Big economic issues

The economy will be front and center in this year’s political campaigns. Are there any big economic issues that are at the heart of all the debates we’ll hear? N.C. State University economist Mike Walden responds.

“I really think there are, and I would encourage our listeners to perhaps keep these debates in mind when they’re listening to the candidates. I think the first is the issue that economists frame as efficiency versus equity. What that means is we certainly want to help people who are down on their luck or who are disabled or who have other situations where they don’t have enough funding and resources to meet certain standards of living, but there’s a worry about whether that creates a situation where the folks who are being taxed to do that maybe will refrain from working as much if their taxes are higher. That is a long-run issue that economists have debated. So that’s number one.

“Number two is a matter of tax rates: Do we want to have a proportional tax rate system where everyone pays the same tax rate, or do we want to have a progressive tax rate system where people with more income not only pay more taxes but they pay a higher percentage of their income in taxes. Obviously we hear that debate all the time.

“Third big issue is the issue of public versus private: What is it, really, that we want the government to do? What should be left to the private sector? (That’s) a major long-run debate (that) really goes back to the beginning of our country.

“And then the last issue, I think, has really come to fore in the last couple of years with the recession and that is, How much should we rely on the free market to move the economy, versus how much government intervention either to head off problems in the free market or once their problems emerge to try to correct those problems? Big, big debate.”