On Economic Growth, the GOP and Dem Platforms Are Fundamentally at Odds
Attitudes towards growth are now one of the defining differences between left and right in America.
In the first half of 2016, the American economy grew at a rate that might be politely described as “less-than-optimal.” According to the Bureau of Economic Analysis, real gross domestic product (GDP) increased at an annual rate of 1.1 percent in the second-quarter of 2016. This was a slight tick above the first-quarter increase of 0.8 percent.
To put this in perspective, these numbers are well below the average growth rate of 3.22 percent between 1947 until the present. There is, however, no shortage of politicians and commentators who insist that the days of more than 3 percent annual growth are gone. The “new normal,” to recite a much-overused phrase, is low growth. This has been accompanied by an ever-increasing emphasis on economic equality, understood as a desire to secure greater equity in outcomes.
Economic growth isn’t the same thing as happiness. Nor is growth an end in itself. But economic growth is indispensable if you want to have a flourishing society. People’s attitudes towards economic growth, however, also reveal a great deal about what they think should be political priorities. In that regard, a comparison of the 2016 Democratic and Republican platforms suggests that one of the most significant divides in America today concerns how people view economic growth.
The Democrats Focus on Redistribution
The Democrat’s Party platform contains very few references to economic growth. It speaks of “sustainable economic growth,” occasionally refers to entrepreneurship, and insists that the Democratic Party will build “strong, sustained, shared economic growth.” Here the Democratic platform places considerable emphasis on repairing America’s infrastructure: partly because it agrees with Adam Smith that this is an important role played by government in the economy; and partly because it follows John Maynard Keynes, who saw such public works programs as a way of stimulating the economy.
Generally, however, growth appears almost as an afterthought in the Democratic platform — as if growth were necessary primarily because it creates more stuff to redistribute. Virtually every section of the Democratic platform that refers to economic subjects focuses on using the state to
- redistribute wealth,
- secure various economic “rights” (which are asserted rather than explained), and
- stimulate the economy by any number of interventions and subsidies.
Many of these interventions support specific groups, thus underscoring the continuing rampage of identity politics on the left.
The platform does mention the need to rid the economy of anti-competitive practices. But one can’t help but notice how many times the text says “we will.” Who’s “we”? The “we” is “the government” and, even more specifically, the Federal government. Though the platform does call for a simplification of government, the notion that excessive intervention, regulation and taxation might retard economic growth significantly or even result in unjust redistributions is generally ignored. It is apparently not important.
The one exception to this pattern is an emphasis upon the need to cut red tape that “holds back small businesses and entrepreneurs” and even giving them “tax-relief and tax-simplification.” By contrast, large businesses and corporations — which do, after all, generate a considerable amount of the economic growth that occurs in America and which are subject to the world’s highest corporate tax-rates — are treated as problems to be solved rather than significant generators of wealth.
Republicans Seek Growth First
Like the Democrats’ document, the GOP platform refers to the need for more competition and for the government to engage in major infrastructure programs, though for Adam Smith’s reasons rather than Keynes’s. The GOP also mirrors the Democrats’ attention to small business and entrepreneurship — minus, the Democrats’ insistence on attaching everything to identity politics.
The primary differences between the GOP platform and that of the Democrats on the issue of growth is that the Republicans’ whole approach to the economy starts with
- a focus upon economic growth,
- a refusal to accept recent years of low-growth as normal, and
- outlines of what Americans need to do to realize a high-growth economy.
In all this, the GOP portrays government as playing a more or less subordinate role.
What also stands out in the GOP approach to growth is that it tries to show how a concern for economic growth feeds into the development of other aspects of American life. If you take growth seriously, the GOP platform argues, then you must see that America’s long and (according to the IRS itself) overly complicated tax code needs serious reform. Likewise, a pro-growth outlook means that you need to take seriously the potential growth-sapping effects of America’s total public debt, a topic on which the Democratic platform is silent.
Most of all, however, the GOP platform articulates a bottom-up approach to economic growth rather than the top-down strategy that pervades the Democrats’ platform. It’s true that, like the Democrats, the Republicans makes some references to public-private partnerships, especially when it comes to technology. But the general contrast — in emphasis, content, and rhetoric — between the two parties’ treatment of growth is profound.
A New Dividing Line
So why is there such a stark contrast between the two parties’ view of economic growth?
On one level, it is a matter of what each party prioritizes. The GOP underscores freedom as the source of much political, economic and social good. This is seen as consistent with America being America. The growth generated by economic freedom is understood as benefiting all, including the many groups that the Democratic Party believes are not doing well in today’s American economy.
By contrast, the Democrats are more interested in using the state to attempt to realize particular conceptions of justice, much of which is in turn driven by a commitment to promote the perceived interests of very specific groups. To the extent that such an agenda corrodes economic liberty and growth, the Democrats are willing to accept the price.
Another, related difference concerns how the GOP and Democratic platforms conceptualize the role of government. The difference might be summed up as one between “Reagan America” and “Roosevelt America.” The Reagan view is not in-principle “anti-government,” but starts with the presumption that the state’s role in the economy ought to be limited, both for political and economic reasons. The Roosevelt stance, by contrast, begins every discussion by assuming that the government must do something.
Whatever the result of the 2016 election, it’s hard not to see this division concerning attitudes towards economic growth widening. For what’s at stake in the debate about economic growth goes, ironically enough, far beyond economics. In a way, it’s about whether America moves even more towards becoming a European social democracy (despite the clear evidence of the failures of that model) or whether it wants to remain something distinct, at least in the realm of the economy.