Wednesday, March 05, 2008


The Economist has published an interesting article about the economic policy agenda proposed by Democratic candidates. Both, Hillary Clinton and Barack Obama (link) have threatened to pull the United States out of NAFTA unless the agreement is rewritten. Both candidates have proposed higher marginal tax rates that have an enormous negative impact on working hours and labor productivity.

Hillary Clinton has suggested the freezing of interest rates for current borrowers (link). Such a discouraging step would leave behind negative far-reaching consequences on capital markets, including higher interest rates in the future. In "The Audacity of Hope" Barrack Obama is proposing more government interference in the labor market and welfare system. If Obama proposed brilliant ideas that would include the fundamental reform of tax code, free trade agreements with emerging nations, the reform of the social security system, Medicare and Medicaid, he would good opportunities to become a leader, not just a politician.

Protectionist and anti-growth economic policy always resulted in a mirage of lower economic growth (link) and productivity performance as higher tax rates on labor supply, by empirical evidence, discourge savings and investment (link), cause labor shortage (link) and impair productivity growth. The international arena offers a growing number of lessons from other nations in areas such as taxes and welfare reform.

Until now, the U.S election battlefield has not yet brought anything new in terms of hope but it rather brought a diminishing rethorics of redistribution, populism and protectionism on both sides.

1 comment:

Anonymous said...

So what is McCain's plan? Same or lower taxes?