Sunday, January 15, 2012

Romney on the Econonomy

Romney, on the campaign trail, has been vilifying the economies of the various countries in Europe plus that of Japan. He suggests that socialist economies are failures and that you should vote for his economic policies to restore the US economy to its former glory because we don't want to be like those losers in Europe or Japan. This claim, to me, is another case of a politician disingenuously distorting reality to mislead people into voting for him.  Basically inappropriately mixing apples and oranges.

My casual observation is that the economies of Europe and Japan are "mature". By mature, I mean that they are aging and declining in population. Economic growth, in part, depends on growing population and a demand for additional goods/services.  Well, declining population means that you do not need to produce as much and older people tend to buy less. Based on the preceding, to say that these economies are a failure would be a significant misunderstanding of economic concepts.

As a follow-up thought, how much unmet demand exists in the US? The possibility exists that the US may itself be evolving into a "mature" economy that has limited need to grow at a rapid clip. Should that be the case, our economy will remain a "failure". The issue is not whether the economy is socialistic or capitalistic but one of demographics. If the demographics are not there Romney will be proven wrong.


Romney, on the campaign trail, has been claiming that he will bring jobs back to the United States to Make it competitive. How does he propose to have jobs move back to the US since US workers are paid more than their counterparts in the Third World?

Well there is one strategy.  Improved productivity. Machines, even under the operation of an expensive US worker, could be competitive.  Productivity has its own downside though, you need less workers. Since you don't need as many workers.  What to do?  You fire some of them which unfortunately raises the US unemployment rate. So once again Romney's economic proposal would seem to lack veracity.

But there is a redeeming approach, sell more products/services to the Third World. That may be a plausible approach to restoring the US economy.


Romney, on the campaign trail, has been claiming that he will create jobs.  I find this contention preposterous coming from Republicans.  As a corporate executive Romney clearly would have the ability to create jobs. As president of the United States, NO.

One of the platforms of the Republican party is getting government out of the private sector.  Within that context, the Republicans assert that they do not want a Nanny State nor do they want the government to define losers and winners in the economy.  Based on these fundamental Republican philosophical imperatives, Romney should not be suggesting that he would create jobs. He can''t. 

To get around this obvious hypocrisy the Republicans use empty motherhood platitudes such as "creating an environment that fosters economic growth". To implement that goal, the Republicans often speak of things such as less regulation and less taxes. Well blame Bush did exactly that. And that created our current financial malaise. So why would re-starting failed Voodoo Economics work?  It won't.

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