This post was last updated on November 2, 2010.
Depending on who you listen to, your vote today should be either a) your verdict on Obama's performance so far, b) an expression of generalized rage, or c) an effort to put the economy on a more productive course. Only the last has any shot at leaving you better off. Problem is, all politicians assure you that they know what will fix our economic ailments, whether they do or not. How do you decide?
Most of the economic debate, such as it was, focused on near-term tactics. Honest people can disagree on whether what's needed right now is more heedless government spending or more reckless cutting of taxes. Both are just different styles of the same thing: borrowing from future generations so we can spend today. You can take your pick, depending on your political leanings. But what you can do, no matter what your political party, is weigh whether your candidate understands what needs to be done in the long run on the real issues that promote sustainable prosperity.
What might those things be?
Reasonable immigration policy At the simplest level of arithmetic, economic growth equals growth in the workforce times growth in the workforce's productivity. Problem is, as a matter of demographics, our workforce isn't growing fast enough to replace the retiring baby boomers and to cover the cost of caring for them. The only way to increase the size of the workforce is to invite workers in from other lands.
Isn't that stealing jobs from Americans? It's a crowd-pleasing thing for politicians to say, but there's no economic evidence that it happens that way. In fact, just the opposite. Tyler Cowan, writing in the New York Times this weekend, cites a new study showing that immigrant workers create more jobs for the U.S.-born, by (among other things) preventing offshoring of work. When low-paying work stays here, rather than being farmed out to China or Vietnam, U.S. born workers get higher-paying jobs as supervisors.
And that's just the low-paid workers. Highly skilled workers from abroad create jobs for U.S. workers by founding companies in the U.S. and cementing ties with their native lands, which can become markets for U.S. goods and services. In Silicon Valley alone, foreign born workers accounted for more than half of all startups since 1995. But since 9/11, we've made it difficult for educated foreigners to find work here, even those educated at top U.S. colleges. At a time when U.S. growth is hobbled by a shortage of well-qualified job applicants, training brilliant workers here and then sending them back to India or Russia to compete with us makes no sense.
Better education If we can't increase the sheer size of the workforce, we should at least boost its productivity. We can't do that if we continue to accept school achievement that puts U.S. kids in the lower third of developed nations. You may want to question the commitment of any politician who is too beholden to the forces that want to preserve the unacceptable status quo in U.S. education. (We're looking at you, teachers' unions).
Reasonably free trade In a weak economy, global trade is another easy target for politicians, since it conveniently blames our economic woes on strangers. Problem is, protectionist strategies in the U.S. generate retaliation from our trading partners, and we need those trading partners. Most of the world's economic growth is focused elsewhere at the moment, especially emerging markets. While politicians can score debating points by blaming China or other countries for our economic woes, the prospect of resurgent protectionism scares many economists to death. Remember we tried protectionism before in the 1930s. Runaway tariffs shut down global trade and helped turn a bad recession into the Great Depression. Any politician who rages against free trade to score votes is doing no one any good.
Honesty about the budget If you think it's possible to preserve the status quo for Social Security, Medicare and government pensions, you are kidding yourself. Any politician who tells you we can do all that and cut taxes at the same time, shouldn't be taken seriously. As a nation, we have some tough choices ahead, and politicians have to show they are not in denial about that fact. "For me, it's crucial that a politician be aware that, more than anything else, the long-run problem is health care costs," says Mark Thoma, the University of Oregon economist who writes the Maximum Utility blog for CBS MoneyWatch. "And they have to understand that it needs to be fixed." The candidate who gets your vote today should have a credible plan in that regard. Feel free: Demand a little leadership. We won't get it if we don't ask, and election day is the perfect day for asking.