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U.S. ELECTIONS/ Governments and the Economy

MICHAEL SEAN WINTERS comments on the role of the state of the economy in next November’s presidential elections, using history to determine the role of the government in the economy.

Tiananman Square, 1989 Tiananman Square, 1989

It must be somewhat unnerving, for the campaign staffs of both President Obama and his would-be opponents, to realize that the fate of November’s election may be determined largely by events over which they have no control. Corporations are recording record profits, but they are hesitant to invest in new plants and equipment and, most especially, in new employees, so the success of the business community is not “trickling down” to the millions of Americans who are out of work or under-employed. No one knows if the government of Greece will be able to negotiate new debt terms with its lenders. Will the economy of Italy respond to the “austerity” plans of the current government, even though austerity has never once worked before to stave off a foreign-debt crisis? What impact will the faltering economies of Greece, Italy and Spain have on the Eurozone and what will be their impact on the US economy?

The “economic gods” may smile on Obama, or they may not, but there is next to nothing he can do about it. There is a great myth with which we will all have to live for the next nine months. If economic news is good, Obama will take credit. If the news is bad, the Republicans will blame Obama. Beneath the credit-claiming and blame-throwing, the nation is prepared, however, to engage in an important debate about the relationship of the government to the economy. Is the government a help or a hindrance in economic matters? Does regulation help protect the average citizen from the depredations of Wall Street as Democrats contend or are government regulations “job killers” as is argued by the Republicans? Should the government step in to stimulate growth in economic sectors which, for whatever reason, may not have caught the attention of venture capitalists?

There are some historical lessons that are useful, not so much because they prove either argument, but because they demonstrate how ill-served the American people are when the debate is rendered in absolute terms, as an all-or-nothing proposition and with little regard for the variety of influences that determine whether an economy will grow or not, and how few of those influences have anything to do with governmental policies.

June 4, 1989 was one of the most critical days in modern history. On that day, Poland held the first free elections in its history since World War II. Solidarity, the labor movement that became a political movement, won all the seats it contested in the lower house and won 99 of 100 seats in the Polish Senate. It was the beginning of the end of communism in Eastern Europe. That autumn, the Velvet Revolution reclaimed Czechoslovakia for its people. By year’s end, the Berlin Wall had come crashing down. In two years’ time, the Soviet Union would collapse.