I opine further on the Supreme Court and its recent decisions in my column today for the Financial Times.
When the US Supreme Court makes important rulings, discussion ensues on the intent of the constitution’s draughtsmen and how far their purposes should guide the court more than 200 years later. The designers of this miraculously durable constitution would have wished there to be such debate. But I do not think they would be impressed by much else they see. In fact I am sure they would be dismayed and even disgusted by what the court has become.
Its handling of Bush v Gore in 2000 marked a dangerous low, whether you see that as reckless bungling (as I do) or an outright power-grab. But it was no isolated instance. Despite learned claims to the contrary from all its members, the Supreme Court has become an intensely political body. It is a squabbling panel of legislators in robes – partisan and unelected, selected for their politics and appointed for life.
The court is as polarised as the branches of government it oversees. Far from standing above day-to-day politics and defending the system’s integrity, the justices are down in the dirt throwing punches with the rest, pausing now and then to wipe themselves down, write an opinion and reflect on their dignity.
It was unsurprising, and in practical terms maybe not very important, that the Supreme Court struck down the District of Columbia's blanket ban on handguns. In yet another 5-4 decision (the four conservatives plus Justice Kennedy against the four liberals), it ruled that the Second Amendment enshrines the right of individuals--as opposed to individuals serving as part of a militia--to keep and bear arms. It also affirmed that this right is qualified, and that all manner of (unspecified) restrictions on gun ownership and use are constitutional. There will have to be further litigation to test the limits, but in most of the country the ruling will make no difference. The DC law failed because it was an outright ban on handguns, including weapons kept in the home for self-defense, and (the majority said) upholding this law would have meant rendering the Second Amendment defunct.
This is how Justice Scalia, writing for the majority, summed it up:
We are aware of the problem of handgun violence in this country, and we take seriously the concerns raised by the many amici who believe that prohibition of handgun ownership is a solution. The Constitution leaves the District of Columbia a variety of tools for combating that problem, including some measures regulating handguns... But the enshrinement of constitutional rights necessarily takes certain policy choices off the table. These include the absolute prohibition of handguns held and used for self-defense in the home. Undoubtedly some think that the Second Amendment is outmoded in a society where our standing army is the pride of our Nation, where well-trained police forces provide personal security, and where gun violence is a serious problem. That is perhaps debatable, but what is not debatable is that it is not the role of this Court to pronounce the Second Amendment extinct.
Actually I have no objection to my neighbors in DC defending their homes with handguns. I'm all for making burglars anxious. But is this ruling as ruthlessly logical as it purports to be?
The Second Amendment has already been substantially hollowed out--and the Court says it has no problem with that, only with taking it to DC's extreme of outright prohibition. For the sake of argument, then, let us suppose--as Scalia invites us to--that the Second Amendment is indeed outmoded, for the somewhat plausible reasons he mentions. Let us suppose, again for the sake of argument, that hollowing out the Second Amendment all the way to nothing would save hundreds of lives a year. And further suppose that public opinion in DC was solidly behind DC's law. Even if all that were true, the majority says it would not be the Court's job to pronounce the Second Amendment extinct--to do that, Congress and the states would have to climb the mountain of repealing it.
The baffling implication is that the Court can properly take the law all the way from "shall not be infringed" to the tight (and apparently constitutional) controls now exercised in many jurisdictions, but that the last small step to prohibition, however beneficial to the locality concerned, is beyond its competence and demands extraordinary if not impossible political exertions. What am I missing?
Two-thirds of doctoral candidates in science and engineering in U.S. universities are foreign-born. But only 140,000 employment-based green cards are available annually, and 1 million educated professionals are waiting -- often five or more years -- for cards. Congress could quickly add a zero to the number available, thereby boosting the U.S. economy and complicating matters for America's competitors.
Suppose a foreign government had a policy of sending workers to America to be trained in a sophisticated and highly remunerative skill at American taxpayers' expense, and then forced these workers to go home and compete against American companies. That is what we are doing because we are too generic in defining the immigrant pool.
