a sturdy base for economic growth.

Perhaps not surprisingly, former President Bill Clinton was the Democrat who framed this argument best.

"It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics," he said in his convention speech Wednesday. "Why? Because poverty, discrimination and ignorance restrict growth."

And the message was seconded Thursday night by President Obama, who linked helping the middle class to boosting economic growth by declaring in his convention speech that he seeks "to restore the values that built the largest middle class and the strongest economy the world has ever known." Thus has the fairness argument morphed into a growth argument.

What's the real-world difference between the two visions?

It is substantial. President Obama envisions a government that spends, on average, 22.5% of the country's gross domestic product over the next decade, while Republican presidential nominee Mitt Romney envisions 20%. That amounts to a difference of more than $6 trillion, affecting the shape of Americans' tax payments as well as Medicare, defense and education spending—a difference that justifies all those convention speeches."

Summing Up

One extremely important thing underemphasized in the above discussion is whether government interventionist policies enhance or detract from our nation's general level of prosperity, setting aside the impact of governmental restrictions on individual opportunities and freedoms.

In other words, does government intervention, including monopolistic practices and the inevitable picking of winners and losers, which admittedly may be well intentioned and designed to help the economy, coupled with the required taxation and borrowing policies necessary to finance that intervention, add to or subtract from the general well being and prosperity of We the People?

In my mind, the answer to all these questions is as simple as picking individual MOM or betting on the wisdom of government OPM. And we need look no further than our own Declaration of Independence, the U.S. Constitution or Europe's current economic malaise for guidance as to whether we should stress and emphasize collectivism or individual self reliance and freedom.

But there are other important considerations about the individual versus the collective to be decided as well.

Who should decide about work place matters which affect the employees? Should it be union leaders or the individual employees? The big salaries union leaders enjoy originate from the membership dues they collect, which in turn come from the companies' payrolls otherwise headed for their employees' paychecks. Oh, and by the way, union contributions to run campaign ads trying to elect Democrats also come from that very same place, whether employees wish to spend their money that way or not.

And while we're on a roll, it should also be noted that the wealth of the Bushes, Clintons and Obamas has largely come, at least indirectly, from their years as "public servants." That's the political way to get rich and powerful while living on unlimited expense accounts at the same time.

Sometimes it pays really well to be a public servant attacking those in the private sector who made their money the old fashioned way --- they earned it (Remember that old Smith Barney commercial, fellow oldsters?). And lest we forget, many government workers today are paid lots more and enjoy much better retirement benefits than their private sector counterparts. Aren't government monopolies and public sector unions great for We the People?!

And the choice this year will also be about the free choice of parents and students versus government knows best bureaucrats concerning where their children will attend schools.

And it's the same thing for individual free choice or the lack thereof when choosing health care, nursing home care and retirement security. Who will decide these things, the MOMs or the OPMs?

Finally, let's be sure to separate the decision itself from the financial impact of that decision. In other words, the money will be there, but who decides how it will be spent? And will that make a big difference in how much money is spent? And if so, will that mean more or less MOM or OPM spending in total?

In simple terms, should government bureaucrats be allowed to tell us where the money raised on our behalf, whether by own or others' taxes or voluntary contributions, must be spent or will we be allowed to make those determinations for ourselves and our families?

Those are just a few of the very real choices Americans will be making this November concerning our nation's future, its level of general prosperity and our citizens' well being. At least that's the way I see things.

Thanks. Bob.

No comments:

Post a Comment