Tuesday, July 08, 2003

I was never too hot about John Edwards. I still am not. I do not really see how he is offerring anything new, different, or exciting as a candidate, and am not one to be enamored by a "son of a mill worker" shpiel. I have also read his basic "what i think about the economy speech" and found it to be mostly vaporware. However, two sources I generally find informed and reliable are now projecting him not only as a possible front-runner, but also someone with an interesting, perhaps even sound, plan for the economy. Slate has an article here, while Lawrence Lessing says,
The great thing about the early stages of a presidential campaign is that the candidate and campaign have time to put together real messages of substance. This speech by Edwards on economic policy is a perfect example of this contribution of substance. It is extraordinarily good.

When I see two sources like this agree, I have to spend some more time thinking about the issue. I guess one of the important things is to see whether Edwards' record supports the idea that he would actually stand by his promises, and whether there is a chance, any chance at all, that the Congress would let him follow through on them. I still think that it is easier to talk about how well you understant the common man, than it is to do something to help them. The big issues I am seeing facing this country are not really addressable by legislation. Even if it were a good idea to legislate that outsourcing of IT jobs to other counties stopped, everyone knows that will do no good. We know tarriffs do not really work. I am not sure how $5,000 for down-payment of a first home is going to really change the urban landscape. $5,000 gift raises the price of a house by $20,000 (at 20% down), which is not very much anymore. Are we just going to see starter homes rise by that much? Easily could happen. Moreover, how is that a reflection of "the values of mainstream America, the values all of us grew up with – opportunity, responsibility, hard work." ? Some of the ideas, I think, are plain dangerous. It is good to own your own home -- but the fact that so much of people's overall assets are tied up in their homes makes them intolerant of residents they consider unwanted, or prone to leave the neighborhoods "while they still can" at the first sign of trouble. That's how inner cities became ghettoes, and it is not clear how the new plan is going to change that.

Another example of why I do not consider Edwards speech that interesting is below,

American’s small businesses create jobs better than any government program. Our markets allocate capital more efficiently than any bureaucrat.

Excellent! Could not agree more! Now what? Where in all of his speech is anything that would help small businesses create jobs? There are no breaks for small businesses? I would have loved to see the double burden of taxes on businesses with only owners as employees lifted [and would seem more fair than the dividend tax, eh?]. But instead he talks about helping people put away money, to the tune of,

This shouldn’t surprise us, because the savings incentives in our tax code are upside down: the better off you are, the greater the incentive for more savings. It’s time to provide a good incentive to working Americans, who have the hardest time saving now and will need those savings the most later. Under my plan, low- and moderate-income working families will receive a $1 match for every $1 they save, up to $1,000 each year. A worker who saves the maximum under this plan every year from age 25 to retirement will have a nest egg of $200,000 – on top of any other savings, pension, or Social Security.

It is not at all clear that Social Security would be still be here in 2044, but even if it were, $200,000 will be the equivalent of something like $60,0000 today ed. at the rate Edwards computes, with a 3.67% return it is more like $47,304.82]. Nothing to sneeze at surely, but not exactly a sum to retire on either. With the size of our workforce, we are talking about aat least 100,000,000 people x $1,000 dollars = 100 billion a year for a total [non-discounted] figure of 4 trillion over 40 years. How exactly is that fiscally prudent? It certainly highlights the issues Social Security has, but does not seem to solve the retirement problem in the least.

There is a lot more in the speech that is interesting and deserves attention. I am, for one, and definitely going to listen very closely to what all the candidates want to say, but all I am hearing so far are political words exchanged by politicians, not sound economic policies that have a chance to be implemented and make a difference. Considering enthusiasm by my better-educated elders like Lessing and William Saletan I am reserving judgement and hping for the best. It certainly, does not look like it is going to come from the current Adminsitration.


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