Barack Obama and other Democrats are theatrically indignant about U.S. companies that locate operations outside the country. But one reason Microsoft opened a software development center in Vancouver is that Canadian immigration laws allow Microsoft to recruit skilled persons it could not retain under U.S. immigration restrictions. Mr. Change We Can Believe In is not advocating the simple change -- that added zero -- and neither is Mr. Straight Talk.
John McCain's campaign Web site has a spare statement on "immigration reform" that says nothing about increasing America's intake of highly qualified immigrants. Obama's site says only: "Where we can bring in more foreign-born workers with the skills our economy needs, we should." "Where we can"? We can now.
While browsing Greg's blog (see previous post) I also noted his item on "starve the beast"--the idea, popular with conservatives, that cutting taxes forces public spending lower. He says that a recent column by Paul Krugman implicitly endorses the theory, much as Paul may deplore its application, since it argues that the Bush tax cuts will tie the hands of the next administration. (Yes! That is what they were supposed to do, the White House would say.)
Perhaps I am misunderstanding, but Greg's point seems to be that Paul has somehow contradicted himself by endorsing "starve the beast". How so? One can perfectly well believe that the "starve the beast"/"poison pill" theory is true, and still deplore big tax cuts, so long as you also think that big increases in public spending are warranted (as Paul does). Indeed, the theory, if true, is the best reason for liberals to oppose tax cuts, just as for conservatives it is the best reason (or maybe second-best) to advocate them.
Question: Is the "starve the beast"/"poison pill" theory in fact correct? There is evidence pointing both ways--including the fact that Obama is promising to extend almost all of the Bush tax cuts, which would tend to support the idea. Still, on the whole I don't buy it. Here is a piece [pdf] on the subject I did for National Journal last year, which says why. It references a study by Christina and David Romer, which although certainly not the last word on the subject is for now, I think, the most authoritative word. The abstract of the Romers' study says this:
The hypothesis that decreases in taxes reduce future government spending is often cited as a reason for cutting taxes. However, because taxes change for many reasons, examinations of the relationship between overall measures of taxation and subsequent spending are plagued by problems of reverse causation and omitted variable bias. To deal with these problems, this paper examines the behavior of government expenditures following legislated tax changes that narrative sources suggest are largely uncorrelated with other factors affecting spending. The results provide no support for the hypothesis that tax cuts restrain government spending; indeed, they suggest that tax cuts may actually increase spending. The results also indicate that the main effect of tax cuts on the government budget is to induce subsequent legislated tax increases. Examination of four episodes of major tax cuts reinforces these conclusions.
I hope the Romers are right, as my NJ column explains:
The worst thing about "starve the beast" is the idea that a straightforward argument for low taxes and spending cannot be pressed successfully. You have to cut taxes, which the voters will like, and let them think they can have high spending, too. Later, if all goes according to plan, they will see they were mistaken. It is a strategy based not only on outwitting the Democrats, but on outwitting the electorate as well. It would be a pity if it worked.
Greg Mankiw links to this recent column by Larry Lindsey on what Obama's tax proposals would imply for taxes on the highest earners.
Larry points out: "A high-income entrepreneur would see his or her federal marginal tax rate rise to 53% from 37.7% under Sen. Obama's tax plan."I believe this would be the highest tax rate on earned income since 1971.
As I mentioned in this recent piece, that is putting it mildly--since many states also levy an income tax of their own. Top marginal income-tax rates in the country would rise not to 53%, but to more than 60%.This is assuming that Obama applied the full payroll-tax rate to very high incomes. (In Britain, when then-finance-minister Gordon Brown abolished the earnings cap on "national insurance contributions", the UK equivalent of the payroll tax, he extended the tax above the old ceiling at a rate of just 1%.) Obama has not yet been explicit about the rate at which his extended payroll tax would apply, leaving people to think that it would be at the full rate, once it kicks in at $250,000-plus. His campaign says that nothing has been decided. I'm surprised he is not being pressed harder on this.
