The Economics of the US Presidential Election

With Hilary R. Clinton's support of Barack Obama's nomination as the Democratic Nominee for Presidential Candidate, we are now at a stage where we can include John McCain in the discussion. At the beginning of the Democratic Primaries I made a prediction. It was not one based on an in-depth understanding of American Politics. It was one based on observation of human nature. I predicted that If Clinton did not win the nomination, Obama would win and if Obama won, then McCain would be the next President. I predicted that Clinton would not be Obama's running mate simply because she had no desire to be second in charge. She'd done that job already as the First Lady. I also thought that America was not ready for their first black President but since then the media has convinced me that the public has gotten over that issue already.

Having listened to all three speeches at the conclusion of the Primary race, the one thing that differentiates McCain and Obama is the Economics behind the content of their speech. If you filter out the subtle (and not so subtle) attacks at each other you hear quite clearly that from an economic standpoint they are very clearly on opposite sides of the fence. Obama's speech is about fixing the thing that George W. has messed up. Excluding the Iraq war everything else is about Government intervention. Healthcare, education, barriers to trade to protect American industries and supporting the middle class. His message is clearly lets do all the things that we have not done right in the last eight years. McCain on the other hand takes a different approach. He looks back and says, we tried these things, it didn't work so lets let the American people decide for themselves. Or alternatively stated, let's not intervene, let innovation thrive through necessity and let American ingenuity find better ways to doing things that foreign manufacturers are doing manually due to lower running costs. Let's not put up barriers to trade because inevitably, America is part of a global economy and they need to find their competitive advantage.

This really is not surprising that Obama takes a Keynesian economic stance in his policies while McCain takes a more Laissez Faire approach. If you take two of the most respected economists in recent history and match them to which administrations they advised you will see that there is a clear distinction between the economic policy outcomes of electing a Democratic as opposed to a Republican President.

John Kenneth Galbraith was a student of John Maynard Keynes in that he believed in Government intervention was the way to control things like inflation, economic downturn and to create greater equality in the distribution of wealth. He we born in 1908 and died in 2006. During his life the last President of the United States of America that he served was Bill Clinton and has in the past also served Roosevelt, Truman, Kennedy and Johnson. All Democatic Presidents.

The other economist I'd like to draw your attention to is Milton Friedman. Friedman was born in 1912 and also died in 2006. He saw much of the same America that Galbraith saw and up until the 1950's was also a supporter of Keynesian interventionism but it was toward the latter part of his life that he began to support Adam Smith's "invisible hand" and advise towards a free market fiscal and monetary policies. In 1976 he won the Nobel Prize for Economics. Friedman advised Ronald Reagan during the 80's but also the other conservative union buster Margaret Thatcher.

So who will be the next POTUS? My prediction might be a bit shaky now. The US is just now coming out of a Recession, the middle class have been hit the hardest and Obama is the best political orator I have seen for a long time. If I were to assume that American voters were voting for America then McCain would still be the winner simply because I believe that a protectionist/ interventionist Government inevitably leads to a weaker nation. Unfortunately democracy dictates that it is one vote per person and not one vote per dollar and the votes that will benefit the most in the short to medium term is middle class ones. The same votes that Obama will be selling job creation, better education and cheaper healthcare to. All things that a McCain cannot offer if he is to remain true to his free market roots.

It's going to be an interesting race this year. Pass the popcorn please.