With MMP the politicians have to decide what Germany has decided

Voters in the German federal election on Sunday had the opportunity to sweep away the detritus of 16 years of compromises from retiring Chancellor Angela Merkel.  

The Green party led in the opinion polls by a good margin earlier in the year.  Only a few days ago, the Guardian dared to dream of a red-blooded left-wing coalition between Social Democrats, Greens and the former communist Left Party united by desire for higher taxes, more pernickety controls and a slug of anti-Americanism.

In the end, the German voters did what they have done for much of the post-war era, giving victory to the parties of the right (acknowledging that these labels seem to be less meaningful these days).

Continue reading “With MMP the politicians have to decide what Germany has decided”

Should liberals be voting for Trump?

You don’t come to Point of Order for a 5,000 word essay on liberalism (for that you read ‘Liberalism and its Discontents’ by Francis Fukuyama at American Purpose).

But he does have a handy definition:

“Classical liberalism can best be understood as an institutional solution to the problem of governing over diversity … The most fundamental principle enshrined in liberalism is one of tolerance: You do not have to agree with your fellow citizens about the most important things, but only that each individual should get to decide what those things are without interference from you or from the state.

And using this yardstick of containing diverse views, let’s look at some of the ways in which Trump’s Republicans or Biden’s Democrats might go should they prevail in America’s national elections next week.

Continue reading “Should liberals be voting for Trump?”

NZ chooses hope over fear – we’ll find out which was the wiser choice

Viewed from the far side of the world, Jacinda Ardern’s triumphant re-election suggests an extraordinary level of hope and expectation behind the voters’ decision.  If it can’t be managed down, it’s hard to see how it can be met.

The opposition National Party were singularly unsuccessful in tapping into voters’ fears for the future and selling themselves as the safer option.  Instead, they appear to have leaked voters predisposed to such fears to the ACT party.  

Given that their signature tune in recent years has been the argument we can finesse the ‘hard choices’ more realistically and efficiently than the Labour party, they should not be altogether surprised that middling voters grasped at the government’s suggestion that some hard choices might be avoided altogether (for you and your family, and maybe even for the country).

Continue reading “NZ chooses hope over fear – we’ll find out which was the wiser choice”

The logic of a Trump win

With the opinion polls showing a healthy lead for Democratic candidate Joe Biden, and the betting markets now putting him odds on, how might Donald Trump pull off a win in the US presidential contest on 3 November.

Well, Hillary also had a comfortable lead this time in 2016.  Biden’s lead is also narrower in the crucial battleground states.  

This time Trump is the incumbent.  Historically, Americans usually grant a second term, except in unusual circumstances.  But Covid does seem pretty unusual.

Continue reading “The logic of a Trump win”

America’s Supreme Court battle is refreshingly clear and largely predictable

There is much talk about whether the Republicans should try to fill the Supreme Court vacancy created by the death of the late Justice Ginsburg.  And much of it misses the point.

Leave aside the diversions about not filling vacancies during an election campaign or leaving it to the next president. Justices are appointed through a characteristically American political negotiation between the President and a Senate majority.  If by chance they are in strong agreement, then it is nolo contendere.

The Democrats are entitled to be grumpy that the laws of chance have not worked in their favour.  But politics does not have much room for ‘our turn now’ arguments, particularly when there is no indication that they would keep playing by the rules.

Continue reading “America’s Supreme Court battle is refreshingly clear and largely predictable”

What sort of coalition do America’s voters want?

The future of America’s Republican party looks more interesting and probably also more healthy, if one can judge by the interchange between Ben Sasse, the scholarly Senator for Nebraska, and his more demotic President, Donald Trump.

“No president — whether named Obama or Trump or Biden or AOC — has unilateral power to rewrite immigration law or to cut taxes or to raise taxes. This is because America doesn’t have kings”, 

wrote Sasse before adding a quick civics jab: 

“Under our constitution we’re supposed to have public servants.”

It’s a reminder that political parties are coalitions – often uneasy ones.  

Continue reading “What sort of coalition do America’s voters want?”

Trump’s (pre-Covid) economy gives clues for election strategy

One of the interesting things about the (pre-Covid) US economy was that, on the surface at least, it didn’t change all that much between Trump and Obama. Or so argues economist Pierre Lemieux in The Trump Economy: Three Years of Volatile Continuity for the Cato Institute.

His assessment on economic growth:

“Under Obama, the average annual growth [in real GDP per capita] starting in 2010 was 1.4%. Under Trump, it averaged 2.0%, though the upward trend slowed in 2019, falling to 1.8%, which is roughly the same level as 2017. These data are consistent with the continuation of a slow recovery from the Great Recession.”

