Both Romney and Obama could be described as fiscalists. They differ on their view of the ideal combination of tax rates and spending needed to cure the nation's economic ails. They differ in regard to those who should bear the brunt of any tax increase or benefit from any tax cut. Nevertheless, the cornerstone of both candidates' economic policies rests on a foundation of taxation and spending policies.
Yet, a growing number of analysts believe that the economy suffers from fundamental structural problems that cannot be solved through fiscal policy alone. Consider some of the evidence regarding long-run structural changes.
After adjusting for inflation, the rate of economic growth during the decade of the 1940s was 6.0 percent. During the decades of the 1950s and 1960s the growth rate was 4.2 and 4.4 percent, respectively. The inflation-adjusted rate of economic growth during the 1970s, 1980s and 1990s was respectively: 3.3, 3.1 and 3.2 percent. During the George W. Bush presidency, 2001-2008, the rate of growth fell to 2.0 percent. Most recently, the rate of economic growth during the second quarter of 2012 was an anemic 1.7 percent. There seems to be a trend.
Part of the explanation for this trend may be found in the country's shift away from manufacturing jobs to service jobs because productivity increases in the service sector are historically lower than productivity increases in manufacturing.
In the 1950s, 34 percent of the U.S. labor force was employed in manufacturing jobs. Today, only 9 percent of the nation's labor force is employed in manufacturing. Interestingly, in 2009, the number of manufacturing workers in China as a proportion of the U.S. population was 33 percent.
At current rates of economic growth, China's Gross Domestic Product (GDP) will double by 2021 while GDP in the United States will not double until 2052.
There are also changes in the labor market. In 1967, when economist Milton Friedman first advanced the concept of a "natural rate" of unemployment, that natural rate was less than 4 percent. The current natural rate of unemployment according to a recent survey of economists by the Federal Reserve Bank of Philadelphia is 6.7 percent.
There is considerable evidence that there are long-run, structural factors afflicting the U.S. economy. If this is the case, the economy will not return to prior rates of employment and economic growth without long-term policies aimed at these structural changes.
Regrettably, both candidates contend that the economic ship can be righted in a matter of months.
Romney criticizes Obama for not being able to produce significant economic growth in the 45 months he has been in office and confidently states that he could do better in a shorter period of time. Obama says that if he is given another term he can finally set the economy on the proper course. Neither candidate is talking about meaningful changes that will take decades to come to fruition.
It is perfectly understandable that politicians are concerned about what economic conditions will look like next month and next year. Yet, one would hope that both candidates would also be concerned about the nation's long-term economy outlook.
In a recent interview, President Obama gave himself an "incomplete" grade for his work on the economy. The platforms of both political parties are incomplete because they fail to address long-term issues that may take decades to address.
Michael Vaughan is Weber State University's provost. He accepts email from readers at email@example.com