Yellen says threats to democracy risk US economic growth, an indirect jab at Trump

Treasury Secretary Yellen Highlights the Importance of Democracy for Sustainable Economic Growth

Introduction

Treasury Secretary Janet Yellen delivered a speech in Arizona, emphasizing the critical role of democracy in achieving sustainable economic growth. Yellen used economic data to illustrate how a disregard for democratic processes and institutions can lead to economic stagnation for extended periods.

Democracy and Economic Stagnation

Yellen’s address at the McCain Institute’s Sedona Forum did not explicitly mention former President Donald Trump, but it alluded to his potential impact if he were to regain the White House. Her remarks served as a warning to business leaders who may overlook Trump’s disregard for democratic norms due to his promises of economic growth through tax cuts and deregulation.

The Flawed Argument of Authoritarians

Yellen argued against the flawed argument made by authoritarians and their defenders that sacrificing democracy is necessary for economic gains. She cited a study suggesting that democratization can increase gross domestic product per capita by approximately 20% in the long run. Yellen emphasized that undermining democracy undermines the foundation of sustainable and inclusive growth.

Threats to Democracy

Yellen highlighted the insurrection on January 6, 2021, as an example of when democracy came under threat. She also mentioned Russia’s invasion of Ukraine as a global threat to democracy. Yellen cautioned against centralizing government powers and undermining the rule of law, as it could jeopardize America’s market-based economy.

China’s Democratic Challenges

Yellen pointed to China as a cautionary example, stating that its future growth is uncertain due to the absence of democratic pillars. She emphasized that China’s transition to an advanced economy will continue to pose challenges without democratic principles in place.

The Role of the Federal Reserve

Yellen, who previously served as the Chair of the Federal Reserve, stressed the importance of the Fed’s independence and transparency for financial stability and economic growth. She expressed concern that if Trump were to regain the White House, he might exert political pressure on the Federal Reserve to lower interest rates, potentially undermining long-term growth.

Economists’ Perspectives

Leading economists and academics, including Nobel Prize-winning economist Joseph Stiglitz, challenge the right’s claims to economic growth and liberty. Stiglitz argues that Trump capitalized on economic insecurities resulting from inequality and the erosion of the middle class. Vanessa Williamson, a senior fellow at the Urban-Brookings Tax Policy Center, emphasizes the economic costs of democratic decline, including stagnation, policy instability, cronyism, brain drain, and violence.

Conclusion

Treasury Secretary Yellen’s speech underscores the significance of democracy in building and sustaining a strong economy. Her remarks serve as a reminder to business leaders and policymakers that prioritizing democratic values and institutions is essential for achieving the Sustainable Development Goals (SDGs) and promoting inclusive and sustainable economic growth.

SDGs, Targets, and Indicators

1. SDG 16: Peace, Justice, and Strong Institutions

   • Target 16.6: Develop effective, accountable, and transparent institutions at all levels
   • Indicator 16.6.1: Proportion of the population satisfied with their last experience of public services
   • Indicator 16.6.2: Proportion of the population who believe decision-making is inclusive and responsive

2. SDG 8: Decent Work and Economic Growth

   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation
   • Indicator 8.2.1: Annual growth rate of real GDP per capita
   • Indicator 8.2.2: Proportion of youth not in education, employment, or training

3. SDG 10: Reduced Inequalities

   • Target 10.4: Adopt policies, especially fiscal, wage, and social protection policies, to progressively achieve greater equality
   • Indicator 10.4.1: Labour share of GDP, comprising wages and social protection transfers
   • Indicator 10.4.2: Proportion of people living below 50% of median income

Analysis

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The issues highlighted in the article are connected to SDG 16: Peace, Justice, and Strong Institutions; SDG 8: Decent Work and Economic Growth; and SDG 10: Reduced Inequalities.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s content, the specific targets that can be identified are:
– Target 16.6: Develop effective, accountable, and transparent institutions at all levels
– Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation
– Target 10.4: Adopt policies, especially fiscal, wage, and social protection policies, to progressively achieve greater equality

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, there are indicators mentioned or implied in the article that can be used to measure progress towards the identified targets. These indicators include:
– Indicator 16.6.1: Proportion of the population satisfied with their last experience of public services
– Indicator 16.6.2: Proportion of the population who believe decision-making is inclusive and responsive
– Indicator 8.2.1: Annual growth rate of real GDP per capita
– Indicator 8.2.2: Proportion of youth not in education, employment, or training
– Indicator 10.4.1: Labour share of GDP, comprising wages and social protection transfers
– Indicator 10.4.2: Proportion of people living below 50% of median income

These indicators can be used to measure progress towards the targets by collecting relevant data and analyzing the results.

SDGs, Targets, and Indicators