While Bush is not on the ballot, Romney has not really distanced himself from the Bush administration’s policies. On the contrary, his campaign has featured the same advisers, the same devotion to higher military spending, the same belief that tax cuts for the rich are the solution to every economic problem and the same fuzzy budget math.
Consider, for example, the three issues that are at the center of the global agenda mentioned earlier: climate change, financial regulation and trade. Romney has been silent on the first and many in his party are “climate deniers.” The world cannot expect genuine leadership from Romney there.
As for financial regulation, while the recent crisis has highlighted the need for stricter rules, agreement on many issues has proven to be elusive, partly because the Obama administration is too close to the financial sector. With Romney, there would be no distance at all: metaphorically speaking, he is the financial sector.
One financial issue on which there is global agreement is the need to close down offshore bank havens, which exist mainly for purposes of tax evasion and avoidance, money laundering, and corruption. Money does not go to the Cayman Islands because sunshine makes it grow faster; this money thrives on the absence of sunshine. However, with Romney unapologetic about his own use of Cayman banks, we are unlikely to see progress even in this area.
On trade, Romney promises to launch a trade war with China and to declare it a currency manipulator on day one of his presidency — a promise that gives him little wiggle room. He refuses to note the yuan’s large real appreciation in recent years, or to acknowledge that, while changes in China’s exchange rate may affect the bilateral trade deficit, what matters is the US’ multilateral trade deficit. A stronger yuan would simply mean a switch in the US from China to lower-cost producers of textiles, apparel and other goods.
The irony — again lost on Romney — is that other countries are accusing the US of currency manipulation. After all, one of the main benefits of the US Federal Reserve’s policy of quantitative easing — perhaps the only channel with a significant effect on the real economy — derives from the depreciation of the US dollar.
The world has a lot riding on the US election. Unfortunately, most people who will be affected by it — almost the entire world — will have no influence on the outcome.
Joseph Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University.
Copyright: Project Syndicate