Column: What an intelligent energy policy would look like
With apologies for the delay in posting it (I forgot), here is a link to my Monday column in the Financial Times--this week, it's on energy policy. In a nutshell, I criticize the approaches taken by both presidential candidates. I accuse them of pandering about equally to their target constituencies, and focusing on irrelevancies. I argue that the key thing is to reconcile the country to more expensive energy.
The US does not know whether to tax energy or subsidise it, promote domestic oil production or forbid it, treat ExxonMobil and Chevron as champions or pariahs. So it does all of the above. What it knows for sure is that it wants energy security, energy independence and clean air – plus the inalienable right to recreational trucks (not to mention freezing its citizens in summer and broiling them in winter) as though energy were a free good.
What would political leadership on this issue look like? It would dispel confusion, insist that expensive energy was necessary and confront voters with choices – as if they were intelligent adults. Somebody should try it.
Mr Obama has lately been pandering to the anti-business sentiment that blames $4-a-gallon petrol on Big Oil and oil-market speculators. It is true, of course, that oil companies are enjoying a profit windfall from the oil price spike. It is also true, or plausible, that futures trading has driven spot prices above their market equilibrium. But these are not the main drivers of the oil price – nor for that matter is the high price of oil a bad thing, if you care about climate change. Done right, a surtax on oil company windfall profits is defensible – as long as one admits it would deter future investment and that working out what “reasonable profit” means would open a can of worms better left closed. The main thing, though, is that it would do less than nothing to cut the price of petrol. It is a sideshow.
Mr McCain is pandering as well – to the view that $4-a-gallon petrol is caused by bunny-hugging curbs on domestic supply. He is busy chasing votes with his own sideshow: new offshore drilling.
Like Mr Obama, Mr McCain has a point. The present ban on offshore drilling is a mistake – just as it would have been a mistake for Britain to ban production in the North Sea. If oil can be extracted profitably and with appropriately strict environmental safeguards from offshore wells (or, for that matter, from the Arctic National Wildlife Refuge, which Mr McCain still wants to protect), well and good. But the reasons to extract it are that it is a valuable resource that would otherwise be wasted and that diversifying US oil supplies has some benefit, not that it would lower the price of petrol. New oil would take years or even decades to come on stream; when the new supplies arrived, they would most likely have no more than a marginal effect on the world market price.
The US has a compelling economic and geopolitical interest in curbing both its use of oil, especially oil imported from unstable suppliers, and its emissions of greenhouse gases. The right thing is to pursue that goal in many different ways: diversified sources of supply, energy conservation, alternative fuels (including nuclear), carbon capture and sequestration, and so on. But whether you strive to achieve this balance through top-down control and a labyrinthine system of quotas, taxes, subsidies and regulations, or else through a simple and explicit carbon tax, energy will have to get a lot more expensive. How refreshing it would be to hear a politician say so.
I thought Obama's new general-election ad was interesting. To make it more conservative, he would have had to attack gay marriage and call for nuclear waste to be stored in Yosemite. He stands for "values straight from the Kansas heartland where I grew up..." My theory is that he might be courting independents.
And this trailer from Fortune for a soon-to-be-published interview with Obama ("Nafta not so bad after all") would seem to support that theory.
The general campaign is on, independent voters are up for grabs, and Barack Obama is toning down his populist rhetoric - at least when it comes to free trade.
In an interview with Fortune to be featured in the magazine's upcoming issue, the presumptive Democratic nominee backed off his harshest attacks on the free trade agreement and indicated he didn't want to unilaterally reopen negotiations on NAFTA.
"Sometimes during campaigns the rhetoric gets overheated and amplified," he conceded, after I reminded him that he had called NAFTA "devastating" and "a big mistake," despite nonpartisan studies concluding that the trade zone has had a mild, positive effect on the U.S. economy.
Does that mean his rhetoric was overheated and amplified? "Politicians are always guilty of that, and I don't exempt myself," he answered.
All this and Jason Furman too. I thought that a fine appointment, by the way, but never dreamed how significant until I read Naomi Klein.
