Belfast Telegraph

How the economic policy of 'President Sanders' could shake the world

By Angela McGowan

This year has the potential to be a game changer. At some point in June, the UK electorate will decide if we are to remain EU citizens or cast ourselves adrift. A vote for Brexit would not only be a severe dent to the European Union, but it also has the potential to lead to another independence vote in Scotland. Taking that leap into the great unknown is a real possibility for the UK in the months ahead and the impact on the local economy in terms of lower investment and lost European funding is a genuine threat.

Across the Atlantic, the US Presidential elections could be disruptive. There is a real possibility its economic status quo is in for a big shake-up - but perhaps that is no bad thing. Coming in from the margins we are now seeing 74-year-old 'democratic socialist' Bernie Sanders moving in on Hillary Clinton's patch. I have nothing against Mrs Clinton, but have to admire Sanders' ambition to change the established order. If elected President, Sanders wants to introduce a Nordic-style economy to the US.

A one-time bastion of free market capitalism, there is now a growing recognition within the US that its economic system is simply not working. Inequality in America is enormous and there is no getting around the fact that despite the size and advanced nature of this economy, the average working class person in America remains under huge economic strain.

The OECD notes that "between 1975 and 2012 around 47% of total growth in US pre-tax incomes went to the top 1%". Blue-collar workers in America rarely advance financially. This widespread pattern of social and economic immobility has been repeated in the US for generations.

Mr Sanders wants to change all that. He has ambitious plans to reverse decades of wealth accumulation by the 'establishment' - "trillions of dollars, from the pockets of working families into the hands of the top one-tenth of 1%".

Mr Sanders has also vowed to introduce a Canadian-style health care system for all US citizens - arguing that health care is a right and not a privilege. He wants to provide free education to all, seeing education as a vehicle of social mobility, with lower-income kids being afforded the same opportunity for a quality education. He states that he would invest heavily in the country's infrastructure - giving the US back its competitive edge while simultaneously creating jobs.

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To pay for all this Mr Sanders plans to raise taxes on the super-rich and is prepared to really deal with the "greed, recklessness and dishonesty" in Wall Street's investment banks. He plans to break up big banks and ensure none are considered too big to fail. He wants to roll back Wall Street's influence in maintaining the economic status quo, changing the system of taxation that suits the elite and keeps Middle America weak.

The funding of elections is also something that he is focused on. "Big money interests controlling the US Congress" is something that Sanders abhors, and with Hilary Clinton receiving $21.4m to date from the financial sector for her 2016 campaign, Sanders is making much of this fact. He boasts his campaign has raised money from small donors - 1.3 million of them. He also accuses Mrs Clinton of being part of the 'establishment' and regularly reminds her that she received $675,000 from Goldman Sachs for three paid speeches.

To date, 170 economists across the US have officially endorsed Mr Sanders' plans for reforming Wall Street, increasing regulation and breaking up excessively large financial institutions into separate commercial and investment banking. But it is not just economists lending support to Sanders. Young Americans adore this 74-year-old. In Iowa last week he virtually tied with Clinton - she achieved 49.9% of the vote while Saunders attained 49.6%.

Young people in the US currently look like they are up for a political revolution. They want to see real progress for the 'average' American, not the elite. Clinton's strategy of claiming to be progressive while quietly cosying up to the establishment is most probably going to work against her. The Republican party's strategy of preaching protectionism and pitting working class groups against each other will also (hopefully) be seen for what it is. Surely, people in the US will be smart enough to see through a billionaire capitalist who last week boasted to his audience that he is "greedy, greedy, greedy".

Yes, this could be a very interesting year for the US and it would certainly be a surprise to see a US president elected on the back of his favourite slogan "We will raise taxes - yes, we will!"

This year the US could be heading down the road towards a more egalitarian society and economy. Simultaneously the UK could move away from Europe's more egalitarian influence and head for the great unknown. Ultimately, it will all come down to the electorate.

In next week's Economy Watch, we hear from Neil Gibson of the Northern Ireland Economic Policy Centre

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