Hey folks – I’ve been overseas for the past few weeks so I haven’t been totally on top of things on this side of the pond. Still, I can say for sure is that over there, they’re generally rooting for Obama to win the election.
Unfortunately, electioneering brings out some of the whackiest, most populist, and thus must economically-deranged policy proposals from otherwise intelligent candidates. Obama – for all his credits – shows that he’s not immune to the bug; this time taking on outsourcing –
Barack Obama on Monday made an aggressive pitch at Ohio’s blue-collar workers by proposing a “Patriot Employers” plan that would lower corporate taxes for companies that did not ship jobs overseas.…Mr Obama’s plan would lower the corporate tax rate for companies that met criteria including maintaining their headquarters in the US, maintaining or increasing their US workforce relative to their overseas workforce, holding a neutral position in union drives among their employees and providing decent healthcare.
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p> Democrat economists rightly ridicule the idea –
…”I would say that this plan is borderline unimplementable,” said a Democratic economist in Washington. “It is also puzzling. Normally presidential candidates only come up with plans that are unrealistic when they are losing. But Obama is now the favourite.”
There are a bunch of reasons lotsa Desis are gaga over Obama ranging from shared policy positions on Iraq and healthcare, to his JFK-esque charisma, and perhaps at the fringe, dare I say, a vague sort of non-white racial solidarity.
It’s worth noting, however, that in the last quarter century few things have impacted real lives back on the Desh more dramatically than the global embrace of free trade – contributing to an estimated 100M lifted from poverty in India alone. And for all the inconsistencies in execution, the US has been the driving force in this global revolution. Unfortunately, penalizing corporations and backtracking on NAFTA / WTO, while perhaps mere election rhetoric over here, create dangerous precedents in other countries that are far more sensitive to populist swings.
Obama’s “popularity” among Desis appears to be based on two things: his opposition to the war in Iraq; and the fact that most people (including Democrats) are sick of the Clintons. Beyond that, Obama offers nothing (I mean, aside from the shallow glamor of being Hollywood’s current “darling.” Of course, Obama will have to speak out against outsourcing in order to get the blue-collar vote!! What else is he supposed to say? Overall, I think he is largely a media-driven phenomenon and is completely unqualified and unprepared to be president.
🙂
There was an interesting article in the local [kanadian, HT: DJ DrrrtyPunj] rag a few days back. To paraphrase, for all the interest the canadians are shwoing in the US elections, we are singularly unaware of the main issues that will affect us. Both democratic party candidates are negative on the nafta and IF they go through on their campaign promises, it’s going to be a swift kick in the nuts for us… and yet, we definitely favor seeing either HRC or O as president.
Not all indian americans put India before America. America comes first for me. The rich have been driving down wages under the guise of globalisation. Obama might give a fair deal to Americans who have not graduated from colleges, who do not make millions or hundreds of millions through financial speculation which jeopardises the livelihoods and life savings of millions of workers. The way things are going in America the day is not far off when it will become a third world hell.
All that is well and good.. I just figure it all out on http://www.kungfuelection.com thank you very much
Vinod, Hasnt Hillary also taken anti-NAFTA positions?? I vaguely remeber reading this.
They can’t and even if they could, they wouldn’t. Can you remember Bush delivering a single campaign promise? Bill Clinton? Pelosi? Reagan? Just one…
Likely. Which is why I want it to happen on Obama or Clinton’s beat.
M. Nam
How does a corporate tax break going to help the middle class or the poor Americans? Such a plan might lead to playing with numbers. For instance a company could cut the wages and benefits to balance out the losses or decrease in profit incurred due to keeping an extra person on the pay roll in the US to get the number of employees in the US to be just above the required mark.
6 · MoorNam said
Something along the lines of refusing to engage in nation-building. And he hasn’t.
Um, I find that highly unlikely. At least of a certain generation.
It would be interesting to know what fraction of the jobs that were lost were producing goods/services for (a) US economy (b) US exports to foreign countries and whether the jobs lost really lead to direct new jobs in foreign countries. If the jobs lost didn’t lead to new jobs in foreign countries then anti-outsourcing rant is pure paranoia and just an effect of capitalistic economy. If the new jobs created in foreign countries were of the type (b) then it is an effect of globalization and American workers and economy has to learn the new game. If it was of type (a) then outsourcing is something to complain about. What kind of capitalism should America adopt where it wants all trade to be one sided i.e only sell but no buy ? Because if we have to buy then somebody else has to produce something. But if higher end work is not available in foreign countries then only lower ends goods and service can be produced by them which in turn is in direct competition to the American blue-collar workers.
