The US is on the cusp of a quantum shift in policy, according to a former economic adviser to the Cl...
The US is on the cusp of a quantum shift in policy, according to a former economic adviser to the Clinton administration.
Speaking at an event organised by Pioneer Investments in Dublin to mark the company's 80th birthday and 10 years in the Irish capital, Rob Wescott, president of economic consultancy Keybridge Research, said that nearly 30 years of "laissez-faire capitalism", begun under Ronald Reagan, would come to an end regardless of whether this November's US presidential election was won by Democrat Barack Obama or Republican John McCain.
Wescott said a number of changes in the past eight years - such as the devastation of Hurricane Katrina and the withdrawal of arthritis drug Vioxx - meant the American public would no longer stand for a system under which infrastructure spending was the lowest in the developed world and 50 million people had no health insurance.
An explosion in chief executives' pay from 40 times average wages up to 400 times has fuelled the sense of inequality, and there is also a growing realisation that climate change needs to be tackled.
"The 2008 election could provide a paradigm shift," he said. "People want an activist government that solves the country's problems. We will probably see more taxes on the rich, a more pro-union feel, greater access to health insurance and more support for the dollar.
"The election sets up better for Obama if people want a more activist government, but it is not clearly breaking for him - McCain is also against global warming and for a trade cap."
He added that the continued high price of oil represents a real risk for the US economy. "An oil bill of 7% of GDP is in the danger range, and at $130 a barrel it is about 6.9%, so there is a definite danger," he said.
"From what we are seeing in the US, with employment flat or falling, industrial production negative and weak disposable income growth, high oil prices are having an effect - it's like a $200bn tax on the US economy, and has the potential to tip it into recession."
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