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A Two-Party System is Uncompetitive

By Byron A. Ellis – September 06, 2009

The perceived economic climate affects election results. When unemployment is rising, incumbent presidents tend not to be reelected. Thus, the application of tight or loose monetary policy could determine the outcome of elections.

The Republicans have demonstrated a good understanding of what it takes to regain political power; at any cost prevent the opposition from succeeding. That is, oppose economic stimulus, healthcare for all Americans, Middle East peace, encouraging youth responsibility, or any other policy that might benefit voters.

President Obama, on the other hand, has been engaged in bipartisanship, an illusory belief that adversaries can unite for the good of the country. However, the opposition knows that collaboration would reduce their viability as a major political party.

Democrats, however, have seldom had a coherent strategy that could checkmate their opponents. Thus, they play nice and incorporating shrewd and capable opponents into the administration, which is a recipe for inhibiting promises to the democratic constituency.

Allowing the illusion of bipartisanship slows or prevents the process of change, as can be seen with the healthcare reform. Failure to understand that the two-party political system is an adversarial system could be politically costly.

Additionally, handing the reins of the economy to a member of the opposing party is risky. The tenet of monetarism is that management of the money supply has a major influence on national income and employment. For example, when the Federal Reserve restricts monetary growth (M1), as it did between 2005 and the third quarter of 2008, national income and employment decreases.

It is, in part, poor economic performance at the end of the Bush administration that delivered the presidency to the Democrats. Now, if the Republicans can prevent the Democrats from expanding the economy and improving the voters’ standard of living, they would be able to regain political power. So, why should they cooperate with the Democrats?

The dissention within the Democratic Party, by the so-called Blue Dogs is beneficial to the Republican strategy of no cooperation. Such dissention prevents the Democrats from implementing campaign promises.

The dissention might also benefit a potential third party if it could succinctly demonstrate that it could act in the best interest of the voters. For instance, a promising third party could evaluate successful national healthcare models (Israel, Costa Rica, Spain, UK, and others) and developed a United States model that would not make users worst off or create a healthcare monopoly.

Additionally, a forward thinking third party could evaluate existing stabilization policies and propose counter-cyclical interventions mechanisms that would prevent or significantly moderate low levels of demand due to restrictive monetary policies (inflation targeting) and hence unemployment.

In terms of foreign policy, a robust third party could evaluate and propose intervention strategies to reduce violence and poverty in unstable regions around the world. And, in the Middle East it could establish a clear and transparent U.S. policy, which would regard any appearance of apartheid and discrimination as not compatible with U.S. policies.

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