Posted by: dstieglitz | September 30, 2012

LOOK AROUND THE WORLD

Politics have never been easy. George Washington, Alexander Hamilton, Thomas Jefferson, and John Quincy Adams didn’t like each other very much and were bitter rivals at times. Yet they collaborated to meld economic and social differences into a form of government based on clear principles. Today, we’re approaching the end of a presidential campaign where special interest groups and the two parties have launched a shocking barrage of expensive and misleading ad campaigns and rejected the notion of collaboration. Each side claims to hold the capital-T truth, blames the other for the country’s issues, depicts them as self-serving and misguided, and refuses to change.

Capitalist Democracy. In a capitalist democracy like ours, companies and individuals are expected to advance society by pursuing their self-interests within limits of the law. But in public life, we expect leaders to set aside their self-interests and exercise judgment to promote the nation’s best interests. That means, on occasion, they must ignore the loud voice of special interest minorities. Unfortunately, most politicians take the easier path of being on the popular side – especially with their party – because their top priority is getting reelected. The criteria in congress are not whether a bill is good, but whether it is popular; not whether it will work, but whether it will produce votes.

Least Productive Congress in History. According to a review by USA Today, 2012 is projected to be the least productive year ever for congress. Of nearly 4,000 bills that were proposed, only 61 have become law. The previous low point was the 2011 session when only 90 bills were passed. The only other year that Congress failed to pass at least 125 bills was 1995 when Clinton and Gingrich pushed the federal government into political gridlock. The lame duck session following November’s election will challenge these lawmakers to face several issues that they created themselves: sequestration, expiration of the Bush tax cuts, and the astronomical national debt.

It Would Be Funny, If It Weren’t So Sad. Humorist Will Rogers once joked: “Lord, the money we spend on government – and it ain’t one bit better than the government we got for one-third the money 20 years ago.” The government hasn’t changed much since that 1930s quip. In 1991 the federal government spent $1.3 trillion and in 2011 it spent $3.5 trillion – the 2011 deficit was $1.4 trillion. Few people would say today’s government is better than in 1991. Such anti-government one-liners make the work of career civil servants tough; but to reformers who would like the government to operate like an efficient business, they are painfully true. The sad part is that members of congress are so close to the process that they don’t see how much damage their inflammatory rhetoric and lack of action inflict on each other, on our economy, and on our worldwide image.

To Change or Not to Change. The U.S. faces a profound economic transition. The Great Recession could be a just a short-term setback and everything might return to normal in a few more years. Or we could be in the first stage of a financial crash like Greece is experiencing. The probability of a crash is small, but it must be considered because it is far from zero. The necessary change probably must be:

(1) Government promises that are sustainable as life spans exceed 80 years

(2) Tax and spending policies that balance revenue and expenditures

(3) An economy that produces more than it consumes (each year since 1985 the U.S. consumed over $100 billion more in imports than it produced in exports)

Or all three. More regulations won’t fix the problem when existing regulations fail to be properly enforced – the government must fundamentally change its relationship with businesses and citizens.

Big Government Isn’t Necessarily the Problem. Bad government is the problem. 236 years ago brilliant men created a form of governance that was better than anything previous. But today’s congress has become self-absorbed and oblivious to advances made in other countries. Partisanship causes them to ignore good ideas. Look around the world at what other countries are doing:

  • Finland is #1 for education, while the U.S. is 14th and declining
  • Germany’s highways are among the best while ours are falling apart
  • Japan’s people live 82.6 years  on average, while we live 78.2 years
  • Japan’s people pay $2,293/year for health care, while we pay $6,096
  • Norway’s unemployment is 3.0%, while U.S. unemployment is 8.3%
  • China’s economy is growing four times faster than the U.S. economy – even during the worldwide recession
  • Switzerland has a trade balance +13.4% of its GDP, while the U.S. is -3.2%
  • The U.S., once #1 in the world, has fallen to 9th in income per citizen

Maybe Congress should put its pride and ideologies aside, and learn from the best in the world.

Bipartisan Collaboration. The nation reaches an historical crossroad on November 6th: will we face our fiscal challenges or continue the political dysfunction that undermines growth? The decisions that congress and the next President will make – or not make – will potentially reshape the government; restructure the tax system; and alter health care, national security, food safety, Social Security, Medicare, Medicaid and other key programs. The most effective governance choices are neither of the two extremes we hear about, and progress will require collaboration. There are no issues where all the angels are lined up on one side. Republicans and Democrats each must slaughter their sacred cows: Republicans by increasing taxes and Democrats by curtailing entitlement programs – and you must too. If a solution is truly bipartisan, you will like parts of it and dislike other parts – no one will feel that it is perfect. Are you ready to accept such solutions?

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