Both Right and Both Wrong

Both candidates gave speeches on the economy a few weeks back, and I think they were both right, which is unfortunate for the country.

Romney is right that Obama’s policies haven’t improved the economy enough. Granted, Republicans have stood in the way of the few things Obama has proposed. But what he proposed was relatively modest and he has barely made the case that unemployment is our biggest problem and that his proposals are big enough to handle it. 

On the flip side, Obama is right that Romney’s policies won’t help the short term problem of high unemployment. More importantly, his policies are a return to those of George W. Bush. And remember, even without considering the crash (which was the result of ultra-free market policies of Clinton and Bush), Bush's economic record is one of very slow growth.

In other words, if Obama is elected and Republicans control at least one chamber, we are looking at the status quo - Obama paying limited attention to unemployment and having his small proposals blocked. But if Romney is elected, he'll let loose the free market, which won't improve short term growth or put us on a path to high medium term growth, but will lead to more risk and possibly more bail outs.

This is why we need Bernake and the Fed to act like the grownups and get us out of this. Unfortunately, they don't see an urgency or any serious problems.

Romney and Bain: More Thoughts

This is a post I drafted a month or so ago. Ezra Klein has written much better posts on this topic, but I still want to post my thoughts for posterity. 

The debate around Mitt Romney's time at Bain and how it qualifies him for president continues and I have some more thoughts.

First, his time at Bain is definitely fair game since that seems to be the only thing he talks about that qualifies him for president. Romney is saying that because of his time at Bain Capital, he knows how businesses work and he knows what it will take to get the economy going again.

To be clear, I don't actually think that is true. The economy is a huge complicated system and especially during a major recession the focus should be on macroeconomics instead of microeconomics. So if we wanted the best person for the economy, we would elect a macro-economist instead of a businessman.

I understand many people might not agree with that though. So let's think about what knowing about businesses would help Romney do? I agree with President Obama that by knowing only about businesses, Romney will miss all of the other important constituencies that a president needs to think about.

For example, Romney might have learned that regulations get in the way of business. In fact, that does seem to be something he believes strongly. But by only seeing things from the business's perspective means he wouldn't understand why the regulations are necessary. Lots of businesses would rather there weren't anti-pollution regulations or safe workplace regulations, but they protect lots of people and compensate for major and known negative externalities.

Also, Romney might have learned that taxes are bad for businesses. Again, this is something Romney has said. But only thinking about the business would mean he doesn't understand why taxes are necessary - he might be blind to all of the necessary services that tax revenues support from education and transportation to health and security.

My point is that Romney's experience at Bain isn't particularly helpful for a president because of how limiting it is. Better experience would be if Romney had been a state governor. If he had been, he might have seen how important things like healthcare are and might have proposed legislation that could extend coverage and might be a national model. And if he had done that, he could talk about it and show how he cares about helping everyone.

But based on the way Romney is campaigning, it seems like he hasn't done that and it seems that his only experience is at Bain Capital.