Economist Leader: Debt and politics in America and Europe—Turning Japanese

Posted by Kendall Harmon

America’s debt debate seems still more kabuki-like. Its fiscal problem is not now—it should be spending to boost recovery—but in the medium term. Its absurdly complicated tax system raises very little, and the ageing of its baby-boomers will push its vast entitlement programmes towards bankruptcy. Mr Obama set up a commission to examine this issue and until recently completely ignored its sensible conclusions. The president also stuck too long to the fiction that the deficit can be plugged by taxing the rich more: he even wasted part of a national broadcast this week bashing the wealthy, though the Democrats had already withdrawn proposals for such rises....

In both Europe and America electorates seem to be turning inward. There is the same division between “ins” and “outs” that has plagued Japan. In Europe one set of middle-class workers is desperate to hang on to protections and privileges: millions of others are stuck in unprotected temporary jobs or are unemployed. In both Europe and America well-connected public-sector unions obstruct progress. And then there is the greatest (and also the least sustainable) division of all: between the old, clinging tightly to entitlements they claim to have earned, and the young who will somehow have to pay for all this.

Sometimes crises beget bold leadership. Not, unfortunately, now....

Read it all.

Filed under: * Culture-Watch • Globalization • * Economics, Politics • Economy • Credit Markets • Currency Markets • Euro • European Central Bank • Stock Market • The Banking System/Sector • The Credit Freeze Crisis of Fall 2008/The Recession of 2007-- • The U.S. Government • The National Deficit • Politics in General • House of Representatives • Office of the President • President Barack Obama • Senate • * International News & Commentary • Europe • --European Sovereign Debt Crisis of 2010

2 Comments
Posted July 30, 2011 at 2:36 pm [Printer Friendly] [Print w/ comments]



1. BlueOntario wrote:

In both Europe and America well-connected public-sector unions obstruct progress.

Progress in what? The decline of the middle class? The author certainly is correct, though. As the economic ship is sinking everyone is fighting over the deck chairs.

July 30, 10:43 pm | [comment link]
2. cekmagdurlari wrote:

The problem has nothing to do with an irresponsible government. The framers of the constitution intended it to be that way. Rather, it is a result of the government overstepping its constitutional boundaries. All too often, we hear people say “those conservatives, why don’t they let us pass this budget, or this resolution, or this law, etc. “Economic conservatism is antithetical to the idea that ANY government has the right to control you actions, especially through the form of taxation. Furthermore, a federal government is in fact not necessary to the establishment of Liberal priorities.

The 10th amendment clearly reaffirms the constitutional provisions against the establishment of federal power. In Democrats like the wellfare state so much, they should implement it at the State and Local level. That way, you give people the choice TO LEAVE if they disagree with the policy, or if they feel that taxes are too high. Conversely, you also give people the choice to COME to your state if they like the benefits. The system that is most successful will win out, but there is no reason to have a national policy on these matters.

Conclusion: I believe this bickering is due to the fundamentals of democracy, particularly American, at work. If you value your freedom, and your liberty, you would never abandon what we have here for the “faux” effectiveness of Chinese autocrats. The federal government should NOT force its will on the people or on the states. Wellfare programs should be run (or rather, run by the choice of the people) so that if an individual state chooses to dispose of that system, it can do so without federal prosecution.

October 25, 3:02 pm | [comment link]
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