Enron Economics, and what Howard Dean would do instead

Howard Dean announced tonight his economic plan (PDF download). It’s got a great new catchphrase, “Enron Economics”, which, as people on the comments pointed out, is easier to understand than barbed comments about “Ken Lay and the boys”, and all in all it makes a lot of sense.

I’m not going to go into a full analysis - I’m not an economist, and besides you’ll see plenty of this in the mainstream media. Instead, I’ll talk about a few of the snippets that I liked.

First of all, the focus on States - the $100bn Fund to Restore America, the increase in funding for Special Education and Homeland Security, the repeal of No Child Left Behind - has the great merit of concentrating on issues that people are facing today. The California Recall was all about the sudden budget deficit of California; states throughout the US are tightening their belt, cutting services, and otherwise trimming as much as they can in the face of diminishing receipts. There’s a serious contradiction between the Federal budget spending billions on Iraq and the States slashing spending, and Howard Dean is right to concentrate on States funding at this time.

I’m intrigued by the following:

Based on the model of mortgage financing that has increased American home ownership levels to the highest in the world, the SBCC will bring additional capital resources to small businesses.

The home ownership analogy is interesting, given that I believe the US is in for a property crunch at the moment (albeit one limited to the coasts - sorry, no sources available to hand, this is just random “I read that a while ago” hearsay). I remember reading that capital isn’t the main problem for small businesses (don’t know whether that’s true or not), so I’m not sure how good a measure this is. On the other hand, he later on goes to say that he’ll provide decent health care programmes that don’t need to be supported by small businesses, but will mandate that large companies provide health care themselves - no idea how that will play out, but I suppose there’s a lot to be said for protecting 15-employee startups against rabid insurance companies through state-led collective bargaining / economies of scale, while forbidding mega-corps to ignore health care.

Then there’s the usual crusade against government waste, more believable than most of these statements since he wants to restore Al Gore’s Reinventing Government National Performance Review programme, which was shown to work, to help revamp economic growth programmes. The thing I particularly liked:

America’s national economy is actually made up of several regional economies, and the economic strength of each region varies from time to time. Yet our economic development efforts are built on national platforms, as if the entire economy moved in unison. There is little or no coordination at the national or regional level.

There’s some NAFTA bashing, which seems reasonable to me, as NAFTA has pretty much a standard free-trade agreement without any of the political or social aspects that made the EC/EU so special. And, incidentally, I think it’s perfectly reasonable that Dean should have approved of NAFTA when he was Governor of Vermont, but disapproves of it now. Vermont did well by NAFTA; the US as a whole does not. But “NAFTA is here to stay - our economies have become too integrated” - good to see economic realism at work.

The Governor is also particularly concerned that broadband is made available to rural America, so that jobs dependent on the rapid transmission of large amounts of data can be created anywhre in the US.

I’ve always been happy about this one, and it’s nice to see it prominent in the plan. But look at the next paragraph.

The political and economic toll of our continuing dependence on imported carbon based fuelds is not sustainable. The Dean administration will expand energy research, which is now funded at half the rate it was 8 years ago, while reassessing other areas to assure that the ongoing work contributes to the nation’s economic strength.

Why 8 years ago? 8 years ago is smack in the middle of the Clinton administration, and if the cuts had started with Bush he’d have said 3 or 4 years. Still, can’t complain there.

But what would these other areas be, the ones that will be cut because they’re not economically significant? Off the top of my head I’d say Space, and maybe some Defence or Nuclear research. Hmmm.

Moving on to higher education:

[…] students and their families will be eligible for a new program of financial assistance, with special incentives for public service, particularly through a dramatic expansion of Americorps.

I don’t know how long Dean has been thinking of this, and whether it’s a coincidence that Clark talked about this just a few days ago. But this sort of thing makes more sense to me than a Graduate Tax. (And a Graduate Tax makes much more sense to me than a number of other alternatives.)

I liked also the emphasis on the medical aspect of the problems facing health care in the US:

As a doctor, Governor Dean has sen the dramatic changes in the practice of medicine over the past 30 years. Now, more and more medical care can be provided by prescription drugs rather than through inpatient hospital procedures, yet Medicare still lacks a basic prescription drug benefit for all seniors.

As for the whole thing about simplifying taxes, getting rid of loopholes, well, good luck Governor, but I’d be happy to take the rest of the plan first.

Moving on to corporations, Dean wants to raise the minimum wage to $6.65 an hour (he used the Vermont figure of $7 in his speech, which sounds a bit disingenuous to me). The only specific pro-union measure he mentions is the restoration of ergonomics standards, which to me is a canny move: promote unions by talking about office environments.

I like also his take on corporate crime:

Ineffective corporate laws and unethical corporate practices have corrupted the flow of accurate financial information that our markets depend on to run efficiently and effectively, impairing investor confidence and depressing market values.

“Flow of accurate financial information” is a wonderful way of rephrasing “the board are lying to you” in terms that stock market fans can understand.