‘Ripple Effect’ explores the business and economics of the election

"Ripple Effect," the Wharton School's faculty research podcast, explores what inspires experts' studies and how their findings resonate with the world today. The past month's episode series, "Business of Elections" explores the issues most relevant to voters in the upcoming U.S. presidential election.

In "Elections and National Debt," Joao Gomes, the Howard Butcher III Professor of Finance and professor of economics, argues that both political parties are unwilling to tackle the burgeoning national debt, and that inaction is putting the country on a perilous economic path.

"Both candidates are, at this point, incredibly populist in the sorts of things they put forward. And none of them has a plan to pay for [the national debt]. At a minimum, we need that fiscal discipline, that sense that, 'OK, I want to accomplish X,' but be honest with the citizens of this country and say, 'I need to pay for it, and I need X or X-plus-something to cover those costs,'" says Gomes. "Until we do that, I think we live in this pretend world that we can just borrow more and more and more, and for a while we can continue to gain weight. We can continue to overeat. But the penalty is going to be severe, and the question is just which generation and at which point? And which political party is going to be in power when it happens?"

In "The Role of Firms in Immigration and Economic Prosperity,"Assistant Professor of Management Britta Glennon shares her research that dispels long-held myths about immigrants and how they influence the U.S. economy.

"If you think about H-1B visas, those are probably the best-known skilled immigration visas, firms are often hiring students with those H-1B visas to come and work with them afterwards. What they're coming with is a different experience than Americans have, and different ideas, different knowledge, different connections, and that's bringing this new perspective into the firm and bringing new knowledge into the firm," says Glennon.

"That's one of the reasons why there tends to be a boost in innovation, for example, because innovation is often about the recombination of different ideas. So yes, absolutely, they are bringing that from their home countries, and that's boosting firm performance and innovation."

And in "How Election Tax Plans Affect Your Paycheck,"Kent Smetters, the Boettner Professor of Business Economics and Public Policy, argues that the economic policies of both presidential candidates will raise the federal deficit, according to the Penn Wharton Budget Model.

"They're very different, in some sense. Trump, we kind of know what he wants. It's very clear. It's also very expensive, because he doesn't have any way of right now paying for it. Add a lot of debt to the picture, on a path that already is exploding with federal debt," says Smetters. "Whereas the case of Harris, the problem there is that they've released an official campaign document, then they have these kind of side conversations giving some hints about how they'll pay for some of this stuff, but it's not very organized at all. We and the Joint Committee on Taxation, CBO in particular, are pretty consistent that you have to give us details. And we're not going to give you freebies in terms of revenue and things like that. So her package is much smaller, but it does also increase the debt."