This essay was an evaluation of the Candidates for the 2016 presidential elections and if they can or will be successful as President in the way policymaking is structured in America. The variables identified in the introduction are based mostly on readings by Deborah Stone in the Policy Paradox. The point of this essay is to understand all the influences on American policymaking and if in the end, public policy is truly determined by the public even in the most seemingly democratic of States.
Introduction
Bernie Sanders’ policies will have a negative effect on the current state of the economy due to influences of the market, the elite or vested interests of who governs, and the variables of policymaking. Broadly defined the elite impact political, economic, and social theories and ideology. The market system encapsulates business interests, the Federal Reserve, and market punishments for unappreciated policies. The variables of policymaking include; emphasis on efficiency over equality, self versus public interest problems, preference for blame, causal stories, how decisions are made, collective versus individual interests (can also be applied to markets), preference of equity over equality due to ease of administration, judgement of policy as feasible not good or bad, and various other contingencies explained further in this essay. There are many reasons behind the implications of the identified independent variables that will be analyzed in accordance to their impact on Senator Sanders’ policies.
Review of Literature
In his paper, “What Would Sanders do? Estimating the economic impact of Sanders programs,” Gerald Friedman (2016), analyzes Bernie Sanders’ policies quantitatively. Friedman explains the impact of the Senator’s regulatory policies. Regulatory changes such as higher minimum wages, higher wages for women and overtime workers, and support for increased unionization will stimulate economic activity. Healthcare for all along with the regulatory policies will increase wages and consequently the overall GDP. Progressive taxes, meaning taxing the top 2%, will ultimately balance the federal budget in the Senator’s second term. All of these changes will reduce poverty, increase economic equality, and lead to overall positive economic benefits. This is the conclusion drawn from the many analyses Friedman conducts on all 12 major Bernie Sanders policies.
Romer and Romer (2016), provide criticisms to Friedman’s analysis and data in their essay. The first counter-argument challenges the emphasis Friedman places on the success of demand-side-effects of the government being too large. An example of this is, “…the level of GDP in 2026, relative to the baseline, would only be higher by at most 2.3%—not the 10% that Friedman estimates. Since a permanent change would raise the level of GDP in the first year and then leave it at the higher level, summing is not appropriate” (Romer and Romer, 2016, p. 1). The second counterargument analyses how Friedman overestimates the slack in the current GDP, unemployment rate, and economic levels. The values assigned to Bernie’s impact on the economy are too large numerically. Current levels of economic productivity are not in as much decline as Friedman states. Therefore, the small output gap would not be able to compensate for the high levels of demand effects. “As a result, capacity constraints would likely lead to inflation and the Federal Reserve raising interest rates long before such high growth rates are realized” (Romer and Romer, 2016, p. 1). The third argument made is the perceived effects of Bernie’s policies are minimal and even negative. Overall, Romer and Romer (2016) believe Friedman overestimates the outcomes of the Senator’s policies incredibly, and, “as a result of Bernie’s policies inflation would soar and monetary policy would swing strongly to counteract them” (p.11).
In Policy Paradox, Deborah Stone (2002), presents an in-depth analysis of the flaws and variables affecting modern policy making on a broad scale. The variables affecting policies are the goals being pursued, lacking definitions of problems in politics, and the large discrepancies in the involvement of the market. Equity is when distributions are regarded as fair even if they contain both equalities and inequalities, while equality is when there is uniformity in distribution. Due to ease in efficiency, or getting most out of input simplified ratios, equity has more emphasis on policies than equality. Political problems vary in their symbolic representation, narrative structure, causal events, methods of measurement, preference for blame, and strategy of decision making. A lot of these variables are interpreted differently due to focus on collective vs. individual interests or public vs. self-interests. Adding the market to this equation complicates things further. The market uses different motivators, self-interest vs. public interest, chief conflicts, criteria for decision making, nature for collective activity and various other inputs to achieve the greatest benefits. The market differs from political methods in almost every way. The market is centered on logic whereas politics is on passion. Market information is whole and generally accurate while political information is incomplete and strategically withheld. Stone notes many other diversions between the market and politics. The conclusion Stone presents is trying to rationalize the policy process. Getting rid of relying on a model of market efficiency that leads to mythical policy processes. Reason and informed decision making is the rational ideal for policymaking.
