The Global Election

With the election looming only 3 days away, some economists are beginning to speculate about how the next president's policies will affect not just the domestic economy but the global economy. In Stiglitz's recently-published article, "America's Global Election," he laments the fact that although the next American president will have a huge impact on people from other countries, these people get no say in our election. He further argues that the non-Americans overwhelmingly favor Obama's reelection. Though he does not cite any evidence as to why a majority of foreigners support Obama, he contends that the fundamental differences in policy between Obama and Romney justify Obama's support from abroad.

Stiglitz argues that Romney's election would lead us back to Reagan-esque free-market economic policies, which Stiglitz claims "brought about the worst global recession since the 1930’s." He believes Romney's policies--like Reagan's--would continue to shrink the middle class and lead to greater income inequality. For instance, Stiglitz believes that Romney's "tax cuts for the rich," budget cutbacks, and lack of support for ObamaCare would lead America--and other countries--down the wrong path. However, Stiglitz failes to recognize that many of Romney's policies--especially his commitment to cut the corporate tax rate--would create jobs to grow the economy. (See Michael Boskin's article.)

Stiglitz presents a short (and weak) argument concerning both the candidates' views on globalization. He admits that Obama has not done much in regards to trade, finance, and climate change. However, he believes that Romney's policies concerning globalization, (which Stiglitz fails to present in detail), would take the global economy in the "wrong direction." Stiglitz argues that in the area of foreign policy Romney has failed to distinguish himself from Bush. This is a surprising argument considering that after the third and final presidential debate (about foreign policy) many analysts criticized Romney for not distinguishing himself enough from Obama.

A final point that Stiglitz makes is that Romney's stated stance against China does not leave him much room to maneuver if he is elected. According to Stiglitz, Romney "promises to launch a trade war with China, and to declare it a currency manipulator on Day One." Stiglitz points out that Romney fails to recognize that the renminbi has actually been appreciating for years (see graph), and that the stronger the renminbi gets, the more the U.S. will simply turn to other countries with relatively low-value currencies so that we continue to have an abundant supply of cheap goods. Furthermore, Stiglitz asserts that Romney does not understand or acknowledge that many countries are calling the U.S. a currency manipulator because of the Fed's recent "easing" policies.

I hope that whomever is elected will reach across party lines and do what is best for America--and the global economy--regardless of whether it adheres to his party platform.