Barack Obama waited just three days after Hillary Clinton pulled out of the race to declare, on CNBC, "Look. I am a pro-growth, free-market guy. I love the market."
Demonstrating that this is no mere spring fling, he has appointed 37-year-old Jason Furman to head his economic policy team. Furman is one of Wal-Mart's most prominent defenders, anointing the company a "progressive success story." On the campaign trail, Obama blasted Clinton for sitting on the Wal-Mart board and pledged, "I won't shop there." For Furman, however, it's Wal-Mart's critics who are the real threat: the "efforts to get Wal-Mart to raise its wages and benefits" are creating "collateral damage" that is "way too enormous and damaging to working people and the economy more broadly for me to sit by idly and sing 'Kum-Ba-Ya' in the interests of progressive harmony."
Obama's love of markets and his desire for "change" are not inherently incompatible. "The market has gotten out of balance," he says, and it most certainly has. Many trace this profound imbalance back to the ideas of Milton Friedman, who launched a counterrevolution against the New Deal from his perch at the University of Chicago economics department. And here there are more problems, because Obama--who taught law at the University of Chicago for a decade--is thoroughly embedded in the mind-set known as the Chicago School.
Ms Klein rightly draws attention to the irony--I mean, the irony--of Obama's lurch to the right:
The irony is that there is absolutely no reason for this backsliding. The movement launched by Friedman, introduced by Ronald Reagan and entrenched under Clinton, faces a profound legitimacy crisis around the world. Nowhere is this more evident than at the University of Chicago itself. In mid-May, when university president Robert Zimmer announced the creation of a $200 million Milton Friedman Institute, an economic research center devoted to continuing and augmenting the Friedman legacy, a controversy erupted. More than 100 faculty members signed a letter of protest. "The effects of the neoliberal global order that has been put in place in recent decades, strongly buttressed by the Chicago School of Economics, have by no means been unequivocally positive," the letter states. "Many would argue that they have been negative for much of the world's population."
When Friedman died in 2006, such bold critiques of his legacy were largely absent. The adoring memorials spoke only of grand achievement, with one of the more prominent appreciations appearing in the New York Times--written by Austan Goolsbee. Yet now, just two years later, Friedman's name is seen as a liability even at his own alma mater. So why has Obama chosen this moment, when all illusions of a consensus have dropped away, to go Chicago retro?
Why indeed? Why oh why? More than 100 faculty members have signed a letter of protest! The rest of Ms Klein's richly nuanced analysis is here.
I thought most of this week's reporting and analysis on why the new bill to curb greenhouse gas emissions failed in the Senate was a bit thin. It's true that nobody expected it to become law (it was heading for a veto in any any case), but it mustered surprisingly little enthusiasm even so--raising doubts about its prospects next year, despite the fact that a well-disposed president will be in the White House. This is another plug for National Journal, if you'll allow me, but the column by Ron Brownstein clearly explains what went wrong.
The bill would have established enough boards and regulations that the chamber was able to distribute a devastating chart, modeled on those used against Hillary Rodham Clinton's health care plan in 1993, that portrayed the proposal as an impossibly tangled hedge of new bureaucracies...
[It] provoked unexpectedly stiff opposition on a related front. Under the measure, Washington would distribute about half the credits to emit greenhouse gases for free and would auction the rest--yielding an estimated $3.4 trillion in federal revenue over the next 40 years. Republicans such as Sen. Lamar Alexander of Tennessee derided that money as a "slush fund" that would enable massive spending on causes far beyond clean-energy research... To pass, the reworked bill will need to focus more tightly on subsidizing new technology and providing tax cuts to moderate-income taxpayers to offset the higher energy costs it will trigger.
That raises the final problem. Amid soaring oil prices, proponents faltered before critics' charges that the measure would inflate energy bills.
I've just finished writing a column of my own on energy policy that will be in Monday's FT. (You'll be able to read it here too, of course, once it goes live.) It develops and endorses Ron's concluding thought:
U.S. environmentalists won't recover from their Senate debacle unless they candidly ask Americans to bear somewhat higher energy prices now, as the cost of building a more economically and environmentally sustainable future for their children.
