For a long time, America has been living beyond its means, running record deficits and having a negative personal savings rate for the first time in history.
Even more importantly, the Republican Party has for decades been preaching an extreme anti-government ideology completely divorced from economic fundamentals. As a professor of economics, I can say with some confidence that the people who have peddled this nonsense are extremely ignorant about basic economic principles. Nothing in the works of Adam Smith, Alfred Marshall, John Maynard Keynes, or even Milton Friedman supports the radical laissez-faire that has been the hallmark of the Republican creed; in fact, just the opposite.
Most economists recognize that markets are not always self-correcting, and that government needs to set the parameters to ensure against systemic risk. Probably no one has had more blind faith in markets than Alan Greenspan (a disciple of Ayn Rand). His legacy is now in tatters since much of the crisis can be traced directly to his actions—opposing government regulation of investment banks and hedge funds, helping to create the housing bubble by taking interest rates to historically low levels, becoming a cheerleader for subprime mortgages, denying the housing bubble and the mortgage crisis long after their existence was clear to others.
Now the house of cards has come crashing down, and it’s time for grown-ups to come to the rescue. In the presidential race there is only one: Barack Obama. John McCain’s campaign has deteriorated into such a farce that I will be shocked if Obama doesn’t win in a landslide. Yes, there is racism in America, and yes, Americans can be swayed by irrational fears, but I refuse to believe that they will elect a man whose campaign will be a staple of late-night comedy shows for years to come.
From picking probably the most inexperienced and patently unqualified person ever as his vice-president—a person whose approval ratings are tanking as she utters gaffe after gaffe—to his bizarre stunt this week in which he said he was suspending his campaign (but didn’t) and would not show up at the first debate (but did), McCain has demonstrated that he is simply unserious. This has not been lost on virtually every news commentator, save the talking heads at Fox News. And with the consensus that Friday’s foreign policy debate was either a tie or an Obama win, it will be all downhill for McCain from here. Foreign policy was supposed to be McCain’s forte; I expect Obama to dominate the debate on economic policy, and I expect Biden to dominate Sarah Palin on Thursday on every issue.
On a somber note, the financial mess cannot help but constrain the actions of the next president; this means that Obama will not have the funds to embark on as much of his progressive agenda as we had hoped. At least in the short-term, Republicans will likely win by losing: they took over the White House in 2000 with a surplus, and will leave it in 2009 with a record deficit that will thwart elements of the new Democratic agenda.
But in the long-term, the Republican Party will no longer be recognizable and America will be better for it. The modern GOP has become a cancer on the Republic, and deserves its place in the dustbin of history. Now is the time for America to rebuild under a Democratic Administration, with large Democratic majorities in Congress. I look forward to devoting VoR pieces to analyzing Obama’s proposals and achievements.
P.S. In his debate with Sarah Palin, I hope to hear Joe Biden say something like this: “Let me be clear, just because someone is a woman doesn’t mean they support women’s issues. For over three decades, I have been a champion for women’s health and safety and reproductive freedoms. In an Obama-Biden administration, these will be a top priority.”
Jason Scorse