What The Democrats Need To Do

Contrarian approaches don't always pay off, particularly when it comes to politics. Last night I called the midterm results completely wrong, assuming that American people would come in line behind the Republicans based on some solid recent economic fundamentals. Unfortunately, and ironically for the republicans, this vote appeared to be less about the economy and more about politics. The question now is therefore: what should the Democrats aim to achieve in their majority in the House for the first time in 12 years, and possible majority in the Senate?

A lot of policymakers are pretty chuffed right now with the election turn-out - record numbers of midterm voters made it to the ballot box yesterday to cast their decision in this overheated political climate. This is however, not necessarily the best of news. At times when political interest is at its highest, it usually means  there's a climate of political instability in the air. This has been the case for the past few years: with the war in Iraq, lots of banter about Iran and North Korea making progress on nuclear development, and terrorism fears abounding, Americans have become more and more politically minded.

This new mindset undermines the competitive advantage of the United States: it's economic prowess. For when politics becomes the cause celebre of the moment, the political instability insinuated by all the interest usually rubs off on things like high commodity prices, depressed equity valuations, and slow private investment growth as people become less risk assuming. Where the Republicans have made some unequivocal progress is in recent economic affairs like tax cuts, appointing an ex-investment banker as Chairman of the Federal Reserve, and encouraging private investment through a myriad of economic climatic tweaks which is now starting to pay off, and the equity markets are getting the best of it. Where the Republicans have fallen short of progressive actions is in the more traditional moral areas of debate such as abortion and stem cell research, which has undermined the scientific progress of the last twenty-so years and hence the potential capital infusions these innovative new measures normally attract.

If the Democrat party really wants to do the best possible job then it would be wise not to start with immediate and more traditionally left-wing measures such as trying to reverse tax cuts and increase state spending, but rather to reverse the general trend of politicisation the U.S. has veered towards as of late like Bill Clinton did. By opening up the channels to science and embracing recent economic growth in the market economies - steering clear of inflation-related arguments to promote political agendas for state spending - the party could end up doing a lot of constructive work. That means admitting to some degree that what the Republicans have done economically has been sensible and rational.

Most of all, the party needs to shift the current focus of concentartion away from America's place in the political world and towards it's role as a great economic ambassador. If there's less political zealousness in two years at election time, the Democrats have done their job right.

Comments

[dodster]

Good analysis - the be positive and do positive things ticket took Hillary to a landslide while Jersey neighbour Menendez and his sleazy campaign only just slid in.