In this new column for National Journal, I reflect on Ireland's rejection of the EU's new constitutional treaty.
The European Union's latest pratfall--occasioned by Ireland's rejection last week of a new constitutional treaty--is worth noting for several reasons. To begin with, the outcome has practical implications for the United States. The next president will wish to refresh the alliance with Europe. Ireland's vote, however, throws the E.U. into disarray--or let us say that it perpetuates the disarray already in progress. Anyway, the president will be talking to himself: Europe will be too busy gazing at its own innards to look elsewhere.
Beyond this, the E.U.'s inner writhings are an object lesson for romantic internationalists who worry about global governance and see "multilateralism" and the pooling of sovereignty as the way forward. Never forget that the pantomime in Europe is multilateralism writ large.
You can read the rest of the article here (the link expires in a fortnight).
Barack Obama and John McCain both expect the ailing US economy to work to their advantage in November. Mr Obama promises to make things better. Mr McCain says they will get better by themselves and he will not make them worse in the meantime. These are the customary postures of the two parties. For a fight between an insurgent Democrat and a maverick Republican, the economics in this election is sadly orthodox.
Mr Obama offers the usual Democratic remedies for middle-class anxieties and grievances: new tax breaks and spending programmes, higher taxes for the rich, sabre-rattling on trade, calls for stricter regulation of finance and so forth. Mr McCain, likewise sticking to his party’s script, says that with the economy in a hole, this is no time to be raising anybody’s taxes, restricting trade or doing anything else to get in the way of American enterprise.
Aside from being predictable, the two have something else in common: fiscal myopia. Their tax plans differ in their distributional effects, but less than you might think in overall burden. Mr McCain opposed President George W. Bush’s tax cuts as unfair and inefficient; now he wants to make them permanent. Mr Obama deplores them still, of course, and says he will let them expire – but only for the sliver of the population that earns more than $250,000 (€163,000, £128,000) a year.
Measured against current law (ie, against a baseline that assumes the Bush tax cuts expire on schedule in 2011) and excluding healthcare (which involves some additional tax changes) Mr McCain wants to cut taxes by $3,700bn over the next 10 years. Mr Obama wants to cut them by $2,700bn. That amounts to a 10 per cent cut in revenue for Mr McCain and a 7 per cent cut for Mr Obama. (The estimates are from the non-partisan Tax Policy Centre of the Urban Institute and the Brookings Institution.)
If either man gets his way, the larger part of the Bush tax cuts would thus remain on the books. At the same time, both have ambitious plans for new spending – Mr Obama especially. The budget is in structural deficit and the shortfall is bound to worsen as the cost of the Social Security, Medicaid and Medicare programmes rises. Neither candidate addresses the issue. Politically, they are doubtless correct: voters would rather not think about it.
Robert Samuelson's new column on the candidates is very good, as usual.
For the party faithful, this is a sweet moment. They have their candidates and, whatever the obstacles, can still imagine victory in November. But the rest of us ought to remember that the politics of winning and governing often collide. The first involves maximizing popularity. The second requires farsighted choices that ultimately benefit the country but may initially hurt a president's approval ratings. What have we learned about the candidates' capacity for governing? Enough, I think, to temper the excitement.
He finds plenty of fault in both candidates, and concludes by reminding readers of the case for divided government.
For me, McCain does have one provisional and accidental advantage. By most appraisals, the Republicans will get slaughtered in the congressional elections, and I have a visceral dislike of one-party government. It didn't work well under Bill Clinton or George W. Bush. Divided government doesn't ensure good government, but it may limit bad government by checking the worst instincts of both parties.
It is a point that my National Journal colleague Jonathan Rauch has argued persuasively from time to time. See this piece from 2006 [pdf]:
In a complicated world, good policy is usually bound to be eclectic; in an unpredictable world, successful policy-making depends on correcting errors. Eclecticism comes from compromise, error-correction from coherent criticism. One-party rule seems to short-circuit both mechanisms.