Charles Lindblom presents a profound truth about the market system and Democracy in his essay, “The Market as Prison,” in 1982 that is still relevant today. According to Lindblom, the market system has hindered political action due to business preferences. Businesses offer inducements to yield their projected highest utility out of the market. When policies are implemented that infringe on or disagree with business choices or interests the market automatically punishes the people for that policy. The method of doing so is self-implementing through an “automatic punishing recoil,” which explains how initiation of a non-preferred policy leads to unemployment or reduction of profitability, as businesses fire people and invest in taxes instead of development. However, reactions to new policies should not be as dramatic as witnessed. This means businesses exaggerate responses because they know the influence the market has on policymaking. It is rational to assume a business would rather keep the status quo than potentially adhere to a new policy that requires some sort of reform that could have monetary costs. Democracies are just set up to allow this imprisonment of markets as altering it with policies starts a cyclical trend of a dissatisfied public asking for further alterations or revocation of the new policy. Lindblom concludes with a clarification of his position which is one of ambiguity for the solutions to the problems presented for Democracy if markets do in fact yield such power.
In his article, “The Elite Question,” Farazmand (1999) provides a discussion about the impacts of various elites in relation to social, political, and economic disciplines. Farazmand discusses how elites are important to study because they are drawn from the upper socioeconomic strata, they share a consensus on certain basic values that they promulgate into society, policy preferences are a reflection of the elite, not the masses meaning they are in the interest of the elite, elites influence the masses, and elites not masses govern all societies. The elite are defined as persons who influence national policymaking, affect national outcomes regularly and substantially, and rule the masses. There are various elite models; consensually integrated elite are formal organizations and centers of national policy, the plural elite model is based on interest groups, organizations, and prominent leaders or elite groups, the power elite model includes military, business, and political elites, the ruling class model is occupied by the business class and some political ruling classes, and the organizational elite are the few that control private or public organizations of various sizes. Organizational elites include bureaucracies and governmental organizations. Farazmand discusses the micro and macro impact of elites. Elites are at the apex of modern organizations in government, corporations, nonprofits institutions, and political parties. Elites participate in solicitation and indoctrination of the social and political culture of masses. Elite have financial leverage and generally work together for common goals. Farazmand concludes his thoughts by assessing the importance of understanding how elites that exist in all major realms of public, private, and nonprofit sectors can transform democratic values into organizational and administrative behaviors of service. Farazmand notes not all elites are “bad” but even simply fulfilling their job roles can lead to undemocratic consequences for the masses.
Findings
Friedman calculates the results of Senator Sanders’ policies on the economy based on many assumptions; one being he is able to get all his policies passed through Congress. Friedman believes the U.S. economy would grow by 5.3% per year, instead of 2.1%, and the nation’s $1.3 trillion deficit would turn into a large surplus by Sanders’ second term. Romer and Romer provide compelling counterarguments to why this would not work. The greatest reason is, “…it would be very difficult to achieve and maintain an economic growth rate of 5.3% per year after inflation. That target hasn’t been hit consistently since the 1960s when technology was providing big advancements, the workforce was younger and there was increased demand for American products worldwide as other countries fully recovered from World War II” (Luhby, 2016). There are some major points in this quote that will be dissected further. There are surrounding variables around the 1960s that reacted differently and assessed policy making differently than the modern world, these can be explained by Deborah Stone’s variables in policymaking. Another major key is the rising rate of inflation that every counter argument made for Sanders’ policies mentions.
One of the biggest reasons why Senator Sanders’ policies would not be immediately successful in the current economy is due to the market influence on policies including stocks, businesses, and the reactions of the Federal Reserve. As explained by Stewart (2016),
If Sanders’ policies deepen the budget deficit for many years down the road that could impact the bond market and creditors, who in the face of uncertainty often drive up interest rates or simply stop giving out loans at all. Essentially, it could mean it would be more expensive to run the government, which could exacerbate any cost issues a Sanders budget might face. Former President Bill Clinton learned this lesson the hard way early in his tenure and was forced to prioritize deficit reduction instead of fulfilling his spending promises. In the Bob Woodward’s 1994 book on Clinton the Agenda, the President is described as saying, “You mean to tell me that the success of the program and my reelection hinges on the Federal Reserve and a bunch of f—— bond traders?”
