Is it safe to assume there will be a shift in U.S. public policy, particularly with respect to the economy, just because President-elect Barack Obama and the Democrats will be in charge, as opposed to the George Bush-led Republicans? The above may appear to be stating the obvious but historical evidence indicates that is not the case: over the decades there have been remarkable similarities in economic policies offered by Republicans and Democrats. It's the basis for the joke that the difference between the two is akin to the difference between Tweedledum (center-right) and Tweedledee (center-left).
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Further, although Democrats have historically viewed government as an activator (and Republicans as a regulator), Democratic ventures, certainly from a European standpoint, with few exceptions, have been limited in scope. The largest and most influential, of course, has been Social Security -- the successful redistributive (although partial) pension program that lifts tens of millions of American senior citizens out of poverty every year.
However, the above is not to imply that Republicans can not be change agents. The impressive reforms by the trust-busting President Teddy Roosevelt (including the Hepburn Act of 1906, the Pure Food and Drug Act of 1906, the Meat Inspection Act of 1906, and numerous conservation programs) provide testimony to that. There's a reason Teddy Roosevelt's face is on Mount Rushmore.
Still, American cultural norms and the interests of existing stakeholders suggest that economically speaking, big change is very rare in the United States. Are there any factors that suggest things will be different under President Obama?
In normal times, the answer would be no. But as investors know, these are not normal times. First, the weakened global financial system and U.S. recession suggest President-elect Obama may be able to offer changes -- what political scientists call non-incremental change -- that would not be possible if the nation were in the midst of the 'Roaring 20s,' or even the 'Roaring 90s.' Incredibly, almost every U.S. economic metric is heading in the wrong direction, or has deteriorated, this decade. And perhaps the worst thing for a U.S. president -- unemployment -- is rising at an alarming rate, and it calls for action. That action may be one avenue Obama can take to implement big change.
The second is Obama's economic coalition itself. True, lots of middle-aged professionals and longstanding Democrats voted for Obama, along with many independents. But so did millions of new voters: young adults age 18-26 (also known as the YouTube / Facebook generation), typical workers, and of course, African-Americans, whose vote for Obama was near unanimous. Voters in those latter three categories probably weren't represented too well at the last Du Point (NYSE: DD) annual shareholders' meeting, so the view from here argues that President-elect Obama will have to deliver something economic for them too -- which suggests there may indeed be big changes ahead.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
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Reader Comments (Page 1 of 1)
11-26-2008 @ 2:54PM
David Letterman said...
Why doesn't Oprah help bail out the economy, she got her boy elected. why does she hate dr. Phil because he's a whitey? Racist bitch!!!