Thursday, September 4, 2008

Missing from McCain's Speech

Another area where there seems to be little daylight between the major party candidates is in the conceit that government-sponsored training or education is an all-purpose solution for economic advancement. McCain had a better real-life example of economic advancement in the audience, in his running mate's husband Todd Palin. Todd learned one of his trades from the company he worked for, BP -- not from a government-sponsored training program (I doubt he learned his other trade, commercial fishing, from a government program either). McCain could have used the opportunity to point out that allowing more domestic energy production will create more high-paying jobs like the one Todd Palin had, but I guess that would have conflicted with the line elsewhere in his speech where he made bogeymen of big oil companies.

Although increasing domestic energy exploration and production will create more high-paying jobs, of course it won't be a panacea either for those whose jobs are lost to outsourcing. That said, the idea that the government is going to retrain laid off workers for jobs that "won't go away" isn't serious. How would the government know what skills will be needed five or ten years down the road? A better approach from the government would be to enact policies that will encourage more companies to set up shop and hire people in this country.

18 comments:

Anonymous said...

McCain's speech was a dull, poorly presented rehash of old ideas.

It made me wish Palin was on the top of the ticket.

McCain should take a page from Ronald Reagan and just let government "get out of the way" in order to "turn this bull loose".

DaveinHackensack said...

Today's GOP still invokes Reagan's name, but it basically offers a lite version of the Dems' proposals of the government helping you get ahead.

doofus said...

Funny that many Democrats say the same thing about their own party (not re: Reagan, but GOP-lite). Consider the reality, though.

DaveinHackensack said...

Doofus,

I wouldn't define as reality an opinion piece written by a politically-biased economist. Blinder offers no explanation for why he thinks Obama's economic plan (to the extent either candidate's menu of giveaways can be called that) would lead to higher economic growth. At least he acknowledges a point I've made before, which is that the U.S. presidency is a relatively weak office with respect to domestic and economic policy.

doofus said...

Very true about the economic powers of the president. Though as he points out, statistical regularities, like facts are stubborn things.

I can't speak to the author's political affiliation, though it doesn't surprise me that it's not the message but the messenger that is impugned. Which incidentally was not about Obama's plan or McCain's, but the persistent difference in economic performance under different partisan administrations.

To paraphrase Reagan, "are you better off than you were eight years ago?" For many Americans, the answer is no. For this American, the answer is no.

DaveinHackensack said...

Doofus,

I'm not impugning the man, just pointing out that he hasn't provided any explanation there of why the policies Obama is advocating will improve the economy. If you didn't know who Alan Blinder was before reading his piece in the NY Times, all you had to do is read the brief bio at the bottom of the essay to know what his political bias is.

Statistics may be stubborn things, but it's useful to ask what they mean. If there has been higher economic growth, on average, under Democratic presidents, is that because of policies they enacted? Is it because of policies enacted by their predecessors (there are often lag times before economic policies take effect)? Is correlation or causation at work?

More to the point: what of the menu of goodies Obama is proposing does Prof. Blinder think will improve the economy, and why?

With respect to your situation specifically, I'm sorry to hear that you feel you are worse off today than four years ago, but which specific Bush Administration policies (if any) do you feel made you worse off, and why?

The reality is that Americans had been spending beyond their means for the last ten years, and a lot of consumer spending (and hence, a lot of economic growth) has been driven by rising asset prices over that time. That was unsustainable, and now it's over, and the de-leveraging process isn't fun. Would this have been materially different under a President Gore or Kerry? I doubt it. The political impulses that drove the real estate bubble were bipartisan; both Bush and Clinton sought to expand home ownership to more Americans, even if that meant offering credit to those who were poor risks.

doofus said...

I don't think either one of us is bound to change our minds, which is probably an apt metaphor for the state of politics in our country. As such, there isn't much point in this comment, or the debate as a whole.

That said, I will address your comments. I didn't say you impugned the man, but his argument. You said nothing to refute the data, only produced a label for the man who published it. It would be useful to ask what the data mean and what caused them. Probably beyond the scope of a brief cover story of the NY Times business section, and I doubt we would more than two economists to agree on anything so open to debate, particularly if it depends on their political cast, as you say.

