Talking loud, saying nothing
Politicians do start out with intentions, even if they're not always 'the best of'. But whether it's Obama or Romney in the hot seat come November, chances are it won't make much difference.
What difference would it make if Mitt Romney were elected as the next US president? At the time of writing Barack Obama was marginally ahead in the polls but a lot could happen before the election on 6 November.
In any case it is hard to dispute that the US presidency is still the most powerful position in the world. Despite the rise of potential rivals, most notably China, America remains the world’s preeminent power.
There are many ways to attempt to discern what Romney would do as president. One of the favourites of Democrat critics is to point to the role of Paul Ryan, a congressman from Wisconsin, as his vice presidential running mate. He is held up as a free market ideologue who would play a key role in shaping the economic agenda of a Romney presidency.
It is true that Ryan is on record as saying the figure who inspired him to enter politics was Ayn Rand: an ultra-free market thinker who died in 1982. In a speech in 2005 to the Atlas Society, an organisation that promotes Rand’s ideas, Ryan claimed among other things that: “the reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand.” A transcript of his speech and the full audio recording is on the organisation’s website (www.atlassociety.org).
Romney’s critics have not hesitated to highlight such statements. Paul Krugman, a Nobel laureate, wrote in his regular New York Times column that “the Ryan fiscal program clearly reflects Randian notions” (23 August). Jamie Stiehm, a widely syndicated newspaper columnist, wrote that: “Ryan’s devotion to Rand is yet another Republican insult and injury to classic American ideas of fairness, squareness, and civic-mindedness.” (US News,14 August). Many others argued along similar lines.
If Ryan did end up following Rand’s philosophy of objectivism, and influenced President Romney to do so too, it would certainly amount to an enormous shift. Rand favoured confining the state to the minimum necessary to protect private property rights. Essentially this meant running an army, courts and police force. She also stated she would be happy for all roads to be privatised.
Although Rand is generally considered a political thinker her best-known works are novels:Atlas Shrugged (1957) and The Fountainhead (1943). Both are paeans to extreme individualism and vehement attacks on any form of collectivism. Her views are also available in non-fiction form such as Return of the Primitive, a collection of essays from the 1960s and early 1970s attacking America’s new left.
Her support for a minimal state ran counter to the actual trend. Total public spending accounts for about 40 per cent of GDP compared with about 7 per cent at the start of the last century (see graph). These figures include spending on a federal, state and local level.
Whether such high spending is viewed as desirable or not it encompasses a huge range of activities not compatible with a free market view. Both Republican and Democrat administrations have increased state spending to include a huge range of welfare functions and extensive state economic intervention.
Ryan has recently distanced himself from Rand’s harsh critique of public spending. Many have interpreted this shift as motivated by a desire not to alienate ardent Christian supporters of the Republican party – Rand was profoundly hostile to all forms of religion.
But a better way to understand it would be as a sign that Ryan is more of a mainstream politician than generally assumed. Like all politicians he is adept at bending his words to please whichever audience he is addressing.
This is a particular problem today when politicians lack both firm convictions of their own and a political base with a clear outlook. Indeed in many respects Ryan, Obama and Romney exhibit similar tendencies. They are all adept at appearing to say something distinctive but when closely examined their worldviews amount to dull managerialism.
Think back to 2008 when Obama energised supporters with talk of “hope” and “change”. He ended up delivering what he promised: very little.
A narrow consensus has dominated US political life for a long time. Despite the free market rhetoric of Ronald Reagan and the two George Bushes, as well as the apparently softer talk of Bill Clinton and Barack Obama, differences in economic policy have proved minimal.
Recall the record of some of the most high profile free marketeers in US public life. Ronald Reagan, elected in 1980 on a platform of rolling back the state, ended up raising public spending. Or George W Bush whose massive bank bail-outs ran directly contrary to free market economics. Indeed Alan Greenspan, a former supporter of Ayn Rand and chairman of the Federal Reserve, played an important role in creating America’s financial bubble by keeping interest rates artificially low.
The sad truth is that in the US, as in the UK, there is little real political debate. Politicians may sometimes latch onto innovative sounding ideas but in practice they react to events rather than trying to shape them. A President Romney or second term Obama would no doubt do the same.
Daniel Ben-Ami is a writer on economics and finance. His personal website can be found at www.danielbenami.com.
Have you looked at investment trusts more since RDR?