Barack Obama stands for a new, protectionist America. Europe can’t be interested in that. Therefore, McCain would be the better presidential choice.
American politics have undergone drastic change in the past decades except for one thing: we Europeans and especially we Germans hope for a Democrat at every election. We dream of a Kennedy and are then disappointed when we get a Nixon, a Reagan, or a Bush. We thought Reagan was an actor and George W. Bush was a lunatic. And we celebrate each time the Americans bring out a Clinton, a Gore, or an Obama. We celebrate because these candidate’s politics come closest to resembling our nebulous European sentiments.
We mostly underestimated the biggest trends in American politics, for example the Conservative Revolution that gripped America in the 70’s and lasted until just recently. And now we ignore another big trend of the present – American protectionism.
America is poised to lose its leadership role in global economics. In the coming decade, it’s likely the dollar’s role as the world’s reserve currency will weaken. Growth in the United States compared to the past will remain below its potential because housing prices will not stabilize for several years. These will be years of austerity. This environment is a breeding ground for sentiments against globalization and the free market upon which Europeans are so dependent.
The greatest apparent task for the next president will consist of managing the economic adjustment process without doing damage to the global economy.
The cloak of social justice
John McCain, Republican candidate for president, symbolizes this trend more strongly than Barack Obama, who will be the probable Democratic candidate. As a European, I can’t really imagine why we would want a President Obama. His “Invest in America” policy can hardly be topped as protectionist mindset, and his “Fair Trade” policies would lead to a restriction of world trade. All this under the cloak of social justice for his constituents.
On this point, the often-invoked comparison to Kennedy is accurate. Kennedy was also a protectionist. His “Interest Equalization Tax” was meant to prod industries to invest more in America and less abroad. One unforeseen result of this tax was to create a huge financial market, the so-called Euro-Dollar market. And Jimmy Carter didn’t distinguish himself as a competent economist by reacting to rising oil prices with price controls.
Bill Clinton was a notable exception among Democrats as a free-trade president as well as a relatively stable political economist. Naturally, he was also lucky. He governed during a time of economic stability. While Hillary isn’t Bill, one would have reason to assume that economic policy under Hillary wouldn’t be dramatically different than under her husband with the big exception that the economic environment would be tougher. Under such conditions, Europeans would be crazy to want a President Obama. Moderate Republicans and Democrats have always been supporters of free world trade. John McCain, much like Hillary, isn’t very interested in economics. But he has historically been in favor of free world trade, something one cannot exactly classify as a populist force.
The most important economic decisions for the new president will include who is selected for cabinet positions. What is whispered into the presidential ear will be decisive.
Reactive economic policy
So we come to the most important question: who will be the next Secretary of the Treasury? Who will become chief White House economic advisor? We don’t know the answer to those questions. Bill Clinton filled these positions mostly with conservatives and I assume Hillary hasn’t decided to modify that emphasis. One of the most important decisions of the new president will be whether to replace Ben Bernanke as Federal Reserve Chairman in 2010. Do you really think Barack Obama hasn’t given that some thought? I would wager that Obama will be driven away from making economic policy. What he suggests is mostly reactive. The first four points of his manifesto, for example, revolve around the mortgage crisis, mainly how to best regulate the mortgage industry. That’s certainly necessary but what’s expected of the new president is a broader approach to the regulation of financial markets.
Hillary Clinton has at least thought in this direction. One shouldn’t praise the new age of a meaningless “feel good” approach from a new generation of politicians. The next crisis will expose that policy.
As New York Times columnist Paul Krugman wrote, Obama is unbearably conventional when it comes to economic policy. The working out of subtle concepts isn’t his thing. He’s therefore not a policy wonk, as Americans call anyone who is interested in political details and not just in the broad outlines and their presentation. I think Hillary, despite her often times unspeakably populist campaign, is more in the tradition of those presidents who were well aware of the USA’s global role.
From the European point of view then, McCain is the better choice. And meanwhile, his chances of winning the presidency against a divided party appear fairly good. The European leftists are again confronted by the same old story. They dream of a Kennedy and get a Nixon.
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