It sometimes seems that when politicians of different political persuasions talk about the economy, and many other issues, they are like the old parable of the blind men and the elephant. The blind men know nothing of elephants. Each touches a different part of the elephant’s body and explains what an elephant is like based on his experience. Their explanations are so wildly different that they suspect each other of lying and come to blows.
We’re all inclined to believe we know the truth based on our subjective experience which, despite our best efforts, is limited. That makes it extremely difficult for those of us who don’t have time to spend hours climbing all over a smelly pachyderm to grasp how we should approach the powerful animal.
And, of course, there are plenty of politicians who shade the truth to their advantage, intentionally tell partial truths and/or downright lies.
Take for instance President Donald Trump’s State of the Union speech. In his version of the U.S. economy, “jobs are booming, incomes soaring (and) poverty is plummeting… I am thrilled to report to you tonight that our economy is the best it has ever been,” the president said.
Then there’s Democratic presidential contender Sen. Bernie Sanders’ version. “This is the richest country on Earth and we have 40 million in poverty, 34 million with no health insurance and half our people living paycheck to paycheck,” he wrote on Twitter.
What are North Carolina voters to make of this? Well, according to the North Carolina Justice Center, a non-profit that advocates for economic justice, while the stock market has doubled in value since 2010 when we began to recover from the Great Recession, wages for working North Carolinians have hardly budged. The Justice Center reports that the hourly wage in November 2019 was about $4.70 higher than in 2010, but inflation has wiped out virtually all of the increase.
The center reports that throughout most of the 2000s, up until the Great Recession, well more than 60 percent of North Carolinians reported having a job. And while employment prospects have improved since the worst of the recession, recent labor market figures showed only 59.3 percent of North Carolinians had a job.
The president said “real median household income is now at the highest level ever recorded.”
But the Justice Center reports that median household income in North Carolina at the end of this decade still hasn’t reached year 2000 levels, despite recent growth. (Some of that growth has been driven by a tight labor market, and some can be attributed to raises in the minimum wage at state and local levels. The federal minimum wage hasn’t budged in a decade.)
To the point of Trump’s market claims, according to a CNN Business analysis of how stocks performed under recent presidents, during the same first 763 trading days of their presidencies, stocks grew 42 percent under President Bill Clinton (the same as Trump), 45 percent under President George H.W. Bush, and 64 percent under President Barack Obama.
In reality, the stock market growth under all these presidents, including President Trump, had more to do with when during the economic cycle they took office, than it did from any of their own actions or policies. That said, trade policies, regulation, monetary policy, taxes and government spending all affect the economy. But the president has only indirect control of most of these areas, as President Trump has learned. Then there are factors over which the president has no control, such as technological innovation and weather related disasters, that can impact the economy.
Monetary policy is the realm of the Federal Reserve, and while the president nominates, the Senate must approve Federal Reserve governors who serve 14-year terms, meaning few presidents get to appoint an entire board. The president shares most of the power he has over the economy with Congress, where the federal budget, trade policies and laws from which regulatory policy flows must be approved.
So, as we look to the coming elections, we need to take sweeping claims and soundbites about the economy with a grain of salt, no matter the candidate responsible for them. More importantly, we need to evaluate the economic proposals of our state candidates for the Senate and the House of Representatives, along with those of candidates for president.
The economy, like so many other issues, is far more complicated than any politician can fit into a soundbite. Trump’s approach to improving it has been tax cuts for the wealthy, deregulation and renegotiating trade policies. Sanders, who represents the more liberal wing of the Democratic Party, advocates higher taxes on the rich to fund social programs, a $15 federal minimum wage, and greater worker rights. More moderate Democratic candidates, like Pete Buttigieg, argue that investments in education, infrastructure and health would pay for themselves and stimulate the economy.
Which of these approaches would actually do more to benefit average Americans?
That’s the question we Americans will decide in November.
As we make that decision, we should bear in mind that our system of government was designed to bring diverse approaches to the table in order to capture a more comprehensive picture of the whole and to allow for respectful debate and compromise. We should reject politicians for whom self-interest takes priority over public service, those who make grandiose promises they cannot achieve alone, those for whom “compromise” is a dirty word, and those who have gotten sucked into a culture of acrimony and negativism. It’s time we remembered that governing is a collaborative process. Before it’s too late.