You ask about specific Bush policies that have made my particular situation worse. But that was, at least in part, the genius of that particular Reagan quip. He didn't need to provide specific examples to tap into the general malaise people felt about the Carter years. And I doubt that any specifics I cited would help to convince you. That said, Bush's much-vaunted tax cuts have done nothing for me. My payroll taxes have remained unchanged, the pittance of a change in my income taxes (approximately $400) makes no practical difference in either my income, or standard of living. In the meantime, that marginal tax cut for the top 1% or 0.1% was materially different (his "base" as he once joked), especially since their payroll taxes are capped, whereas mine are not. So I get to sit by and watch the federal debt double (under Bush, the "conservative") and that $400 chewed up by inflation that has doubled? tripled? nobody really knows right now.

You're damn right, I think we would have been better off under a Democrat. We'll never know. But I do know that things could not have been much worse under Bush.

doofus said...

Before I get any comments, let me just apologize for that link. I should not have included that. An impulsive moment cemented by the send button. My regrets. -d

DaveinHackensack said...

Doofus,

I didn't attempt to refute Blinder's data, because I assume the data he quoted was true. My point was that Blinder's opinion piece said nothing about why Obama's policies would be good for the economy. And neither did you, for that matter. If you want to argue why any of his specific policies would be better than the alternatives, feel free to do so and I'll address your arguments.

Anonymous said...

McCain's energy plan will ease the pain in the near term at the expense of the long term and our collective wallets.

Drilling deeper, deeper and further out, spending zillions on pipelines from Alaska, etc. only makes sense because we have already spent zillions on inefficient SUVs, highways, and infrastructure. The solution is not spending more on old-energy infrastructure.

The solution: higher taxes on old infrastructure to motivate people to migrate to a sustainable new infrastructure. Lowering taxes on gasoline is about as stupid & wrong as one can imagine. It reinforces a stupid behavior (buying SUVs, moving to suburbs and commuting 30 miles each way, building McMansions, etc.)

Channel the tax revenue into alternative transportation and energy programs and OUT of our highway system.

If a bunch of aliens plopped down fresh on the earth and were told to build a society, given the access we have to energy today, they would not say, "hey, let's go to alaska and build a 1000 mile pipeline. Let's go to Wyoming and drill 20,000 natural gas wells that are each 2 miles deep into the earth. Let's build an oil rig in hurricane alley."

I think maybe these aliens would build a factory that could fit on one city block capable of producing one, low-tech, 150 watt solar panel every 1 second. This single factory could provide enough solar panels over the 30 year life of a solar panel, to provide energy for 1 million households. Maybe they'd throw up a windmill or two, also.

Anyway, tax breaks to "ease the pain at the pump" as just irresponsible and stupid.

DaveinHackensack said...

Anonymous,

Increasing domestic oil & gas production versus alternative energy is a false dichotomy. No one is proposing drilling instead of building windmills, solar panels, etc., and McCain specifically mentioned an "all of the above" approach in his speech (although he still opposes drilling in ANWR, unfortunately).

For years we've had tax incentives to support alternative energy. The reality is that the government can't legislate the pace of technological progress. Mandating that X% of electricity come from solar and wind absent technological advances that make the increase feasible just means you are legislating higher energy prices and rationing. In other words, you are legislating a smaller economy and a lower quality of life for most Americans.

Regarding "getting out of" our highway system, I'd be interested to read what you think would be a feasible alternative to it. This is the sort of thinking we get when Tom Friedman is treated as an energy expert.

Anonymous said...

Lowering taxes on conventional energy sources, i.e. McCain/Palin's gas tax holiday, is the same as a subsidy for that energy source.

Don't encourage Bubba to buy another 13 m.p.g. SUV and move further out in the burbs for his 30 mile commute to work.

Use tax policy to encourage Bubba to buy a Prius and move out of his McMansion and back into a moderately sized house closer to his job...

Already, the government successfully uses tax policy to encourage Bubba to own his house instead of renting, save money for retirement, save money for education, increase consumer spending to head off recessions, contribute to a health savings account, etc. All examples of good tax policy to improve society.

