About trade deals, something we learned in Indiana:
"The story repeats itself over and over. The Clintonites spent the ’90s negotiating one trade deal after another. But once the dust had settled, the laissez-faire approach appeared to have accelerated the decline of American industry. What the Clintonites (and, to be fair, this commentator) missed was that clearing aside trade barriers can leave you dangerously exposed when many of your trading partners — especially in East Asia — don’t reciprocate."A difference exists between free trade and fair trade. I would say that unfair trade is not necessarily free trade. So what if we can trade without explicit tariffs? Are not lower wages, minimal environmental regulation, currency manipulations create tariffs in a different form?
Consider the budget. In 1993, Robert Rubin, then the president’s top economic adviser, helped persuade Clinton to pursue a huge deficit-reduction package. The theory was that the bond markets would reward him with lower interest rates. It seemed to work: the package passed, interest rates fell, and the economy boomed. But two hitches would become apparent. First, the productivity gains that underlay the boom had taken root years earlier. Second, interest rates didn’t actually fall much once you factored in a drop in inflation.
Kuttner doesn’t dispute the need for deficit reduction, given all the red ink Clinton inherited from his Republican predecessors. He just takes issue with what became a fetish for balanced budgets. It led Clinton to underinvest in areas like infrastructure and research and development, which some economists, including the Nobel laureate and former Clinton adviser Joseph Stiglitz, believe slowed growth. Meanwhile, the alarming rise in income inequality since 2000, coupled with European countries’ record of rapid, evenly distributed growth, suggests that a more activist government might be preferable on both social and economic grounds.
If Clinton underinvested in infrastructure and research, then what can we suppose about George W.'s investments in the same and our future growth?
And what about Obama and Mrs. Clinton?
Still, given the influence of wealthy investors on the Clinton and Obama campaigns in particular, Kuttner is right to be worried. In May, the legendary hedge fund manager Paul Tudor Jones II held a 300-person fund-raiser for Barack Obama at his Greenwich, Conn., mansion. If a future Obama administration were to consider, say, reining in derivatives, could the president resist pressure from the likes of Jones? It’s possible. But, like Kuttner, I’m skeptical.
“The potential of our economy to underwrite a society of broad prosperity is being sacrificed to financial speculation,” Mr. Kuttner declares in his new book’s opening chapter. “The winnings are going to a narrow elite, jeopardizing not only our broad prosperity but our solvency. In less than a decade, our government budget, gutted by tax cuts, has shifted from endless projected federal surpluses to infinite deficits. Our trade imbalances and financial debt to the rest of the world have grown from a modest concern to levels that could produce a crash.”
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Mr. Kuttner attributes the squandering of America’s economic health mainly to what he describes as the systematic dismantling of the government-managed economy that was created under Franklin D. Roosevelt and Harry S. Truman.
The push for deregulation in recent decades, he contends, has created a “casino economy” in which labor unions have become marginalized, pension funds are hijacked as vehicles for speculation, and financial elites enrich themselves through hedge funds and private equity groups with little accountability to government or the public.
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