The presumed reaction and impact of the market on policymaking is an observable trend. As Lindblom explains, the mechanics of the market work in ways that immediately punish the people for policies businesses, corporations, and other entities with vested interests do not gain benefits from (Lindblom, 1982). Senator Sanders’ policies targeting the lower and middle class simply do not benefit these sectors yielding major influence. Therefore, the punishment system of the market would impact the lower and middle classes Sanders is trying to aide by initially increasing unemployment, inflation, and deficit. I do not know the long term effects of the Senator’s policies but if the government did not react to the market’s response of a new policy and let Sanders’ policies be implemented the way Friedman proposes in his paper, those policies would positively influence the economy. However, people with varying interests infringe upon this further.
The elite Farazmand describes, would dominate and influence the policy-making, implementation, and distribution of Sanders’ policies. There are not many elites that would benefit from the policies Sanders proposes. Therefore, the factors Stone mentions would come into effect and favor the market and elite over the masses. The public interest, in this case, would not be regarded above efficiency, equity, and self-interest. The self-interest of the elite is not the only kind that must be considered. There are some elites that might benefit from Sanders’ policies if they serve certain nonprofit or interest groups. The self-interests represented here also lie within the rich, corporations, and markets. It is not economically rational for the rich and powerful to accept Bernie’s policies, simply because they have to deliver more costs and do not get many benefits in return. With the influence, these groups have on the elite, policymakers, and the masses, it makes sense that Sanders’ policies would not be widely socially embraced. If, as Farazmand proposes, the elite influence the masses and, as Lindblom discusses, the market punishes the masses for unfavored policies it is irrational to assume the Senator’s policies will be accepted or implemented long term to witness any positive effects on the economy. Influence of the powerful is not the only variable of policymaking that should be regarded in this case.
It is no secret that a lot of Bernie Sanders’ policies parallel with certain Nordic governance. There are many factors that explain why these policies work in Nordic nations that can be evaluated to understand the position of those factors in the U.S. One of those factors is the dynamic market systems of Sweden. As stated in The Economist (2013):
In the 1970s and 1980s, the Nordics were indeed tax-and-spend countries. Sweden’s public spending reached 67% of GDP in 1993. But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993. Since then the Nordics have changed course—mainly to the right. Government’s share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France’s and could soon be lower than Britain’s. Taxes have been cut: the corporate rate is 22%, far lower than America’s. The Nordics have focused on balancing the books. Sweden has reformed its pension system; their budget deficit is 0.3% of GDP, America’s is 7%.
I am not blaming capitalism or the market system for nullifying potentially positive results of Sanders’ policies. I believe there is a way to have both a competitive market and progressive policies that aide all socioeconomic strata. As explained in The Economist (2013):
Nordics also offer something for the progressive left by proving that it is possible to combine competitive capitalism with a large state: they employ 30% of their workforce in the public sector, compared with an OECD average of 15%. They are stout free-traders who resist the temptation to intervene even to protect iconic companies: Sweden let Saab go bankrupt and Volvo is now owned by China’s Geely. But they also focus on the long term—most obviously through Norway’s $600 billion sovereign-wealth fund—and they look for ways to temper capitalism’s harsher effects. Denmark, for instance, has a system of “flexicurity” that makes it easier for employers to sack people but provides support and training for the unemployed, and Finland organizes venture-capital networks.
The reasons why the policies Bernie Sanders is proposing work in the Nordic nations is because there are social differences, dynamic market acceptance, historical adaptations, and many contributing factors that gave rise to the practicality of a flexible market and government system that aims for equality with Democracy over equity. The objective of introducing Sweden’s narrative is just that, it is their own, and differs greatly from the American narrative. To alter American governance in a manner where Sanders’ economic policies can be accepted, some economic, social, and political alterations have to first be implemented. In a nation where there is elite and market control which greatly influences politics and policymaking, it is difficult to imagine the acceptance of new progressive and regulatory policies. When the system creating and responding to the policies has multiple vested interests it is difficult to assume a willing republic can truly affect the end result of a certain policy by demand.