I am personally more concerned about the outsourcing of pollution than of jobs – and I think globalization has accelerated pollution tremendously. I would like to see FTAs modified to include environmental and human rights safeguards. My motivation is not economic protectionism, although we might well end up benefiting from more jobs.
A commentator at Assymetrical Information pointed out that Obama had co-sponsored a senate bill to reward ‘patriot employers’ in 2007, which contained similar provisions. So he might well be serious about it.
That’s kind of a bizarre policy offer. Am I understanding correctly — Obama is talking about incentivizing retaining local jobs by offering corp. tax breaks? If you’re going to borrow populist economic rhetoric, it might have been valuable to take a page out of the Dennis Kucinich school of economic/labor policy. Without taking a look at how the domestic economy interacts with the global economy (both from a comparative advantage and asymmetric [labor] market view), this policy — as presented — sounds superdumb. Why not discuss that the economy has been shifting in the manufacturing sector, or talk about the reallocation of jobs/labor, or discuss the gross barriers to higher ed and decreasing returns to education for the non-college bound? There are at least a dozen “populist” topics you could propose sensible policy around, but this seems like the wrong entry point.
While I am strongly in favor of globalization as something that benefits all sides, I am not really worried even if Obama is serious about this and becomes president. I don’t think one person can stop globalization even if it is the president of Amrika, though maybe he could slow things down a bit for sometime. In balance I still think he is a sincere and thoughtful person and I still lean towards him as president (FWIW of course, as a non-citizen).
And people who think the US is turning into a third-world country need to go live in a third-world country for sometime.
2 questions for Vinod:
(1) Does the President of the United States have the duty to promote the domestic economic interests of the United States? (2) Does a policy promoting domestic economic well being necessarily cause harm to third world countries that are trading partners of the United States?
I think you made a huge leap from a policy proposal to reward domestic employers as being inherently harmful to India. Obama did not say that all economic ties with India need to be ended, nor is he against foreign trade, he is merely doing his job of caring about the average, non-professional Americans, unlike Bush.
Also Vinod, I think you fail to give India its due respect for the role it should and does play in promoting its economic destiny. The Indian government has a duty to make sure that it creates a sustainable economy with benefits that trickle down to the uneducated and the educated who are unemployed. The Indian government likewise has a duty to ensure that India’s economy is not dependent on the U.S. or any other nation(s).
In addition, there has been an amazing phenomenon of “reverse brain drain” or NRIs returning to India to provide their know how to create opportunities in India.
The right term (as an adjective) is Democratic and not Democrat. The latter was pushed on the public by right ideologues. The word can distinguished by the small-d democratic by…well, the lowercase d.
It’s almost as if the the possibility of to their opponents (the Democ-RATS) being referred to by a lofty sounding word was difficult to digest.
Also the very funny “America is a republic, not a democracy”. So, as a true American would you vote for a Republican or a Democrat? (Hint, hint: the answer is right there)
the more people is speak with, the more i realize that the racial solidarity reason for support isn’t really on the fringe.
Kurma, is that really necessary?
Obama is not running for the President of India so he should focus on the interests of the US and not India. I think one advantage of Obama as President as compared to Billary or McCain is that Obama might actually pull out US forces from Iraq and save hundreds of billions of dollars by ending the war. Yes, he can.
Obama wants to keep American jobs in America? How audacious.
Surely you meant “the left term”? The right term remains “Republican”.
Grotesque pun. Is great success! I like.
Obama wants to keep American jobs in America?
What exactly is an American job?
I would actually like to know specifically which taxes he would like to reduce. From personal experience, payroll taxes are taxed at the same rate regardless of the size of the company. If he offers to reduce the payroll tax burden on companies in the US, then maybe it would be effective. Most outsourcing is done by large companies who outsource not only to cut expenses but also to focus on growth initatives and deploy their assets, be they financial capital or human capital on areas of growth. These large corporations already enjoy numerous tax holidays. They already have corporate tax loopholes. So, the small firms, mom and pops, who don’t outsource, who create the bulk of jobs in the US, don’t benefit at all because of the heavy burden of payroll taxes. For once, I would like to see a candidate actually target payroll taxes and have the guts to change the rates.
For once, I would like to see a candidate actually target payroll taxes and have the guts to change the rates.
