With less than two weeks to go before an election that could change the balance of political power in the United States, it is becoming increasingly impossible to think about any of the issues that obsess How the World Works without wondering what Democratic control of the House (or, less likely, the Senate) could mean.
I don't mean to jump the gun here, and assume that a change is gonna come. But two separate radar blips on my morning blog-scan reinforced the primacy of internal American politics in determining global affairs and exposed the odd ways that economists sometimes approach political affairs.
First off comes economist Daniel Drezner responding to fears expressed by his readers and the National Review that a takeover of the Senate by Democrats could end the free trade consensus that has ruled Congress for "two administrations." Drezner dismisses the worry as irrelevant, because the Doha round of WTO trade talks is already at a standstill. Nothing good, free trade-wise, is going to happen anyway, so why worry.
Two things here.
No. 1: Why are trade talks at a standstill? Largely because of American and European refusal to make enough concessions in opening their own markets to satisfy developing nations that rightly feel they've gotten a raw deal from previous trade negotiations. A Democratic takeover certainly wouldn't change that equation, but it's important to recall that enthusiasm for free trade around the world is in decline because of the widely held perception that the United States does not actually practice what it preaches.
No. 2: It's not entirely clear that this election is about the economy. It may have far more to do with Iraq and a general sense of distrust in Bush and unease at the long-term consequences of Republican control of both the White House and Congress. Previous elections that saw major shifts in popular elections usually occurred in periods when the economy was demonstrably worse than it is now. But if a phalanx of anti-trade Democrats storms into Congress, then that would be de facto proof that the current political leadership has failed to make the case for "free trade" and globalization. As I've written before, economists can argue until they are blue in the face that the net gains of trade liberalization outweight the net losses, but if enough people don't feel that they are getting their fair share of those gains, well, the current set of bums in power will be replaced. Maybe, just maybe, some of those gains need to be redistributed.
Next comes environmental economist John Whitehead taking a puzzled look at a report on the number of new coal-fired electricity-generating plants planned for the next couple of decades and tells us that "if electric utilities have incentives to burn more coal then politicians aren't really taking the threat of global warming more seriously."
What's up with this? he wonders.
Hoo boy. If we define "politicians" to mean the party in power -- the party that has done its absolute best to resist every attempt to make the energy industry pay the full costs of the pollution it produces -- I'd have to completely disagree with professor Whitehead. They take the threat of global warming very seriously, because they've worked very hard to ensure that absolutely nothing is done about it. As noted here last week,since the Republican takeover of Congress in 1994, conservative think tanks, the energy industry and Republican legislators have ensured that attempts to introduce "efficient incentives" into energy policy -- whether that means a carbon tax, a Kyoto-style cap-and-trade system, or flat-out mandatory requirements to incorporate carbon sequestration in every new (and old) power plant -- never get off the starting block.
It's not as if these people are breezily dismissing rising temperatures as so much liberal hot air. What these people are about is maximizing profit for themselves and their campaign contributors. Whether it be in "free trade" agreements written as specified by the pharmaceutical industry, or environmental policy directed to avoid raising costs on energy companies, it has almost nothing to do with actual ideology or economic theory, and everything to do with corporate power.
The great irony is that this election is not about either the economy or the environment. It is about years and years of mendacity and bumbling by Bush and his cronies, particularly with respect to the Iraq war. If I were a modern-day robber-baron, I'd be pretty pissed at George W. Bush. He may have screwed up a pretty good thing for the ruling class.
Then again, he may not. We'll see in a couple of weeks.