And on labour markets:

“Overall, the poverty and unemployment picture improved slowly from 2009 to 2019, with no radical break when the occupant of the White House changed. The Obama economy and the Trump economy seem to be the same economy. This observation applies to many other measures of American prosperity”

OK.  An important general point – that presidents’ short-term influence on the economy is usually overrated and the influence of longer-term market and policy settings is underrated – is usefully made.  But you still ought to look at the changes in those settings to draw some conclusion about possible longer-term economic and political impacts.

Lemieux’s analysis identifies three substantial policy divergences between the two administrations.

Comprehensive tax reform in 2017 is the first.  This pushed down the cost of capital and increased investment. Lemieux cites evidence that it spurred economic growth in the following year by 0.8 percentage points.

But the tax cuts were not backed by reduced government spending.  So rising government debt, further boosted by Covid payouts, will require a response at some point.  The choice on how this is done – either spending restraint or higher taxes – remains a key dividing line between America’s political tribes.

The second divergence is on regulatory policy. Trump’s administration actually managed to stop (rather than just slow) the growth in the stock of regulation.

“… the Trump administration has roughly capped the total volume of federal regulations at, or slightly over, the 185,000 pages [in the Code of Federal Regulations] they comprised at the end of the Obama presidency”

The process was probably more shuffle than standstill but, even so, it represents a decisive change of intent from the sweeping regulatory surges in areas like resource use, financial services, healthcare and energy policy launched by enthusiastic politicians of all stripes and predating the financial crisis.  And it almost certainly needed a clear lead from the top (plus some excellent regulatory economists on the ground).

The third area is Trump’s break with the orthodox consensus on world trade.  

Managed stability has been replaced by an attempt to batter concessions out of China, win votes from the losers of globalisation, and challenge China’s bid for geopolitical hegemony.  The best you can say about the economics is that so far he seems to have got away with it (despite increased trade barriers reducing US GDP by an estimated 0.4%).

If you are a market liberal, you ought on balance to prefer the Trump mix – although you would be entirely justified in having some conniptions with regard to opportunism and lack of consistency.

And you might also want to use this analysis to evaluate how a Biden or Trump presidency might approach things after the November election.

First up, the case for more continuity.  Despite the rhetoric, both parties will at bottom be relying on workers and businesses in the private sector to generate post-Covid recovery by adapting to changed economic conditions.  Both are likely to spend freely to support those economically hurt by the pandemic (although it’s also reasonable to expect the winner to direct more pork towards ‘his people’).  Both are likely to favour strategic competition with China over market integration. No one wants to tackle the national debt before the market makes them do it.

And now the differences.  

Biden Democrats see a much bigger role for government in the recovery and are already talking about higher taxes on the usual suspects (business and the rich) to pay for extra spending on green subsidies, childcare and unionised jobs.  One can also safely predict a resumption of normal service from the regulatory bureaucracy. Trump and his allies seem less likely to take this path.

So in some ways, Covid might be clarifying the economic choices facing Americans  in November.  Which will surely be helpful after all that continuity.

Some Labour strategists may agree with Peters that the election should be delayed

NZ First leader Winston Peters today said he wants the election held on November 21,  Radio  NZ   reported.  He says he believes  the health system would be under the pump in September with the winter flu season and the country potentially still dealing with the impacts of Covid-19.

Prime Minister Jacinda Ardern announced the September election date before the Covid-19 pandemic began.

Peters said he had fought for the November date originally, because his party believed summer elections were better, but given the pressures of Covid-19 he will again raise delaying it by two months.

“Having a good look at it now and with the compounding problems of coronavirus and all the distractions and efforts going in elsewhere, perhaps the sound thing is to say November 21 is the right date and we should go ahead then,” he said. Continue reading “Some Labour strategists may agree with Peters that the election should be delayed”

Are German political ructions signalling a sea change in European politics?

It’s not made many headlines outside Germany, but the resignation of Annegret Kramp-Karrenbauer, Angela Merkel’s handpicked successor as leader of Germany’s Christian Democratic Union (CDU) party, may be the first step in a broader European political realignment.

Ostensibly she is stepping down because of the mismanaged response to a minor political squabble.  Last year’s state election in Thuringia delivered the usual stalemate.  Two parties got more than half of the votes between them: the Left party (a successor party to the former East Germany’s communists) and the Alternative for Germany (AfD), a newer right of centre party.  Both are customarily labelled ‘far left’ and ‘far right’. Continue reading “Are German political ructions signalling a sea change in European politics?”