Politicians compromise because they have to, not because they like to. Divided government forces them to compromise as a fact of daily life. Although compromise does not guarantee sound or successful policy-making, it does draw both parties toward the center and produce bipartisan buy-in. It's no coincidence that divided government produced the 1986 tax reform and the 1996 welfare reform, the great reforms of their respective eras.
Two-party rule also helps to marginalize partisan extremists and curb ideological excess. The Democratic Congress moderated President Reagan's unsustainable tax cuts and defense buildup, safeguarding his legacy. In the Clinton era, divided government produced a miraculously frugal fiscal detente. Ronald Reagan and Bill Clinton both succeeded not in spite of divided government but because of it.
The idea is not yet much talked about in 2008. The Democrats seem certain to rule Congress with expanded majorities, yet I don't see many independents (Samuelson aside) arguing that this inclines them to prefer McCain. Come to think of it, why am I not (yet) advancing that argument myself? Good question. I'll have to get back to you.
An interesting exchange between Tyler Cowen and Dani Rodrik on attitudes to free trade. Tyler puts protectionist sentiment partly down to atavistic nativism:
Despite all these gains [from free trade], the prevailing intellectual tendency these days is to apologize for free trade. A common claim is that trade liberalization should proceed only if it is accompanied by new policies to retrain displaced workers or otherwise ameliorate the consequences of economic volatility.
Yes, the benefits of a good safety net are well established, but globalization is not the primary source of trouble for most American workers. Health care problems, bad schools for our children or, in recent times, bad banking practices have all produced greater disruptions — and these have been fundamentally domestic failings.
What’s really happening is that many people, whether in the United States or abroad, are unduly suspicious about economic relations with foreigners. These complaints stem from basic human nature — namely, our tendency to divide people into “in groups” and “out groups” and to elevate one and to demonize the other. Americans fear that foreigners will rise at their expense or “control” some aspects of the economy.
Dani attributes it to the fact that international markets are insufficiently "embedded":
Domestic trade takes place within thoroughly embedded markets; there are clear rules and they apply to all transactions equally. International trade, on the other hand, is conducted in only weakly embedded markets: the rules either do not exist or apply unevenly. I believe this is the fundamental reason why their consequences are often perceived so differently.
Let me make this concrete. If Harvard fires me and hires Tyler Cowen instead, I would feel bad for sure. But I would not blame Tyler or Harvard, because I would assume that the decision was made on fair grounds: we compete under the same ground rules, and if Tyler beat me to it, it must be because he deserves it.
But suppose instead that Harvard hires John Plagiarizer, who has a much longer vita and larger citation counts than either one of us, because... well because he is a flagrant plagiarizer. I think I would have pretty good reason to feel cheated.
An extreme example? Let me make it less so. Suppose that I am an experimental psychologist instead of an economist and the person Harvard hires in my place is someone who has accumulated a long vita by virtue of not having to abide by human subjects review standards. (You can find out a lot about human behavior through torture.) Would I not feel treated unfairly? You bet I would.
The international trade counterpart of this hypothetical is the worker who loses his job because his company decides to move to a country where, say, labor rights are routinely violated. So the "us" and "them" characterization that Tyler attributes to irrational nativism perhaps has more to do with the absence of a common set of international rules on labor standards, environment, consumer safety, and so on.
I'm with Tyler, though I would put the case a bit differently. For many workers, suspicion of particular manifestations of free trade (the ones that might cost them their jobs) is rational--just as, for many workers, fear of labor-saving technology is rational. The question is, why is it permissible to demand that trade be restricted, but impermissible to demand the same of technological progress? One answer is: because it can be, whereas technology, one supposes, cannot be stopped. A second answer is that the overall benefits of free trade are subtler than the overall benefits of new technology, even though just as real. A third answer is that it is always politically advantageous to cast foreigners as cheats (evidently, even if you are also promising to restore America's standing abroad), and that is Tyler's point.
