Obama is to Romney as Stiglitz is to Wolf

It’s hard to talk about anything other than the presidential debate tonight when blogging, especially since I’m pretty sure it’s being broadcast on twelve different channels. The debate so far (I’m 24 minutes in) has consisted entirely of talk on tax cuts and the deficit. Romney has been defensive of attacks on his plan for tax cuts given Obama’s criticism that he cannot enact these cuts without harming the middle class or increasing the federal deficit.

The issue turns into the economics of big businesses, because as Romney explains, the top 3% of businesses employ the majority of small businesses jobs. Should corporations be subsidized by the government in order to stimulate growth? As should be expected, Obama declares no while Romney nearly has a heart attack in contradicting the President’s criticism.

When listening, the debate seemed to refer to our reading for this week. How should developed countries handle government involvement? Should this be different for developing countries? Martin Wolf argues that government is too prone to be “bad government,” and developing countries are especially sensitive to this misuse (62). Opening borders offers stability, stability convinces investors to invest their capital into that stable economy. Given that the United States has faced increasing criticism abroad and faces increasing fiscal dependency upon China, convincing foreign direct investors to return their capital to the market economy of the United States is essential.

Not surprisingly, Wolf’s writing supports Romney’s policies and Stiglitz likewise echoes throughout Obama’s talk. Obama criticizes tax cuts to corporations and the arguments seems the other side of the coin; corporations are just as prone as governments to be “bad” because, as Stiglitz explains, “private incentives are often not aligned with social costs and benefits…[so] the pursuit of self-interest will not result in the well-being of society” (190).

Wolf makes a concession within his work that he understands the need for some government action, especially in areas of medicine and education. His allowance suggests that he and Stiglitz are not so radically different in terms of policy, which is not surprising considering the U.S. as a nation is considered moderate and centrist. Watching this debate, however, the fate of American politics appears a little bit darker…this thing is getting tense.