Amen brother. And can someone deliver on increasing the payroll or self employment taxes to a cap of $150,000.
rustbelt politics is such. there are certain things that political elites say but which they will never implement. a broad rollback of globalization is one of those things. both hrc and obama seem to be trying to “out-populist” each other in ohio….
How do you decide which rhetoric to believe and which not to believe? You don’t believe anti-globalization talk but you do believe pull out of Iraq talk? Why?
bill — simple reason, though not one to do with beliefs about the presidential candidate’s intentions. historically, in terms of control and power, presidents have far greater control over foreign policy than the domestic economy (the latter often being dominated by congressional control).
?? I’m a little perplexed, Camille. Unless you mean it’s off-topic. Is anything anyone complains about on this site really necessary? That usage ( in the media almost exclusively by right wing pundits, but now quite common among ordinary folks) bugs me no end. These words serve political purposes. DemocRATS was used by a 527 group in the 2006 mid term elections. The Birch Society used to regularly include “republic not a democracy” in their mailings just so more people would say it. Note how the “war on terrorism” became the “war on terror” because of infinite repitition by the White House (I don’t know what purpose that serves). The Bush administration also has a stated policy of trying to change the term “suicide bombing” to “homicide bombing” (only Fox News is enthusiastic about that idea). So this sort of thing does happen.
Just to be clear, I didn’t mean to imply in any way that Vinod invented the term or is a right wing ideologue pushing an agenda. He was, of course, just going by common usage. In fact, my own political views aren’t that far from his (as he expresses them on this site). And that includes his worries expressed in this particular post.
It is, when the rest of the world is lectured about protectionism.
And who would have thought that Hoperah might actually hedge or pander? Doesn’t he believe in change? After all, he was against the war in 2002 before he was maybe for it in 2004.
(Ok, that was snarky for sure, but it was just too hard to resist. Believe me, I tried.)
Kurma, I wasn’t asking to tell you that you shouldn’t comment or you’re not entitled to your comment / right to speak out. I guess I was just a little frustrated because the disparaging comments that go back/forth about how “conservatives” and “liberals” and “progressives” and “Republicans” and “Democrats” and “the right” don’t really contribute to a dialogue around the issue, which is labor policy and business incentives. It’s not just you, so I’m sorry I singled you out.
heaps of people rooting for Obama 😉 – nay even with him
Talking about Obama Rooting. Many straight women fancy him. Do gay men fancy him ?
When we were in Malaysia and Singapore, people brought up Obama ALL THE TIME. Everyone seemed elated to think that a black man could be president of the United States. No one was as excited about Hillary. It was a strange realization—at one point, I started counting the times this came up. We were never the initiators, but it came up without fail. I think one guy we met was actually writing him a letter.
I think having more jobs in the USA is good for the world especially India. Any measure that increases the total number of jobs in the USA is good.
Kurma, I wasn’t asking to tell you that you shouldn’t comment or you’re not entitled to your comment / right to speak out. I guess I was just a little frustrated because the disparaging comments that go back/forth about how “conservatives” and “liberals” and “progressives” and “Republicans” and “Democrats” and “the right” don’t really contribute to a dialogue around the issue, which is labor policy and business incentives. It’s not just you, so I’m sorry I singled you out.
Hmm…. I thought that’s sort of what I was getting at too – the idea of throwing a name on one’s opponent as an easy alternative to debating. And while we are at it, distorting that name too. But these are meaningful words – conservatives, liberals, Republicans, Democrats with fairly plain meanings and I see no harm in using them if one is not claiming they are automatically good or bad. And there are such things are left and right wing ideologues. These, I do claim are bad. Anyways, my comment surely did not contribute to this dialogue, no doubt.
Every country should look at its interests and see whether it should allow certain trade practices or not. What is wrong with that? I have nothing against Obama on this one. Nobody is talking about rollback of globalization, but if it is not working for the country and its people (now, economically, am not sure that is the case), there are certain changes to be made.
As for rooting for Obama, most people do it, because he is a story of inspiration – he doesn’t come from the family of politicians, he belongs to a class that suffered racial prejudice for the longest time, his dad left when he was two years old. He is self-made and he has a message of hope that resonates with most people regardless of nationality.
Our time for change has come!
I am curious as to how the act would work. Will Toyota be taxed more as its headquartered in Japan? Does that mean Japanese cars become more expensive? Also I am not sure if it will impact outsourcing to India at all. A company that outsources a call center to India is not opening a subsidiary or gaining any employees in India, so it might well qualify for the tax benefits.