Dani's response strikes me as odd (and not just because of the presumably unintended implication that torture is less "extreme" than plagiarism). Is opposition to outsourcing noticeably milder for jobs that go to Europe than for those that go to India? Is this a distinction that is ever even made? Minimum wages in Europe are mostly higher than in the United States, and labor rights in general better protected. I cannot see that this fact does much to assuage the feelings American workers have about outsourcing--though it should, if you agree with Dani that fear of regulatory arbitrage is the main thing underlying anti-trade sentiment. If an American's job goes to Ireland, let's say, the victim still feels cheated, because his US company has preferred to hire a foreigner. That is still a case of "putting profits before [American] people".
Also, if Dani's regulatory arbitrage idea is correct, how do you account for protectionism in poor countries? Tyler makes this point in his response to Dani. It is not so hard to explain, if you think xenophobia-as-permission-to-complain is what counts.
One more thing. Dani notes that trade where violation of labor rights does not play a role "probably constitutes the bulk of world trade". In other words, fear of regulatory arbitrage is in most cases a mistake. On Dani's view, correcting that misunderstanding would seem to be an urgent priority. Why isn't it?
Column: Obama's next test is to be unremarkably competent
Last week Hillary Clinton said that next time, thanks to her campaign, the idea of a woman running for president will seem unremarkable, and of course she was right. Thanks to Obama's campaign, the idea that America's next president will be a black man already seems a lot less remarkable than it did even very recently. My new column for the FT starts with this observation:
When Barack Obama, having secured the presidential nomination, ended his victory speech last week, CNN sought its first reaction from Jesse Jackson – not long ago, the standard-bearer for blacks in US politics. What did it mean for the US, Mr Jackson was asked, that the Democratic party would for the first time nominate a black man for president?
It was a jarring transition, so much so that Mr Jackson’s reply is hard to recall. One’s first thought was, what does this have to do with him? It took a moment to remember.
Race has intruded on Mr Obama’s campaign, to be sure. The raving reverend, Jeremiah Wright, threatened to sink it completely. Polls suggest that racism was a factor in Mr Obama’s defeats in West Virginia and elsewhere. In the end Mr Obama secured the nomination thanks to the overwhelming support of black Democrats. Quite possibly, race could cost him the general election in November. So yes, this election is partly about race.
Yet Mr Obama stayed true to his early promise and ran whenever he was allowed to as an exceptional candidate who just happens to be black. Contrast that with Senator Hillary Clinton, who ran (especially in her campaign’s later stages) not as a strong candidate who happens to be a woman, but as one who was entitled to win because she was a woman, and whose defeat would be an affront to women across the country. (For if Mrs Clinton were not nominated, she seemed to say, what woman ever could be?)
Mr Obama’s victory speech did not even mention that he is the first black American to win the nomination of one of the main parties. As he has all along, he spoke to and for the whole of his party, and to the whole of the US. In no meaningful sense, therefore, is he Mr Jackson’s heir. His break with that style of victim politics is total and that is what makes his nomination so important. He does not belong to the “black interest”, if there is such a thing. It was young people of all kinds and wealthy urban whites who first found him most appealing. Yet as his electability became apparent he has united black voters in their enthusiasm. If ever there were a new kind of politics, this is it.
In a new column for National Journal, I compare Obama's and McCain's proposals on taxes. Neither candidate makes much sense on the subject, I argue. With their fixation on the fate of the Bush tax cuts, both of them are missing the main point: comprehensive reform is needed--and needed so badly it may be unavoidable. The key is to broaden the income-tax base.
Income-tax rates are moderate in the United States by international standards, but the income-tax base is narrow, so the total raised is less than you would expect. Raising significant amounts of additional revenue--which is going to be necessary, even if no new spending is undertaken--would push income-tax rates quite high. The country needs to broaden its tax base and simplify the rate structure, and much the best way to do this is as part of a thorough overhaul of the code.
A lot of what should be done is neither liberal nor conservative. Ordinarily one thinks of a trade-off between equity and efficiency. At some point, those choices do have to be made, but the United States is not at that point. The current system is so inept, so complicated, and so replete with unintended consequences that it is easy to devise a win-win alternative--fairer and more conducive to growth at the same time. Yet neither Obama nor McCain gives any sign of embracing comprehensive reform. Quarreling over the fiscal legacy of the Bush administration is more to their liking. So much for post-partisan politics.
