US election and economic realities

THIS US election campaign is being billed as a battle of big ideas. That is a good thing. But it is a shame that the fight is not being waged in the 21st century.
In choosing Representative Paul D. Ryan as his running mate, Mitt Romney swapped his Massachusetts pragmatism for a proudly ideological commitment to limited government. The Democrats, by contrast, believe in the essential role government plays, and are willing to raise taxes, at least on the rich, to pay for it. This a clear and important battle line in the United States. But the argument over the size of the state comes with little regard for the very particular economic realities of this era. Like generals fighting the last war, US politicians are solving the economic challenges of the past century.
That is a problem because we are living at a time of deep and fast economic change. The intuitive sense that the economy is becoming less predictable and less secure is right. Thanks to globalization and the technology revolution, the nature of work, the distribution of the rewards from that work and maybe even the economic cycle itself are being transformed. But one would not know it from the US political debate, whose familiar melodies of small state versus large state, higher taxes versus lower taxes and the importance, or not, of balancing the budget could have been played in any decade since World War II.
Most people in the United States are comfortable with these old songs — everyone knows the words — but they are an inadequate response to the new economic demands of the 21st century.
The economic reality is that, thanks to smart machines and global trade, the well-paying, middle-class jobs that were the backbone of Western democracies are vanishing. Neither Mitt Romney’s smaller state nor Barack Obama’s larger one will bring them back. That is because the paradoxical driver of this middle-class squeeze is not some villainous force — it is, rather, the success of the world’s best companies, many of them American.
The tempting answer, which I heard most recently in an interview with Glenn Hubbard, an economic adviser to Romney, is to optimistically assume that, just as the early traumas of the Industrial Revolution gave way to widespread prosperity in much of the world, the economic transformations of today will eventually work out.
“If you were to go back to 1940 and have this debate, we might worry, well, what if people are going to lose their farm jobs?” Hubbard said. “Then the debate was over manufacturing, then over service. And if an economist is honest with you, the best he or she can say is, what we need to do is allow those opportunities to happen, and they will.”