Yellen Warns that Threats to Democracy Could Jeopardize US Economic Growth

Treasury Secretary Janet Yellen is emphasizing the importance of a united democracy for a strong economy, indirectly referencing Donald Trump.

Yellen, delivering a speech in Arizona, uses economic data to illustrate how neglecting democratic processes and institutions can lead to economic stagnation over time.

While Yellen does not mention Trump by name in her speech for the McCain Institute’s Sedona Forum, she implies the potential impact of his return to the White House.

Her remarks serve as a caution for business leaders who support the former president’s approach of tax cuts and deregulation to fuel growth.

Yellen acknowledges the unusual nature of a Treasury secretary discussing democracy but stresses its crucial role in building a strong economy. Her office released a copy of her speech in advance.

She argues against the idea that sacrificing democracy for economic gains is justified, citing a study suggesting democratization leads to long-term economic growth.

Yellen points to events like the Capitol riot on Jan. 6, 2021, as threats to democracy and highlights global challenges like Russia’s actions in Ukraine.

She warns of China’s uncertain future growth due to the absence of democratic principles, and she mentions speculation about potential political pressure on the Federal Reserve if Trump returns to office.

Yellen emphasizes the importance of an independent and transparent Federal Reserve for financial stability, citing research supporting her view.

The Trump campaign did not respond to a request for comment from the Associated Press.

Other economists challenge claims linking economic growth and liberty to a particular political stance, advocating for businesses to prioritize democratic values.

There is clear evidence of the economic drawbacks of democratic decline, including stagnation, instability, cronyism, brain drain, and violence.