America has a modern history of two major political parties. Current Democrats have morphed into the Liberal Party while Republicans have become the Conservatives. Liberal and Conservative we are told are opposites. One party drives the Country left and then the other drives it right. As the Country moves forward, the left-right forces keeps the country bouncing around a balanced path. Therein lies the strength of two parties.
American culture has consistently presented life as opposites and offered heros to champion the good side. In movies, good cowboys wore white hats, bad ones wore black. Countries which the US opposed were sinister and evil while those the US supported were brave and peace loving. Marijuana was the first step to drug dependency, while Valium (and other prescription drugs) was a medicine.
Most of us know better than to accept these sterio-types. We know that life is more complicated. So why in this election, where the economy is the number one issue, do we think someone who says he has the experience to fix it (getting the economy growing), why would we believe him?
Wouldn’t people realize that the last time jobs were plentiful was when lots of Americans were employed by financial institutions who could afford these employees because they were charging copious amounts of fees (most of which took advantage of the less knowing) and were lending money to leverage levels the banks could not tolerate in a down turn.
The next largest sector comprised those who built buildings and houses (and all their suppliers). This is honest work and with overtime certainly represents good jobs. The problem is that so many houses and buildings have been built, we will not see another housing bubble for some time (and who likes bubbles anyways).
Not to be overlooked is that our Country’s credit limit is dangerously close to “tilt”. Government spending on new areas that could create jobs is out of the question. Manufacturers could repatriate some jobs that went overseas but wages would be low and what incentives would be necessary to make business sense?
A snap shot of the world today finds India and Russia struggling, Europe on the verge of recession, and China’s growth rate declining sharply. Why?
For a number of years, the world has seemed to either want to live on credit or export their way to the good life. Over recent history, the US has always stepped up in situations like we see now. The US would act like the economic engine that got other economies going. It did so by importing goods and services from other countries and paid for these imports by essentially printing more money.
Since the 2008 recession, there have been no strong economies. Looking around we see that most of Europe is in as bad or worse shape with their national debt as is the US. So could the US again become the global economic engine? To be clear, this is not about the US making products and exporting. No one is willing or able to buy. This would be about the US consuming far more imports than we export, and in that way stimulating other economies.
It’s not going to happen. The US and the world are going to have to learn how to prosper on a different basis. Each must get its own financial house in order and then find ways to trade efficiently.
Clearly China needs to learn to live on a 2-4% growth rate (down from 10+%), countries like Ireland, Portugal, Spain, Italy, and Greece need to find ways to reduce their unemployment rates from double digits to mid single digits while reducing their debt. And the US needs to solve its deficit conundrum while gradually finding good jobs for more people.
This idea that the US can continue to act as if it is on an island, that job growth here is dependent only upon domestic policies, and that financial regulations are irrelevant, is false. The two parties have a wonderful opportunity to propose ways to overcome the current hurdles if they abandon the good guy/bad guy approach.
The “hero” option (my Bain experience informs me) is not one of the ways that will help. The problem is far more nuanced.