Gasoline taxes should be raised, or at the very least kept the same. Already, they're lower in the U.S. than every developed nation.

Anonymous said...

FWIW, the tax incentive to support alt. energy is lame. It's a credit capped at $2k per household. Germany and Spain have serious incentives, thus they have a monumentally higher adoption rate.

DaveinHackensack said...

"Lowering taxes on conventional energy sources, i.e. McCain/Palin's gas tax holiday, is the same as a subsidy for that energy source."

McCain and others proposed waiving the 18.4 cents per gallon federal tax on gas over this past summer, to help ameliorate the record high prices. The summer's over, so this proposal is now moot.

If Senator Obama thinks that gas prices should be significantly higher, and that federal gas taxes should be raised to get them to that level, let him say how high he wants to raise the tax and run on that platform.

J K said...

The Bush years have absolutely torpedoed our country for a very long time. I almost feel sorry for whomever is the next president because no doubt they will get blamed for the repercussions of what Bush is leaving them. While it can be argued that certain negative aspects of our economy would have happened no matter who was president (housing bubble), you certainly wouldn't have seen Al Gore fall in with the neo-cons and dive headlong into Iraq at the behest of AIPAC and Haliburton. Dwight Eisenhower would not recognize the Republican party of today, so its not suprising that his grandaughter is supporting Obama. The Iraq war has plunged our country into massive debt and we will have to pay for a long time for the biggest foreign policy blunder of the last half century. Its just silly to think you can indulge on quixotic missions like that and slash the government revenue to pay for it. Oh, it will be paid for, via the "invisible tax"--inflation. I already suspect that I've paid much more due to inflation (which is just getting started and deliberately minimized in govt data) than I've saved in any Bush tax cut. Not to mention that the salary rates in my industry came to an absolute halt when the Republican congress and President refused to increase minimum wage for one of the longest periods of time in history. (obviously I don't make min wage, but that's one thing that really does 'trickle up' the chain quickly) The Clinton years were much, much better despite his faults. But if he can be impeached for lying about getting some head, then some members of this administration who lied about the war should be facing multiple felonies and prison time.

McCain is not a front man for the military industrial complex/neocons/pseudofascists like Bush was, he's the real deal. If McCain is elected I predict it will be just a few months before we sponsor an Israeli attack (with direct US military assistance?) on Iran and plunge our country further in debt and spike energy prices further. The Dem's are also pillagers of the golden pot, but guess what, I'd rather see a higher % of that money stay in the country. Perhaps its beyond the scope of government to subsidize education and retraining of workers, but I'd much rather see that than subsidizing the dealers of death and chaos in the middle east. McCain sure showed where his priorities are in his speech - forget the US consumer, get your red white and blue on and fall in line to do battle with the war hero commander in chief (< talk about a 'personality cult'). The only question is, can he possibly be worse than Bush? I doubt it, but I don't see much of an improvement either. Hopefully he won't erode our civil liberties as much as Bush did at any rate (that would have been Giuliani's specialty). I was hoping he wouldn't capitualate to the Bible-thumpers either, but Palin crushed that hope. Well if they are going to promote religion in science class, I'd better make sure that mine is funded well enough to have equal representation and complete the dumbing-down of america.

DaveinHackensack said...

J.K.,

You ought to take a moment to look up what percentage of the federal budget has been spent on the Iraq War annually before making such an expansive claim. You may be surprised. It has averaged about 5% of the budget, versus about 40% for entitlement spending. The Iraq War spending will wind down over the next few years, as the Iraqi government grows strong enough to defend itself, but entitlement spending is growing every year, and a faster rate than our trend GDP growth rate.

DaveinHackensack said...

Another point of disagreement: I suspect that whoever gets elected president this year will get credit for the good economy we have when he runs for reelection, simply because by 2012 we'll be at a positive point in the economic cycle, as the current issues with the credit crunch and real estate bust will have worked their way through the system.

Anonymous said...

I guess you better tell Palin because a gas tax holiday was in her debut speech.