The American elections are just around the corner. I think I can safely say that the main feature of the campaign to date has been the economy. If issues relating to the economy generally feature highly in the electoral battle, this time all the more so on the back of a four year crisis. Thus, I think it is fair to say that the victor will be whoever manages to persuade voters that they have the best solution for returning America to prosperity.
During his four years in the White House, Barack Obama has distinguished himself with moves that were clearly ‘Keynesian’ in flavour. The idea at the heart of such an approach is that economic growth, in some phases, is in need of being driven and relaunched by public spending. The moment he took up office, Obama approved a ‘stimulus plan’ that allocated hundreds of billions of dollars in subsidies for unemployment, health reform and infrastructure.
Even before this plan was approved, the Cato Institute, a liberalist American think tank, obtained the signatures of over 300 economists who were opposed to the idea. Their opinion is that the role of the State should not be that of diverting tax payer’s money towards sectors considered important for economic growth, instead it should remove the obstacles that prevent a virtuous operation of the market mechanisms. In other words, the State should not take the place of investors and consumers, but should tax them as little as possible so that they can allocate their own money in the best way possible. This is Mitt Romney’s position – and his choice of Paul Ryan as Vice President in particular appears to outline a clear difference in stance between the two candidates.
History has taught us that there is no universal recipe for economic growth. And perhaps, as I am becoming increasingly convinced, it is also time to initiate a discussion on the actual meaning of the concept of ‘growth’ (I have discussed it here but also here). Nevertheless, the debate is stimulating and is worth following, as is any debate based on ideas, particularly because in a few months’ time it will be Italy’s turn to go to the polls, and we can be sure that arguments over the best recipe for growth will feature highly here too.