I mention a few specific possible reforms, based on some recommended pre-election reading: A short paper by Bill Gale of the Brookings Institution on priorities for fixing the system. You can find that here. If you want to read the rest of my column, it is here (the link expires in two weeks).
I have to say that my sympathies are somewhat divided in the matter of Obama v Clinton.
I’ve argued from the beginning that Obama is the better candidate and would make much the better president, though not without wavering now and then on both points. Obama’s campaign has been far from flawless. Hillary has impressed me—and who could not be impressed?—with her relentless drive. And some of her complaints about her treatment in the media have been quite justified, I think.
The commentariat’s prejudices have not run entirely Obama’s way, but he has plainly had the better of it. I still don’t buy the idea that the Clintons “played the race card”, for instance; there has been a lot of sexist sneering; the shock when she said that Bobby Kennedy was assassinated at about this point in the primary race (a crass, tone-deaf comment, but one of no large significance) was exaggerated and synthetic.
At best, let’s not forget, Obama has won by the narrowest of margins. The Clinton campaign was run with operatic incompetence from start to finish, and at a chronic financial disadvantage too—yet at the end her momentum was greater than his. On most of the different ways of counting Democratic votes (including the one I would advocate as a matter of best electoral practice: one registered Democrat, one vote) she would in fact have won this race. I prefer Obama, as I say, but I think she can feel with some justification that the will of the party’s supporters has been thwarted.
Having said all this, her performance last night was stunningly ill-judged, and speaks volumes about her fitness to lead—or lack of it. Under the circumstances, one can understand, maybe, a reluctance to concede. But to declare moral victory; to insist, knowing that she had lost, that she remains the stronger candidate; to start positioning herself to demand the VP slot as of right: all this was not just remarkably ungracious, it was also patently counter-productive from a strictly selfish point of view. Can’t she see that she has made it easier, not harder, for Obama to keep her off the ticket?
One of the CNN analysts debating Hillary’s non-concession speech mentioned emails coming in which said that Tuesday “needed to be her night.” At this one of the others spluttered, “It had to be her night? Obama just won!”… before, in a valuable moment of reckless honesty, referring to “the Clintons’ deranged narcissism”. Yes, I thought (recalling, incidentally, Alistair Campbell’s comment that Gordon Brown was “psychologically flawed”). Read her speech, and compare it with Obama’s. His extravagant (and tactically shrewd) praise of her; a speech addressed not just to the whole Democratic party but to the whole country; calculated, of course, calibrated—with nothing in it that was smug or self-regarding or sectarian. Contrast that with her perfunctory acknowledgement of him, followed by a recitation of her achievements and the obstacles that had been put in her way: Enough about our nominee, this is my night and I want to talk about me.
Something tells me that she is not cut out to be Obama’s deputy. If he puts her on the ticket, I think he will be making a big mistake.
The remarkable ability of the Federal Reserve to coast above the turbulence of US politics has been tested lately. The central bank has been forced to deal with a financial crisis at least partly of its own making. It has rightly come in for some criticism; it has had to explain itself. Even so, the Fed and its policies are hardly front and centre in the debate between the presidential candidates.
Most voters say that they regard the economy and its troubles as the single most important issue facing the country. They want to hear what Senator Barack Obama and Senator John McCain propose to do about it but the Fed – where the real economic power resides – is mostly allowed to get on with the job unmolested.
I wonder if this will continue to be true. When a central bank has an uncomplicated recession to deal with, it can cut interest rates. When it faces a clear-cut case of inflation, it can raise them. The worst nightmare of any central banker – especially one with a tradition of political independence to defend – is stagflation, when raising interest rates to curb inflation will provoke a recession or deepen one that has already begun. It is a problem that the US has not had to confront for 30 years. In 2008, an election year, the conditions are falling into place.
