The presidential candidate voters judge to have the best solutions for the economy will almost certainly win next week.
But when it comes to the economy, we’re like auto mechanics puzzled by an old, balky engine. And voters — as well as the candidates — are fixated on that old engine.
Rather, we need to bolt together a new, more powerful one, better suited to unprecedented changes shaking not just the United States but the world.
Those changes — far-reaching information technologies, the ever-increasing globalization of production, crucial demographic shifts — are coming to the fore at a most-inopportune time.
Just when we need to be building a new economic engine, governments around the world find themselves hamstrung by previously planned spending and debt.
Governments are recognizing that they’ve over-promised pension benefits. And that health care costs for aging populations will soon begin to starve out other budgetary needs.
Many countries are either cutting back now, or like the United States, seriously debating about how and how much to slow the growth of spending in the coming decades.
Voters, too, are coming to a scary realization: They now know they won’t be able to count so much on governmental help in their older years.
Many consumers, burdened by debt from the housing boom and by job and income losses from the recession, look at their nest eggs in disbelief. And they’re doing the sensible thing: Saving more for retirement instead of spending money on goods and services to speed the recovery.
With the worldwide forces taking deeper hold and the debt worries mounting, whoever is elected president next week and for decades to come has to be a different economic mechanic than previous presidents.
Traditional measures like Keynesian stimulus and deficit spending are useful in emergencies to stave off severe financial collapses and depression, but presidents should realize they won’t ignite a self-sustaining economy that has to compete globally.
The changes sweeping the world and how the U.S. adapts to them are now more important to our economy. Often, they’re more important than many of the policies we’re politically and habitually fighting about.
The health of the U.S. economy depends less on, say, marginal tax rates, and more on how we compete with China technologically. It depends on the access to our goods and services that China, Brazil and India give to their growing middle classes. It depends on how Europeans run their economies.
It doesn’t matter so much whether for ideological reasons we want our corporate tax rates to be high or low, it’s how they compare with rates in other countries. Capitalism has been globalized.
Labor protections in the U. S. are generally strong and should remain so. But a president has to worry more about trying to get other countries to enact similar protections. If they don’t, our workers will be at a disadvantage because jobs can now shift to other countries so easily.
On the environment and climate change, we need to get other countries to limit their emissions, too.
A president may want the U.S. to erect high trade barriers to protect jobs, but it’s more important to persuade other countries to lower their barriers.
This puts a whole different spin on what it means to be a foreign policy president.
Voters, too, need to adapt. They think presidents, and politicians in general, have way more power over the economy than they really do. Voters are too quick to punish politicians for recessions or slow recoveries.
That forces presidents and members of Congress into battles over short-term but inadequate economic policies just to win the next election. The parties maneuver tactically to gain political talking points.
(Democrats, remember this if there’s a Republican in the White House and you want to demagogue over the economy just to turn him out of office.)
Any important and long-term changes to build a new economic engine remain stymied.
Left in the wreckage are meaningful and compassionate reform of Medicare, a “grand bargain” over the budget, tax reform that raises revenue and set the stage for growth, education reform and spending on infrastructure and research and development.
The president also ends up with his hands tied over trade, environmental and labor policies.
To change this state of affairs, for a president to really have an impact on the economy, he either needs to be powerful or politically adept.
By powerful, I mean that voters need to give him and his party control over both the White House and Congress so they can enact their agenda.
Absent that power, the president needs to be a good politician who can work out compromises with the other side.
Unfortunately in this election, it appears neither outcome is probable.
And the fiscal cliff awaits.