Thursday, October 16, 2008

money matters

The closing statements said a lot. There was McCain, appealing to the American voters to let him fulfill his destiny, to serve Americans again, and Obama, focusing on how he wants to change policies to rescue America from this slippery slope.

You must have seen it all, read it all, how McCain sneered and rolled his eyes as Obama spoke; how Obama smiled as McCain criticized him. McCain was simply unpleasant. He wasn't always like this, go back and google his appearances on Conan, Leno or even The Daily Show. He spoke his mind. He was fun. But, I suppose as a Republican candidate (after all, he is not running as an independent candidate) he was taken more traditional positions.

But it all boils down to policies and the Republicans severe aversion to having the government involved in people's private lives. (Although, under Bush, the government was not only in their phones, but now is nationalizing banks, which for them, really, is a strict no-no.) Coming from India, we are well used to the government with its finger in every pie. In fact, over here we want more privatization. We feel that is more effective. But let's also keep in mind that if private companies were allowed to do what they wanted -- as has happened in the States -- one would need to government to come out and sort everyone out. Obama's basic argument is that private players have not always been able to solve problems, because they don't have larger policy issues in mind, but profits for themselves and shareholders. That's not wrong, but a country needs a long-term plan too. Even here, say the phone companies hiked up charges to insane amounts, we would expect the government to step in and tell them to calm down. Remember the common man, and all that. ((Same to same Obama.))

I won't bother recapping other arguments they have, you know them. But I did see something on BBC that is worth recounting. They reported, last night as I lay awake at 3am for no reason, that America has seen shopping sales drop drastically in this year -- and the trend seems to have started even before reports of a financial crisis. The country -- despite problems -- has always depended on the American consumer to spend, spend, spend, thereby reviving the economy. That's why, as I understand it, Republicans say taxing the rich doesn't make sense. Then they'll have more money to spend, and it will all go back into the economy and trickle down. Well, clearly, that's not the case.

So, is it worth taxing the rich so that government has the money that it must necessarily spend on some kind of reform, research, relief, instead of a jacuzzi?

I guess my point is that a mixed economy seems to make the most sense.


Dantedownunder said...

Any country that has a government, whatever the nature of the latter, would by definition have the "mixed economy" you speak of. I think the point that you wanted to make was regarding the size of the government in such an economy. Sure enough, this has been a question hotly debated for ages, in various guises. As you point out this is also a fundamental issue of difference between the Democrats and the Republicans. While my support(unsolicited) lies with the Democrats primarily due to their foreign policy, on the basis of economic policies alone, the Republicans have a far more robust agenda than the Democrats. I'll try and explain why this may be so (without numbers). Lets assume that the rich get taxed even more(they're taxed pretty heavily anyway, and I'm far from rich), so the government gets more funds to run relief/development/research. You do agree that the economy cannot sustain itself forever on such handouts, and hence at some point people have to start that spending. So whatever it is that the government does with the money must generate more revenues/jobs. There lies the rub. There is little reason to imagine why people in the government will make the most efficient use of their resources. Why? Because the government never goes out of business. The government doesn't face any competition and the salaries of government officials are generally not updated by performance and hence (often) not incentive driven. Re-election? I would imagine it being easier to pass the buck on in a government than in (most) corporate houses. Having said all this, it is also entirely true that there are scenarios when the government does need to step in. Whether it should stay permanently as a house guest or not, I'm not entirely sure and Obama's plans may mean an expensive house guest who lacks accountability. Even so, as I said before...... Democrats for foreign policy.

IR said...

the us is in problem today , because of the fed's monetary poilicies initiated by greenspan , the i banks simply made use of the regulatory framework .
The commodity bull run ( bubble) and real estate prices in the us , went up due to the cheap money provided by the fed.Since the dollar depreciated , the oil price went up ,the producres wanted a better price .

i dont agree with the concept of a mixed economy save for a few areas such as health,defence,telecom
the govt should provide the regulatory framework and ensure it is strictly enforced, the framework in the first place should keep the larger interest in mind.

as for m/s obama and mc cain , i heard there speech on tv in the annual dinner in new york , they were trying to sound funny , i also heard their face to face debate , all things aside i think the debating talent amongst our politicians is far better

egg style said...

A political party that pooh-poohs the theory of natural selection, restricts women's reproductive choices and legally imposes its traditional preferences on minority sexual orientations and conjugal relationships (even if under benign-sounding covers like 'uniform civil code' etc etc) cannot be said to have an "aversion" to interfering in people's private lives. Moreover, kneeling at a big statue to bang wardrums is not the same as honouring 'liberty'.

Still, on matters of money, the classic big-govt-vs-small-govt debate has been overshadowed by the current debt crisis in large economies. On TV, neither White House candidates showed the nerve to discuss the critical assumptions that underpin the debt and debt-pricing paradigm in force there, so there's not much to admire. But if the question is which of the two demonstrated a somewhat clearer grasp of the crisis's origins and signalled something of an ability to lead the US to a relatively open-minded future (if that is still possible), then the answer would have to be Obama. This is not to suggest that he deserves egghead confidence, just that a combination of intellect and composure is much better than a combination of bravery and grit, going forward.

Anonymous said...

Interesting comparison about debate quality. In US, there is right of center and far right as choices.

India also has left of center (far left is only in tribal belt and out of electoral contention) in addition to right of center and far right.

That is why denocratic debate is better in India, unless you mean TV studio or English debate. Someone pointed out that India has never had a Dante in vernacular