Conventions Deliver Little Economic Value

We are in the middle of the convention season for the Democratic and Republican parties, and it should come as no surprise to anyone that the major topic at both conventions is the economy. Both parties are long on promises about how they would “fix the economy” or “get this economy going” or “create jobs” or “strengthen the middle class.” But I have come to the conclusion that neither side really has a solution for the economic problems that currently vex us.

Unfortunately, both the Republicans and Democrats are guilty of framing the problems in such a way that it makes their respective ideas sound like the best solution. But really, their ideas are more suitable for selling themselves, satisfying their base constituencies, and trying to sway independent voters than they are for fixing the economy. Their real objective is to win elections, not solve problems, so they use their powerful media access to try and make the economic data fit their theory, rather than come up with a theory that is based on an accurate reading of the data.

The problem with the economy is market-based. At the present time, consumers are hesitant to spend, and business leaders are hesitant to invest. But this situation is steadily working itself out. The best solution to the economic problems we currently face is to let the market function as it always does. Policymakers can help by minimizing the drama in Washington in the short-term, and then balancing the budget in the long-term. But the government really cannot fix the economy, get it going, or create any jobs other than government jobs.

What drives our economy forward is competition.  The government is not a worthy competitor. It can officiate, it can regulate, and for many years it did a pretty good job of building and maintaining infrastructure. Other than that it cannot make the markets competitive. If government officials really wish to strengthen the members of the middle class, then they need to stop trying to give them things for free and start trying to encourage them to become more competitive.

But as I think about it, politicians only respond to the wishes of the voters. They continue to offer hollow promises about fixing the economy because that is what voters continue to demand. The best way to fix the economy is to improve ourselves and our communities and stop asking people in Washington to do it for us. And the best way to fix Washington is to stop asking them to do things they can't do anyway.