NY Times Economic Writer on Clinton/Obama Differences

A New York Times economic writer lays out what he believes is the essential difference between the Clinton and Obama approaches to the economy. He calls them right of John Edwards, but well to the left of the Republican candidates. He summarizes the difference this way:

The easiest way to describe Senator Clinton’s philosophy is to say that she believes in the promise of narrowly tailored government policies, like focused tax cuts. She has more faith that government can do what it sets out to do, which is a traditionally liberal view. Yet she also subscribes to the conservative idea that people respond rationally to financial incentives.

Senator Obama’s ideas, on the other hand, draw heavily on behavioral economics, a left-leaning academic movement that has challenged traditional neoclassical economics over the last few decades. Behavioral economists consider an abiding faith in rationality to be wishful thinking. To Mr. Obama, a simpler program — one less likely to confuse people — is often a smarter program.

The article then goes on to point out that the Clinton approach was used by her husband in the nineties in expanding the Earned Income Tax Credit. This program was a tailored program aimed at the working poor. It was extremely successful and, because it benefits those who are working, avoids the stigma associated with government welfare programs.

The article also argues, however, that the problems facing America's middle classes such as globalization, the coming collapse of the employer linked health care system, and growing income inequality might not be susceptible to an approach based on tax credits and tailored government programs.

Although we would have preferred an article that would compare Edwards' economic view along with Clinton and Obama's, it is a good article and well worth the time.