Tuesday, June 17, 2008

I Told You So

Anytime my students hear me say something that doesn't affirm their bent for supply-sider cowtowing, they think I'm being a biased liberal political stooge, so this post goes out to them.

The Economist is considered pretty objective (this week's cover: "Iraq Starts to Fix Itself"), if not a bit rightish on economic issues. About a dozen times, when asked or when discussing an issue, I emphasized that there is often some ambiguity about the aggregate impacts of specific policies, and even if a policy is more efficient than the competing proposals it is not always the one that stands the test of democratic election cycles. So here are a few snips from an article on the competing proposals, as summarized by the Economist:

On June 9th Barack Obama began a two-week tour to battlefield states, his first as his party's anointed leader, with a big speech on economic policy. He accused John McCain of favouring George Bush-like profligacy by proposing tax cuts he can't pay for. Mr McCain shot back with a speech of his own next day, saying that Mr Obama will raise taxes and unwisely renegotiate trade agreements. Strangely, both of them may have a point.

So, as I've said, neither party has a monopoly on bad economics. The article concludes:

Mr McCain hopes he can avoid crushing deficits with mysterious spending cuts, while Mr Obama relies on varied measures his campaign claims would somehow raise almost a trillion dollars over a decade.
The figures are debatable, but there is one clear difference. Mr Obama's plan would redistribute cash to lower- and middle-income Americans, while Mr McCain's would skew benefits towards the wealthy. That's something voters may find it easy to take a view on.

In other words, the question is much more one of distrubution of economic benefits, not which are going to be greater on the balance of things.

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