Death and taxes
How much of a role should government play in the management of the American economy? An article in the NYT suggests Hillary Clinton thinks it should be substantial.
Senator Hillary Rodham Clinton said that if she became president, the federal government would take a more active role in the economy to address what she called the excesses of the market and of the Bush administration. ...
Reflecting what her aides said were very different conditions today, Mrs. Clinton put her emphasis on issues like inequality and the role of institutions like government, rather than market forces, in addressing them. ... “If you go back and look at our history, we were most successful when we had that balance between an effective, vigorous government and a dynamic, appropriately regulated market,” Mrs. Clinton said. “And we have systematically diminished the role and the responsibility of our government, and we have watched our market become imbalanced.”
These remarks are certain to be compared with Mitt Romney's remarks at the Detroit Economic Club, which were reported in the National Review Corner.
The biggest news was his call for $20 billion per year of “investment in energy research, fuel technology, materials science, and automotive technology,” presented both as a way to help the auto industry, and as an alternative to the whole panoply of global warming-related measures that McCain supports. Romney made the sensible point that a unilateral U.S. cap-and-trade regime instituted as a feel-good “statement” that will cost hundreds of billions of dollars and hundreds of thousands of jobs, while not really solving a problem of very uncertain size without global participation, might not be so smart. This issue will move many votes from McCain to Romney today, and it should.
The risk, of course, is that most of this “investment” will be nothing but corporate welfare that props up a decaying auto industry structure, and wastes other people’s money in delaying further necessary restructuring.
But comparing the remarks of both Presidential candidates requires a framework against which to assess their proposals. Romney begins from the premise that government policy already affects the workings of industry. The challenge, given that existing intervention, is to make the correct intervention.
Hillary Clinton similarly recognizes the existing effect of government on the economy. She says, "economic excesses — including executive-pay packages she characterized as often 'offensive' and 'wrong' and a tax code that had become 'so far out of whack' in favoring the wealthy — were holding down middle-class living standards" But beyond the specifics of any particular tax proposal she appeared to claim the economy could benefit from more regulation. In other words, that the market could not be relied on to make rational decisions. Politicians could make better decisions than the market, especially if they 'cared'. "Reflecting what her aides said were very different conditions today, Mrs. Clinton put her emphasis on issues like inequality and the role of institutions like government, rather than market forces, in addressing them. ..."
“If you go back and look at our history, we were most successful when we had that balance between an effective, vigorous government and a dynamic, appropriately regulated market,” Mrs. Clinton said. “And we have systematically diminished the role and the responsibility of our government, and we have watched our market become imbalanced.”
When Hillary added: “I want to get back to the appropriate balance of power between government and the market,” it could only possibly have meant that she felt the market had grown too big for its britches, and that to restore the "balance" government had to increase its share in the decision making.
Framing the debate as an issue of how much power government should have over the economy automatically transforms business issues into political ones. At every stage business must consider the redistributive effects of its efforts, its effect on the environment. In other words, managing a business and earning a livelihood become as much a political endeavor as an economic one.
The electorate will decide which approach they prefer: more government or less government, though its unclear whether, in the blizzard of talking points that now blankets the airwaves, the choice will be framed in clear and definite terms. More likely the choice will be embedded in the sloganeering, in the fine print of the political process. But it's an issue important to separate out and consider on its own. Otherwise some people may find that Change is what is left after taxes. And Hope is what you rely on to get to the next payday.