US Elections (Part 1): Democrat vs. Republican

by Anisha Bhardwaj


The upcoming United States Elections in November 2012 will have the world watching as Democrat candidate and current President, Barack Obama and former Republican Governor of Massachusetts, Mitt Romney race for the title of the President of the United States.

Before understanding the implications of either of them winning - for the United States or the rest of the world - it is important to understand the basic differences in their ideologies. One way to start is by learning about the two parties they represent.

The Federalist Party was the first American political party (1790s to 1816) to be formed. It was started by Alexander Hamilton, who, during George Washington's first term, built a network of supporters - largely urban bankers and businessmen - to support his policies committed to a fiscally sound and nationalist government. Fiscally sound here implies that the government had a strong financial position i.e., its (tax and non-tax) revenue exceeded its expenditure on improving the economy.

The Democratic Party emerged under Thomas Jefferson in the 1790s in opposition to the Federalist Party. It initially drew most of its support from planters and farmers. Over the next few years, the Republican Party emerged as the main opposition to the Democratic Party in the North. However, the Republicans had little support in the South.

Main Differences Between Democrats and Republicans

Core Beliefs

Republicans believe in individualism - that each person is responsible for his or her own place in society. On the other hand, Democrats believe that the government should enable each person to secure the benefits of society for themselves, their families and for those who are unable to survive this regime of capitalism. The Republicans’ philosophy is based on minimising this intervention by the government in the economy unless the society cannot effectively function at the individual level.

Democrats believe it is the responsibility of the government to care for all individuals, even if it means giving up some individual rights, business or initiative. Democrats have always favoured government interventions that replace community solutions to problems as they might not always be effective. They realise the shortcomings of mainstream economics (that markets do not function efficiently or equitably without intervention). These tactics have created regulations and controls that are often in the hands of unelected bureaucrats, which often cause a severe erosion of local authority in the community.

The Economy

Republicans feel free enterprise (markets where individuals with maximum capital and means of production set up businesses and run them for profit) has brought economic growth and innovations that have led to growth of the economy. They believe the government should help stimulate a business environment where people are otherwise free to operate.

Democrats believe that the economy is imperfect and individuals can’t decide where to allocate their resources to get the best returns. They believe that business decisions should be guided by government officials and be made in the best interest of labour unions and society as a whole rather than power getting concentrated in the hands of the powerful.

Taxes and Government Spending

Republicans aim to cut government spending and believe that the public should keep a check on their spending and the public should not complain against tax increases, since it is the best for the country to achieve internal (i.e without taking into trade balance) fiscal balance.

Democrats argue that federal bureaucrats better understand the needs of a community than a locally elected council and the government should define the tax burden necessary to meet its obligations, because this is too complex for individuals to understand. 

While at it, let’s also understand the difference between left wing and right wing politics. Left wing parties are those which support social equality and are predominantly in favour of government controls. In some countries, it is often synonymous with the communist party. Right wing parties on the other hand are in favour of individual freedom and capitalism and tacitly approve social hierarchy. Thus making sense of everything it’ll be safe to say that socialists lean more towards the left wing ideologies and Republicans are more right wing in their approach.

In the upcoming debates between the two candidates, you might hear the phrase ‘Washington Consensus’ while they discuss their policies about trade and development. As the phrase’s originator, John Williamson, says:

“Audiences the world over seem to believe that this signifies a set of neoliberal policies that have been imposed on hapless countries by the Washington-based international financial institutions and have led them to crisis and misery. There are people who cannot utter the term without foaming at the mouth.”

The policies referred to by this term involve fiscal discipline, a redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution. At the same time it encompasses tax reforms (to lower rates and broaden the tax base), interest rate liberalisation (set by market forces without government intervention), competitive exchange rate (exposing the economy to a lot of fluctuations where the central bank does not buy or sell currency to keep exchange rate within a range). It also promotes liberalisation of FDIs, privatization of companies, and deregulation in industry to abolish barriers to entry or exit in a particular industry. However, no such consensus exists as of today and the policies are augmented and then adopted to suit national interests.

Now that we have understood the basis of the ideologies that make the upcoming elections so interesting, we can delve deeper into understanding the core implications of the elections for us.

In part 2 of this article, we will learn everything about the events that will unfold leading up to the election on 6 November this year.

References

Ayn Rand Lexicon <www.aynrandlexicon.com>
Gallup <www.gallup.com>
Yahoo! News <www.news.yahoo.com>
The Economist <www.economist.com>
The Times of India <www.timesofindia.com>
Wikipedia <www.wikipedia.com>
The Prudent Indian <www.theprudentindian.wordpress.com>