THE PURITY OF REACTION:

Democrats look beyond Clintonomics (Financial Times, 6/15/07)

After almost seven years of George W. Bush's presidency, the Democrats have departed from many of the economic nostrums held during the great economic boom of the 1990s presided over by Bill Clinton.

Then, the Democratic party's priority was to reduce America's fiscal deficit to free up capital for higher investment by the private sector. Mr Clinton was also aggressive in shrinking the size of government, and opened up foreign markets through the North America Free Trade Agreement and the Uruguay Round, which led to the creation of the World Trade Organisation. The role of unions barely featured.

Today, even the economic architects of the Clinton years, Robert Rubin and Lawrence Summers, who were successive Treasury secretaries, question much of the 1990s agenda... [...]

On trade, most candidates are more sceptical than Mr Summers and Mr Rubin of whether new deals would be desirable – or even possible. This week, Mrs Clinton rejected the forthcoming trade deal with South Korea: "It will hurt the US car industry, increase our trade deficit, cost us good middle-class jobs and make America less competitive," she said.

Although all the candidates reject overt protectionism, the underlying assumptions have altered. "It is highly doubtful whether a Democratic president would be able to push Nafta through today," says Matt Bennett, of Third Way, a centrist Democratic think- tank. "We are living in a different world from the 1990s."

It's not particularly surprising than the candidates for the nomination would kowtow to the Second Way activists, but it is odd that legitimate economists would.

Posted by Orrin Judd at June 15, 2007 8:53 AM