20 · bulbul said
The problem, however, is that an effort to create protectionist policy only helps a few select Americans, but injures many. Take as an example the United States’ high sugar tariff. Undoubtedly, it helps the sugar industry and its workers, but at what cost? In Holland, Michigan, 600 American jobs were lost when Life Savers moved its factory to Canada in order to take advantage of lower sugar costs. Those factory workers were acutely and severely harmed by the tariff. Similarly, the higher price of sugar translates to higher prices on countless other products. In effect, these higher prices are a highly regressive tax.
Also say Coca Cola is doing really well in India and wants to increase its head count. Under the law it’d have a huge incentive not to, as it’d be taxed more highly for the lowering difference between Indian and American count. Ironically, the act might end up protecting Indian soft drink companies from Coca Cola. I don’t see a workaround this: how can you tell if a company’s workforce increase in another country is at the expense of US workers or not.
vinod –
Can you put up some more information on this statistic – how it was obtained, and to whom exactly it refers?
This idea of taxing companies that “outsource” is not only unworkable, it is profoundly dumb.
As are countless proposals being bandied about by all candidates. This whole presidential election tamasha is just that. Ideas are thrown about, not so much to be scrutinized, as to be taken with a tsp of salt. Which is why I am deciding my vote on who is more likeable, looks more presidential, more inspirational and more fun to listen to.
Too bad Colbert isn’t still in it.
Najeeb, What exactly inspires you about Obama? his “hope-change-hope-change” chant, or his excellent track record and experience. Oops never mind…. Really we are talking about the PRESIDENT of the USA, and all that people want is “change”. Remember back in 1976 when another “young,fresh” man whose “time had come” (Jimmy Carter) was voted in, and we all know how that went,dont we?. As far as inspiration goes, there are so many such minority men and women who made it. Does that mean that they all can run for president now?
If Obama wants to stop outsourcing,are Americans willing to pay 3x more for everything they buy. If production costs increase, the costs are obviously going to pass on to the customer, do you want your monthly grocery bill to double or even triple? Is that the “change” you want. Or the is the “change” going to be a 50% income tax to pay for all his great schemes?
Though this was mentioned before, I’ll bring it up again.
HRC’s rhetoric is just as anti-outsourcing just as much as Obama’s. The whole Democratic Party pretty much has to run on that or a similar platform in general elections.
As an Obama-supporter, I am quite disappointed by this “pandering to the base”, especially for someone who went to Chicago. Shouldn’t he be a Friedman fanboy?
But, realpolitiking aside, I am quite intrigued by this new economic theory from prominent free-market theorists/microeconomists about how free-trade barriers may not be all that good in all cases. I remember reading a WSJ frontpager on the topic and they cited someone from Princeton. Does anyone else remember?
RandomDude, In my view, Obama, having come up from a modest background and made it to a platform to speak about issues with such intellect shows what the man is made of. Hillary on the other hand still stands in the shadow of Bill Clinton – her entry, ideas and politics have a lot to do with being beside Bill Clinton. There is nothing wrong with that, but when tough decisions are to be made, Bill Clinton is not going to be next to her always. As for experience, he has experience being a senator, a damn good one at, in the limited time he has been one. He has spoken his conscience, even when it wasn’t the popular thing to say – Iraq for eg. Time and again, when Hillary had the choice to speak against the war, she didn’t, until of course, the news wasn’t so good anymore from Iraq. People want change, a total change of course from the dive down this country has undertaken from Bush’s presidency. And Inspiration does a whole lot of good – it encourages generations to come to rise up against the obstacles. Kennedy is still remembered as a major source of inspiration for the youngsters despite many of his failures during his administration. Time will tell whether Obama will be a good president or not. But given the outset of it, I am very hopeful. No other candidate comes closer to Obama —
AS for outsourcing, I am not sure whether Obama’s policies will benefit the country. But, I am not against the basic idea of figuring out whether it is good for the country or not. At the end of it, I have come to realize that in this case, there is no policy that will benefit all. It is a question of who should get the benefit. I like the policies that benefit the lower/middle class more than the upper class. I am fine with paying more tax so that lower/middle class doesn’t have to do the struggle that they are going through now. In reality though, democrats aren’t going to raise taxes. You are already paying high taxes and it is just that the beneficiaries are not the poor people – we are spending 20 billion a month in Iraq. It is about where one should focus.
