There are many political issues that preoccupy us on a daily basis. Some care deeply about issues like climate change and environmentalism. Others are concerned about healthcare costs and the future of Social Security. On John McCain’s website, McCain describes his stance on 19 vital issues, including the second amendment, the space program, and the “sanctity of life”. Not to be outdone, Barack Obama lists 23 issues on his site, although blindness caused by small text does not seem to be one of his major concerns. However, while recent news headlines have revolved around another investment bank possibly going under, the takeover of Fannie and Freddie, and our highest unemployment rate in 5 years, the candidates have been arguing over… lipstick.
After spending four years studying economics in college, I would like to think that the economy is more newsworthy than another story about Sarah Palin. But even while we hear about it all the time, the economy is often difficult to understand, and even more difficult to explain. The complexity of today’s economy can lead smart people to different conclusions with regards to policy… thereby confusing the rest of us even more.
For simplicity’s sake, I would argue that the difference between Republicans and Democrats is that Republicans focus on the macro aspect of the economy, while Democrats focus on the individual. From a macro perspective, we judge the economy based on indicators like the stock market, consumer confidence, the unemployment rate, and GDP growth, to name a few. As individuals, however, our perception of the economy is colored by our own experience: Do we have a job? Can we afford to buy things? Do we have money in the bank? Conservatives promote free-market ideals, lower taxes, and less government–sometimes at the expense of unskilled laborers and people who have fallen into misfortune. Liberals, on the other hand, advocate for an active government to temper the market’s unpredictable and unequal consequences on its citizens–sometimes at the expense of productivity and efficiency.
Then, determining good economic policy may ultimately depend on one’s beliefs and values.
My personal opinion is that while conservative economic policy may lead to greater productivity and wealth, I do not believe that increasing wealth is the only source of fulfillment for most people. The Darwinian inclination of the market can create an unhealthy focus on accumulating wealth as the benchmark for success or happiness, and can lead us to lose compassion for anyone less fortunate. We also know that a rising tide does not lift all boats, as inequality in America is just getting worse. I would rather live modestly in a community where I feel safe, than lavishly in a place where I’m constantly looking behind my shoulder.
An interesting take from RFK on our measure of the economy:
Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product – if we judge the United States of America by that – that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities…. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. — Robert F. Kennedy, Kansas, 1968
Of course, the reason why most economists are conservative is because it’s difficult to measure the joy of children’s play and the behavioral reaction to growing inequality. For a conservative perspective and more technical tidbits and interesting facts about the economy: http://gregmankiw.blogspot.com/