Last week I presented an admittedly simplified explanation of the two economic theories that are represented by the candidacies of Barack Obama and Mitt Romney. I characterized them as “bottom-up” for Obama and “top-down” for Romney.
To briefly restate the difference between the two, the bottom-up view holds that a vibrant economy grows from the bottom up, with consumer demand pushing growth. The top-down approach sees an economy that works best when those at the top have incentives to create new businesses.
Both theories have been tested over the recent history of the country, and both have adherents who claim that their theory works. I am an unabashed proponent of the bottom-up approach, but I acknowledge that part of my reason for propounding that perspective, apart from the empirical evidence that it works, is that is also addresses a moral issue I see in the equation (to wit: poverty is destructive of the human spirit and should never be countenanced in a just society).
But what if a country’s economy is essentially uncontrollable? What if the ups and downs of the economic cycle are as imponderable as the patterns of weather that develop across the globe. Yes, we can predict the weather from one day to the next, and yes, we know that certain regions have climates that are continuous over the centuries. But can we know on September 13 what the weather in downtown Sacramento will be on October 13? Moreover, can we do anything to change what it would otherwise be a month later in a given locale?
The answer, of course, is no; we can’t predict the specific weather for a specific locale more than a week or so in advance, and we can’t control what that weather will be.
What if the economy of a given society is much the same in terms of its unpredictability and its uncontrollability?
Well, first of all, let’s acknowledge that very real possibility. It isn’t that the forces that determine economic cycles are unknowable any more than the factors that determine the weather a city will experience on a given day are unknowable. But the theoretical ability to know does not by any means equate to the actual ability to know or, even more problematic, to control.
And it may just be that in a complex society such as ours, with so many identifiable and unidentifiable factors and influences at play at any given time, the ability to control or even guide and direct the economy is all but impossible.
In other words, it may well be that there are either too many factors that can increase or decrease employment, or keep prices stable, or push wages higher, or give incentives for new business development, or discourage corporate mergers, or lead to increased research and development, or promote good management techniques.
And just think about that list for a moment. Its length alone suggests how foolish it might be to focus on any one factor or to embrace any one theory as superior to another.
“Economy” is a word we use to describe, among other things, the flow of money in a society. If the amount of “money” (I use the word loosely here to mean all of the assets that have value and can be used to purchase and trade in goods and services) in a society is constant (admittedly another imponderable, since both the federal government and the federal reserve have the ability to create additional “money”; and both do with some degree of regularity), then whether that amount is spread evenly over all the individuals in that society (as in a purely communistic society) or is allowed to go wherever it may (as in a purely anarchic society) will depend on the degree to which governments seek to control its path.
But if the path that the society’s “money” takes is uncontrollable, then the debate over what method of control should be in place becomes an irrelevancy, or, to put it another way, a waste of time.
Now let’s put all of this theoretical imagining in a political context.
When Obama became president the nation’s economy was in the toilet. Many knowledgeable economists were fearful of a second great depression. Others thought the economy would never recover to the levels it had been before the fall. Still others were convinced the recovery would be very long and very slow.
Under Obama (whether due to his leadership and policies, or in spite of them, or neither) the economy did not descend into a second great depression. It has, instead, been on a very long and very slow recovery. Whether it will ever return to the levels it had been at before the fall is still uncertain, although both presidential candidates (on this point they most certainly agree) are convinced it will.
So, if we put all of this theoretical conjecture and the reality of what has happened under the Obama presidency aside, what are we left with? As to the economy it really turns on which side of the equation you are on. That is, do you favor an economic model that promotes advantages for the wealthy, thereby allowing them to become wealthier at the expense of those below them on the food chain? Or do you favor an economic model that requires greater financial sacrifice from the wealthy, thereby providing from them the means to assist those lower on the economic food chain?
It may well be that neither approach will have much of an impact on the development of the economy, for the theoretical reasons I’ve just detailed. But even if so, which of the two is adopted can still significantly impact the lives of those directly affected.
A second Obama term promises greater redistribution of wealth from the top down. A Romney presidency promises greater protection of the wealth for those at the top and more incentives for those at the top to acquire greater wealth.
Neither may exert any real control over the path of the nation’s economy, but both can dramatically affect the lives of the nation’s citizenry.
Pick your poison.