Vinod – I do not claim to understand all the concoctions that come out of mixing varying amounts of Politics with Economics, but have two humble points/questions:
Primary accountability – Firstly, this issue should worry Chinese much more than Indians. Next, what you call populist, could very easily be called democratic from the vantage point of 100K laid-off rust-belt workers. While some things that Obama has promised may not get people in India jumping with joy, it gets the appreciation of his electorate. As tempting as it is to think of the US President as President of the world, he is not. His job is not to seek the global maxima, but to seek the maximum potential of US and unless he is completely screwed up, that should have a fairly high correlation with rest of the world as well. And to be fair to him, his seemingly strong position is not really that dramatic – “The Patriot Employers legislation would provide a tax credit equal to 1% of taxable income to employers” – that it can derail the train of globalization from its tracks. Moreover, if India/China can play games with the tax rates in the states/regions which need development (read: SEZ) why can’t the Americans do that? Obama has openly spoken about taking Chinese up on their artificially depressed currency, because that is not fair to people of Ohio and Michigan. Again, is there much wrong with that?
Long-term viability of globalization – We have to keep in mind that this is the perhaps for the first time in recent human history that economic power is shifting from the one half of the world to the other without any major wars (ignoring Iraq/Afghanistan for a minute). Globalization can flourish only if we make the transition smooth for all parties concerned, and that includes the laid off workers in the US. Does it help anyone if there forms a critical size of such disenchanted workers who then put someone with radical ideas in the White house? A good company/stock to hold in the long run is not which peaks at in a few years with uncertain future after that, but one that has the maturity to realize that sometimes after a few years of growth marathon a few months of R&R to build bottoms-up bench strength ain’t a bad idea. And Obama’s repeated emphasis on education and skill building is exactly that, imho. And given that even the most aggressive GDP estimates still have US in the top 5 and still amongst the top per capita consumers in the world in 2050, won’t it be better for all of us to not shrug and say too-bad-all-ur-base-r-belong-to-us to the laid-off Americans and no-fair to the politicians who are doing something about it?
Najeeb, Obama has spoken a lot. But as we all know,words are cheap. What Obama speaks,the thing is anybody can speak. But as Walter Mondale would say “Where is the beef”? Where is Obama’s experience, to prove that he is capable of pulling of all his tall claims? Jimmy Carter did the same thing and look where that lead the country. Except the Iraq War, what can you blame Bush for. Inspiration is good too, but there are other candidates with the Inspiration AND the experience. Why not someone like Bill Richardson,for example?. Experience as a Senator? What exactly has he accomplished in a single term say compared to other more veteran Senators? That was the same question that Chris Mathews asked an Obama supporter and nobody had a damn clue. Pretty pathetic to say the least. Besides pushing a few bills is a far cry fro executive experience, which Obama has none.
Again, why should the country benefit the lower/middle class MORE than the upper class. Economic policy should benefit everyone equally. The maligned upper class are the job-creators, the entreprueners. Taxing them would make the US like France, with 10% unemployment and pathetic 0.5% economic growth. The US is the most vibrant major economy for a damned good reason. Low taxes, rewards for the upper class, and the benefits trickle down to the lower class, that system has worked very well. The alternative has failed, everywhere. Obama is another salesman selling socialism by the drink.
Bush didn’t attend Chicago as a student. He attended Occidental and Columbia (undergrad), Harvard (law), and taught at UChicago’s Law School. Hardly the same thing as subscribing to the prevailing wisdom at the Econ department.
RandomDude, you’re conveniently leaving out other “change candidates” from the past 60 years who were quite popular (although their impact or policies is debatable), including Reagan, Kennedy, and W. I’m not sure the comparison even matters, though, since you seem to believe that the rich are entitled, by virtue of their wealth, to more incentives, more breaks, and more benefits than other, less affluent, citizens.
Bush didn’t attend Chicago as a student. He attended Occidental and Columbia (undergrad), Harvard (law), and taught at UChicago’s Law School.
Camille: this Freudian slip of yours clearly demonstrates you’re suffering form neocon-envy. The only cure is to have an affair with Paul Wolfowitz
Out-of-control domestic spending. Harriet Miers idiocy. Recognizing Kosovo.
Did you
the Democratic debates? Richardson is pathetic–he makes Bush look smart!
(full disclosure–I am a Republican.)