Obamanomics

Hope and fear

Democratic economic policy sounds worryingly populist

FOR a man who has placed “hope” at the centre of his campaign, Barack Obama can sound pretty darned depressing. As the battle for the Democratic nomination reaches a climax in Texas and Ohio, the front-runner's speeches have begun to paint a world in which laid-off parents compete with their children for minimum-wage jobs while corporate fat-cats mis-sell dodgy mortgages and ship jobs off to Mexico. The man who claims to be a “post-partisan” centrist seems to be channelling the spirit of William Jennings Bryan, the original American populist, who thunderously demanded to know “Upon which side shall the Democratic Party fight—upon the side of ‘the idle holders of idle capital’ or upon the side of ‘the struggling masses’?”

There is no denying that for some middle-class Americans, the past few years have indeed been a struggle. What is missing from Mr Obama's speeches is any hint that this is not the whole story: that globalisation brings down prices and increases consumer choice; that unemployment is low by historical standards; that American companies are still the world's most dynamic and creative; and that Americans still, on the whole, live lives of astonishing affluence.

It is not fair, moreover, to blame Mr Obama exclusively. His rival, Hillary Clinton, is no less responsible for the Democratic Party's wholesale descent into economic miserabilism. Both candidates have threatened to pull America out of NAFTA, the free-trade deal with Mexico and Canada, unless it is rewritten. Both rail against oil companies, drug companies, credit-card companies—the usual suspects. Both want more government spending and regulation to protect individuals against predatory companies. Indeed, in some ways, Mrs Clinton is worse. She appears to be sceptical of all trade deals, including the multilateral Doha round which would produce big benefits for the world's poorest countries. Unlike Mr Obama, she has proposed a deeply unsound five-year freeze on interest payments for subprime borrowers, which would surely result in higher rates and scarcer credit for future borrowers.

Beyond the campaign

How worrying is their populism? The sanguine—and conventional—argument is that none of it matters much. Democratic candidates always veer to the left during primaries, because that is where the votes are. But come the general election, the winner will tack back towards the centre, where the crucial independent voter resides.

The winner, unless Mrs Clinton can stage a dramatic comeback in the big primaries on March 4th, is likely to be Mr Obama. If you look on his website rather than listen to his speeches, there are plenty of intelligently designed, reasonably centrist proposals to be found (see article). It is sensible, for instance, to make it easier for people to save for retirement by enrolling everyone in a scheme unless they specifically opt out. His plans for health-care reform, like Mrs Clinton's, are middle-of-the-road. And his economic advisers, even more than hers, are sound academic economists. So although it might seem odd to advise suspicious voters to ignore the rhetoric of a man whose principal appeal rests on his speeches, Mr Obama in office would surely seek to be something other than the capitalist-hating demagogue he has recently sounded like.

Yet there are reasons to worry. The longer the Democratic race grinds on, the more entrenched the candidates may become in their populism. As America moves into the election proper, there is every likelihood that it will do so against a backdrop of worsening macroeconomic figures and rising numbers of house repossessions. Both John McCain and the Democratic nominee will then be chasing swing voters who are, typically, white working men—the type already prone to pessimism about their prospects. This group is not a natural part of Mr Obama's constituency and, if he were the nominee, he might well be tempted to keep the populism turned up high. If he were elected president, backed by a Democratic Congress with enhanced majorities, Mr Obama might well feel obliged to deliver on some of his promises. At the very least, the prospects for freer trade would then be dim.

The sad thing is that one might reasonably have expected better from Mr Obama. He wants to improve America's international reputation yet campaigns against NAFTA. He trumpets “the audacity of hope” yet proposes more government intervention. He might have chosen to use his silver tongue to address America's problems in imaginative ways—for example, by making the case for reforming the distorting tax code. Instead, he wants to throw money at social problems and slap more taxes on the rich, and he is using his oratorical powers to prey on people's fears.

Mr Obama advertises himself as something fresh, hopeful and new. But on economic matters at least he, like Mrs Clinton, has begun to look a rather ordinary old-style Democrat.