If American electors decline Barack Obama's bid for a second term in two weeks, then the denouement of the 44th President of the US, the first African-American to hold the greatest political office in the world, will be a question for history.
Both lay and expert commentaries point to the President's lacklustre first debate, allowing Mitt Romney to step leftwards to the centre, as an exceptional instance of debate performance changing the dynamics of a race.
I am more impressed with the idea it was Bill Clinton's speech to the Democratic national convention in Charlotte, North Carolina, that lifted the scales from the eyes of US electors and observers across the world. There was big upside in having the former Democrat president with a 70 per cent approval rating barrack for Barack. But there was also big downside in having the older man show up the wunderkind as relatively callow in the policy wonk stakes, and less than the master in the rhetorical stakes. Perceptions of two of Obama's great strengths - his policy grasp and his oratory - shifted that night.
Perhaps the cost of making Clinton proxy running mate was already paid despite the celebratory wake of the convention, but not yet apparent on the political ledger. It took the first debate to complete the impression of Obama as an ordinary candidate who could be refused a second term.
However, beneath these surface analyses of Obama's potentially fatal campaign miscalculations lies a more fundamental reason the race is down to the wire: the tepid state of the US economic recovery from the 2008 financial crisis and perceptions of the Obama presidency's handling of it.
Through the five years since the crisis began, like millions of lay people, I have followed the economic and political debates surrounding the causes of the crisis and how governments should and should not respond. Far from intellectually exhilarating, these debates have been to me truly depressing. It is unfathomable, three-quarters of a century since the Depression, that there is today no broad consensus in economic theory about the causes and cures of economic crises such as the one gripping the world, and no broad political consensus about how best to respond. We may have been, as Milton Friedman stated, all Keynesians back in 1965, but we are all Hayekians now.
The scale and intensity of the argument between those advocating a focus on debt and austerity on the one side, and employment and stimulus on the other, has been the story of these five years. The Austerians, as Paul Krugman calls them, have held the commanding heights and their policy prescriptions in favour of austerity and limiting stimulus have largely prevailed.
I have followed Krugman's column and blog in The New York Times across this period. His position has been consistent all the way through. You know the whole Keynesian deal. Krugman reprises it in his recent book, End This Depression Now!
Austerity is precisely the wrong prescription in a recession. Government stimulus must make up for the collapse in demand. Inflation ("the phantom menace") will not be a problem. Interest rates cannot go much lower than they already are. No crisis of confidence will arise from government action. Debt is best paid off with a growing economy. And as massive as American debt may seem, the American economy is a massive engine. And so on.
Krugman argued the Obama stimulus of 2009 was not going to be big enough. While it would stop the slide, it would be insufficient to effect a recovery.
So far events have proven Krugman right; inflation has not been a problem. The effect of David Cameron's austerity policies on a depressed British economy have played out in the way he predicted. Five years later I am prepared to accept the arguments and evidence that Krugman is right. To nail one's colours to the mast this late in the day is of course as pusillanimous as it gets, but the following two propositions seem to be clear:
Pursuing Keynesian policies in good times bloats the welfare state.
Pursuing austerity policies in time of recession emaciates the economy.
We should indeed confront the big fiscal challenges and pay down debt in good times. There are many limbs of the Leviathan to be cut down. A relatively successful society such as ours has much scope for reform, as too many of the social ends we desire are sought through social means. Reform fruitfully would focus on liberal means to social ends. Poverty comes first to my mind as the welfare state's greatest enduring failure, in the sense we fiddle with it but we never overcome it.
Unlike the US there has been a general Australian consensus around market liberal economic policy in the good times and a New Keynesian response to the financial crisis. While Krugman pours scorn on the efficient markets hypothesis put forward by the "freshwater" economists of the Chicago school, former Reserve Bank governor Ian Macfarlane told the Committee for the Economic Development of Australia as early as 1998 that "the intellectual underpinning of the free market position in relation to asset price determination, the efficient markets hypothesis, is very weak. In all the exchange-rate tests of which I am aware, the hypothesis has been contradicted by the facts."
By world standards Australia has been well served by our economic stewards in recent decades.
The political danger for Obama in an inadequate stimulus package was foreseen by Krugman. He wrote in his January 2009 blog: "I see the following scenario: a weak stimulus plan, perhaps even weaker than what we're talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 per cent and coming down slowly. And then Mitch McConnell says, 'See, government spending doesn't work.' Let's hope I've got this wrong."
This is how it played out. Obama had no more political capital to go back to congress for seconds. The public credibility of stimulus is weak and debt remains the bogey. And Obama faces a second-term election with an equivocal recovery.
Clinton was right to say Obama came to office in diabolical circumstances, and neither he nor his predecessors could have done better in one term. But those advising Obama on economic policy have been Clintonites and I expect Krugman would be making the same judgment of Clinton in these circumstances.
The stimulus was too small, remains too small and will need to be revisited by Obama if he is the victor. Tax cuts and a massive increase in defence spending is Romney's plan for turning around the contraction in demand in the event that he ascends to the presidency.