Wednesday, April 13, 2016

The difference between Hilary and Bernie is economics

There are some pundits who say that from a policy perspective there isn't much difference between Hilary Clinton and Bernie Sanders. Perhaps now there isn't since, as some have noticed, Hilary has adopted at least half of Bernie's message and policy positions.

Yet it is clear that Hilary is far more militant than Sanders, having served in an administration that has sold far more arms to foreign countries than the Bush Administration. She is a more conservative deficit hawk than Bernie is. And she still makes an occasional racist gaffe where Bernie has been fighting for civil rights since the 60s. Some refer to her as a Goldwater Girl, a reference to her very early Republican career and support for Barry Goldwater's run for president.

I found an interesting graphic on the internet to show where the primary candidates stand politically, shown below:
That graphic was created by The Political Compass, an interesting website dedicated to exploring the full spectrum of political thought. Notice where all the GOP candidates stand, in one little corner to the upper right. There really isn't that much difference between them, except that Trump is far more overt than the rest of them in terms of bigotry.

From an economic perspective, there is apparently, not that much difference between Hilary Clinton and the Republicans.

Economist Dean Baker notes that Bill Clinton, along with the International Monetary Fund, (IMF), worked to impose harsh penalties and restrictions upon Asian countries in the wake of the Asian currency crisis of the 1990s. They did not receive sufficient help from the IMF, so they built up large reserves of US dollars to prevent that kind of crisis from ever happening again. Reserves built up by the Asian countries made the dollar strong relative to their own currencies, and that helped to grow and maintain a trade imbalance.

Moreover, the Clinton Administration, along with every succeeding president, worked to pass and implement trade agreements that put manufacturing workers in direct competition with millions of low wage workers around the world. At the same time Bill Clinton and others like him were praising free trade and the benefits of having low wage workers build the stuff that we all buy, they were protecting professionals like doctors and lawyers from international competition. The reason is obvious: professionals have more political power than manufacturing workers.

The trade imbalance that we have today is not due to natural economics. It is due to the way the rules were written under the Clinton and succeeding administrations. We've seen Hilary waffle on trade agreements. Bernie Sanders opposed NAFTA and remains a staunch opponent of so-called "free trade agreements" that protect the professional class while thrusting manufacturing workers into competition with low wage workers overseas.

Asher Edelman, one of the models for the Gordon Gekko character in the movie, Wall Street, is a trained economist and successful businessman. He has endorsed Bernie Sanders based on his own analysis of Sanders' policy proposals. He is yet another economist who is calling for the reinstatement of the Glass-Steagall Act. Bernie Sanders is promoting a 21st Century Glass-Steagall Act to acknowledge how the world has changed and to deal with the shadow banking that helped to put our country into a recession. Hilary Clinton is opposed to re-instating the Glass-Steagall Act.

What is so important about the Glass-Steagall Act? Glass-Steagall was enacted in the 1930s in the wake of the stock market crash of 1929. It separated commercial banking from investment banking. Commercial banking is where most of us put our money and get our loans. We have savings and checking accounts that are protected by government insurance. Thanks to the repeal of Glass-Steagall by Bill Clinton, that wall was removed, allowing investment and commercial banks to merge. This allowed the unprecedented growth and consolidation of giant, too-big-to-fail banks that surround us today.

With Glass-Steagall in place, investment banking did not get insurance for their investments. Without it, the American people are on the hook for the mistakes of the investor class. Where Sanders wants to re-instate Glass-Steagall, Hilary Clinton has been steadfast in her support of the status quo.

Most of of this economic activity is happening on Wall Street, in New York, the same state that Hilary Clinton once represented as a Senator in the United States Congress. She won two terms as Senator and then was appointed by President Barack Obama to be Secretary of State. I think it's an open question as to why she moved there, you know, just to run for Senate.

She won both elections for Senate with comfortable margins. She won the primary election in 2008 against Obama in New York. Now she is running for president against Bernie Sanders. Polling is strongly in her favor. But we've noticed that the polls have been wrong by large margins in past primary contests between Hilary and Bernie.

There has been a record surge in registration of new voters in New York, mostly first time voters. An estimated 41,000 people have registered to vote in New York between March 10th and March 20th. The Sanders campaign is hoping that this is a sign that voters in New York are wising up to the differences between Bernie Sanders and Hilary Clinton. I'm inclined to think that they are ready for Sanders.
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