Conclusion
The current realm of governance is unable to yield positive results to Senator Sanders’ policies. While Friedman may have grossly overestimated the capacity or elasticity of current political and economic environment to respond so positively to Bernie’s policies, his analysis may not be as wholly inaccurate as interpreted by Romer and Romer. It is difficult to accept high performance levels in GDP, employment rate, and economic success of Bernie’s policies in the short amount of time proposed by Friedman. However, the immediate response of the market to punish policy changes and the consequential response of the government, whether it is the Federal Reserve, elite, or Congress to quickly fix the punishments implemented by the market due to the demand of the people is a cyclical occurrence modern Democracies cannot seem to overcome. With the correct allocation of time and restraint from the government in saving markets, Sanders’ policies would yield positive economic results gradually.
Ultimately I do not feel comfortable taking any position in answering this research question. I do not believe Bernie’s policies will have a positive impact if current political practices remain. However, I also hold the ridiculous belief that the American public is dramatic enough to radically alter the impacts of the independent variables by demanding a difference in policy implementation and response. For the purposes of this paper, the conclusion drawn is that Bernie’s policies will not have positive economic impacts in modern day America in the current policymaking and political structure.
References
“The next Supermodel.” The Economist. February 02, 2013. Accessed March 05, 2016. http://www.economist.com/news/leaders/21571136-politicians-both-right-and-left-could-learn-nordic-countries-next-supermodel.
Farazmand, A. “The Elite Question: Toward a Normative Elite Theory of Organization.” Administration & Society 31, no. 3 (1999): 321-60. http://aas.sagepub.com/content/31/3/321.abstract#cited-by.
Freidman, Gerald. “What Would Sanders Do? Estimating the Economic Impact of …” January 28, 2016. Accessed March 05, 2016. http://www.dollarsandsense.org/What-would-Sanders-do-013016.pdf.
Jacobson, Louis. “Hillary Clinton Says the Stock Market Has Done Better under Democratic Presidents.” Politifact. August 4, 2015. Accessed March 05, 2016. http://www.politifact.com/truth-o-meter/statements/2015/aug/04/hillary-clinton/hillary-clinton-says-stock-market-has-done-better-/.
Lindblom, Charles E.. 1982. “The Market as Prison”. The Journal of Politics 44 (2). [University of Chicago Press, Southern Political Science Association]: 324–36. http://www.jstor.org/stable/2130588.
Luhby, Tami. “Under Sanders, Income and Jobs Would Soar, Economist Says.” CNNMoney. February 8, 2016. Accessed March 05, 2016. http://money.cnn.com/2016/02/08/news/economy/sanders-income-jobs/.
Neufeld, Dorothy. “How Monetary Policy Impacts Income Inequality | Investopedia.” Investopedia. November 17, 2015. Accessed March 06, 2016. http://www.investopedia.com/articles/investing/110415/how-monetary-policy-impacts-income-inequality.asp#ixzz42cu4HAMX.
Romer, Christina D., and David H. Romer. “SENATOR SANDERS’S PROPOSED POLICIES AND ECONOMIC GROWTH.” February 25, 2016. Accessed March 05, 2016. http://ineteconomics.org/uploads/general/romer-and-romer-evaluation-of-friedman1.pdf.
Stewart, Emily. “If Bernie Sanders Was President, Here’s What Would Happen to the U.S. Economy.” TheStreet. 2016. Accessed March 05, 2016. http://www.thestreet.com/story/13319434/2/if-socialist-candidate-bernie-sanders-was-president-here-s-what-would-happen-to-the-u-s-economy.html.
Stone, Deborah A. Policy Paradox: The Art of Political Decision Making. New York: Norton, 2002.
(PS: If you are looking for a good book to read on policy and decision making Deborah Stone is good. The way the elite, businesses, bureaucracies, and government function in America is flawed, to say the least. Allowing an oligarchy to remain masquerading as a democracy is detrimental to America and other nations. My other research is going to focus more on exactly how businesses exploit developing nations and increase the burdens on people who are already suffering from poverty.)
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