An excellent piece in today's print version of the Wall Street Journal - Obamanomics is a Recipe for Recession - by a Stanford Economics Professor, Michael J. Boskin. As he says, "despite his obvious general intelligence, and uplifting and motivational elequence, Sen. Obama reveals this startling economic illiteracy in his policy proposals" . . . which are (and I paraphrase) to;
- unilaterally renegotiate his country's international economic treaties
- dramatically raise marginal tax rates on the "rich"
- change his country's social insurance system into explicit welfare by severing the link between taxes and benefits
All this at a time when America's budget deficit is starting to baloon again - possibly up to $500 billion in 2009 and world trade talks have just collapsed. That's why I don't really have much time for Tories who genuflect to Obama. Their adulation is a classic example of what Paul Johnson might call anti-intellectualism - believing personalities are more important than ideas. Of course, the UK and the US economies start from different places. Above all in the standard of living, in terms general economic freedom, rates of government expenditure of GDP, a still marginally lower budget deficit in the US etc. But in the entirely implausible scenario that Gordon Brown wins the next election, how likely would he be, this time, to significantly raise taxes again, embrace a protectionist stance on trade and roll backwards on their late conversion to welfare reform?
As Boskin says, "History teaches us that high taxes and protectionism are not conducive to a thriving economy, the extreme case being the higher taxes and tariffs that deepened the Great Depression. While such a policy mix would be a real change, as philosophers remind us, change is not always progress".
