Top 15 Points of G.O.P.’s Finance Platform
1. Advance free markets
2. Reduce personal and corporate taxes.
3. Constitutional amendment requiring a super majority for any tax increases
4. Reduce federal spending using a tripartite test for every federal activity, and thereby,
5. Reduce the size of big government
6. Rein in union power
7. Audit the Federal Reserve Bank and make it more transparent
8. Enforce free trade by pushing trading partners to open their markets to US goods
9. Stop China’s unfair trade and currency policies
10. Aggressively support small businesses
11. Promote private-public infrastructure development
12. Retain FDIC guarantees on bank deposits but increase banks’ capital requirements ensuring no more future bailouts
13. Repeal Dodd-Frank. Instead pursue, “Reasonable practical oversight of financial institutions, [and] practical safeguards for consumers”, but still,
14. Moratorium on all regulations until existing ones have been reviewed
15. Give citizens control over their Social Security accounts
(From: G.O.P. Platform 2012)
Analysis
First, there are no new ideas. These fifteen positions on finance and economics have been part of the GOP world-view and action plan since the last century. Economic and financial ecosystems have changed. Empirical evidence from finance over the past decade may require new ideas for new contexts. For instance, the tone of the GOP platform suggests free markets are, without exception, good. The party continues to want light to no regulations (little is said about regulating banks after repealing Dodd-Frank). This position ignores the evidence provided by the 2008 financial crisis and the 2000 dotcom crisis. Markets are not efficient. There are market failures and there is market manipulation.
Second, the GOP platform, not unexpectedly, speaks in broad, general terms. There are few details. For instance, reduce big government. Who can disagree? However, the tone of the GOP platform suggests government, without exception, is bad. The implication is government and labor unions distort free markets making markets inefficient. However, the platform is silent on other factors that distort free markets.
Private sector interference also can distort free markets. Unethical private sector activities such as the manipulation of LIBOR (London Interbank Offer Rate) distort the free market price of money. Cronyism and non-independent boards of directors distort the market price of executive compensation. Corporate corruption such as Enron’s distorts free market forces.
Third, the platform is largely anodyne. Yes, we do not find disagreeable ideas like free markets, less government, and a balanced federal budget. However, if the GOP had included something new and creative in its platform, such as, say, “promote ethics in markets, because ethical failure is probably the single most perilous cause of financial market collapse”, voters would probably sit up and pay more attention.
Next Week: The Top 15 points of the Democratic Party Finance Platform