The Clinton message for 2010: “It’s the Economy, Stupid”

Supposedly, Bill Clinton won the American presidency in 1992 by staying “on message,” which was that his opponent, the elder Bush, had allowed the U.S. economy to fall into recession the year before.  The underlying theory is that voters vote for jobs, and they saw Clinton as the better candidate at creating jobs. If this theory is correct, a presidential candidate’s grasp of economics is crucial particularly when jobs are scarce.

Is there a parallel with Philippine politics today?  In other words, might the opposition contenders fall flat if the economy somehow weathers the global economic crisis?  Alternatively, will the winner in 2010 be the one who can best articulate a way out of the recession if the economy tanks?  The answers to these questions depend partly on the economic literacy of candidates, as evidenced by their solutions to the unemployment problem.

Although it is perhaps too early for the May 2010 election, some contenders addressed the unemployment problem at a recent forum at the UP School of Economics.  Their responses were reported in the Daily Tribune.

One contender (Mayor Binay of Makati) said that he would increase investment in computer-related sectors, solve the “mismatch” problem, and consult employers on their needs. Another (Sen. Legarda) said she would provide safety nets to families of OFWs, work for a small enterprise law, and support the rural economy.  Former President Estrada (Erap) would focus on agriculture and attract foreign investors by giving them peace and order and a level playing field.  An administration contender (MMDA Chair Fernando) said he would protect local producers (“make local, buy local, and export”), and match “money we get” and put it in “quick gestation projects.”

The ideal economics answer would have been something along the following lines. Jobs are created by a strong economy, one where labor productivity is promoted instead of hindered by government, and where schools emphasize basic as well as applied sciences.  Thus, fixing the unemployment problem means having a domestic economy that absorbs a well-educated labor force. One key fix in this regard is to allow “at-will” employment contracts in exchange for a commitment on the part of the employer to increase labor productivity through training. A second-best solution is to continue to export OFWs as a temporary measure.  Finally, a short-term solution to recession-induced unemployment is expansionary monetary and fiscal policies, or Keynesian “pump-priming.”

Binay comes closest to the ideal answer because he emphasized the “mismatch” problem of schools not producing sought-after graduates.  Fernando is the farthest off the mark because he believes in a highly interventionist and protectionist government.  Erap and Legarda do not fare well with their emphasis on the rural economy, which has its own land-reform-related rigidities, and such an emphasis is not much different from the “make local, buy local” approach of Fernando.  But Erap gets good grades for supporting a “level playing field” for investors, which is a call for a business environment without cronies or favored players.

As to other candidates, Sen. Roxas does not include unemployment as an “issue” in his official website, but like Legarda he supports a new small-enterprise law.  Similarly, Sen. Villar views “entrepreneurship” as the best solution to the unemployment problem.  Defense Sec. Teodoro sees entrepreneurship as the “linchpin of economic growth,” but he also agrees with a  roadmap” on economics drawn up by UP academics, which favors fiscal responsibility, including an increase in the VAT to 15%, but is somewhat vague on what policies would reduce unemployment. Sen. Escudero favors promoting investments through “stable, predictable, and conducive policies,” and may be on the same wavelength as Binay and Erap.  Accordingly, it would seem that Roxas and Villar are on the same level of economic literacy as Legarda, while Escudero rates higher at about the same level as Binay and Erap.  Teodoro appears to be somewhere in the middle with his endorsement of the UP academics’ so-called roadmap.

Of course, politics is not the same as economics.  But since the Clinton strategy of 1992 apparently worked, economics can make a difference.

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2 thoughts on “The Clinton message for 2010: “It’s the Economy, Stupid”

  1. “Erap and Legarda do not fare well with their emphasis on the rural economy, which has its own land-reform-related rigidities, and such an emphasis is not much different from the “make local, buy local” approach of Fernando. But Erap gets good grades for supporting a “level playing field” for investors, which is a call for a business environment without cronies or favored players.”

    Orlando Rances, is saying that a motherhood statement like level playing field is better than a doable and nationalistic suggestion like “make local, buy local” of Bayani.

    this country is really dominated by glib talkers and “matalinong bobo” .How on earth a motherhood statement that can be said by anyone be better than a definite and focused economic solution…

    We elect the government that we deserve. If the people from the depressed area are guilty of ignorance, lots of educated people are guilty of propagating their ignorance…who has a greater crime of the two?

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  2. Thanks for the comment Thinking Masa. It is part of the rough and tumble of freedom of expression that you have the right to call anyone glib or matalinong bobo, and that I defend such. It seems you do not like motherhood statements, but protectionism is itself an ideology, i.e. a motherhood statement. I have no reason to doubt Erap’s sincerity on “level playing fields.” Perhaps you know something I don’t. Again, thanks for the contribution.

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