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May
4
I wrote this as a reply to Steve Dalton’s comment on my post “Our Dysfunctional Politics Are Ruining Our Economy” and thought it would make a nifty post, instead of just a reply to a comment. (Thanks to Steve for sparking this new post!)
I’m all in favor of the Constitution’s system of checks and balances and the idea of incremental changes as a protection against tyranny.
Having a do-nothing Congress and government is often more beneficial to the country as a whole than an activist government that is unified and ready to move quickly.
However, I was thinking about how the Congress hasn’t done much lately — except maybe investigate baseball players for steroid usage. At times, doing nothing is a great thing. However, having a demagogic Congress that does nothing except blame business for political gain puts our country at a disadvantage in a world where a company could easily move its headquarters from the United States to London for more favorable treatment.
If I was to act the way Congress does, I’d say that they were responsible for all of the economic messes they complain about because everything happened on their watch.
We do have to have a Congress that is willing to be a little less sluggish and partisan and more willing to think about the long term. The threat to our economy isn’t free trade. It is our system of regulations and relatively high taxes as compared to other nations that is causing many businesses to move out of the country in order to find relief.
Western Europe is dropping tax rates in response to lower tax rates in Eastern European nations. London is becoming the next New York as companies look for places with favorable business climates. If we don’t watch out, we’ll force companies to move to lower cost jurisdictions in order to fulfill their duties to their shareholders to ensure that maximum profits are made.
Our partisan system too often blames business and wants to impose taxes to punish while forgetting there is a huge world out there where businesses can go. This isn’t the 1950s when most of the world was recovering from World War II and wasn’t interconnected as it is today by the internet.
If we get rid of NAFTA to make a few people who lost jobs at an old-style industrial factory feel good for a few seconds, we could end up losing our foreign oil supplies from our NAFTA partners to China as they are given freedom to sell their oil on the world market — instead of keeping it within North America. Do we really want to end up paying $8 or $9 per gallon for gasoline because we made Canada and Mexico angry?
If we impose windfall energy profit taxes on Exxon-Mobil, do we risk having them divert oil away from the American market so that they can make their profits in China? Why sell to the United States if profits will be confiscated? Why not sell to China which is willing to pay? Rational actors will make decisions that are in their best interests. Will it be rational to subject business profits to confiscation?
The problem isn’t a structural problem with our government system.
In many ways, it has worked perfectly to keep the radicals from destroying our country by rapid changes by forcing everything to undergo rigorous challenges within the political process. Speed kills when it comes to making radical changes to our way of running our government. History shows that radical changes often fail radically. Look at the Soviet Union, North Korea and Cuba. They didn’t end up being the workers’ paradises that were promised.
Our largest problem is with the people who get elected to go to Congress and do nothing except chase business away and scare the public into accepting higher and higher taxes as the solution to all of our woes. Members of Congress focus on winning their next 2- or 6- year term, instead of thinking 25 years down the road. They’d rather raise funds for their next campaign — and so that they can become rich themselves — they complain about the rich when they are millionaires themselves — instead of thinking about ways to help businesses that will employ the workers who make America great.
Instead of fostering economic growth that will cause everyone to benefit, they only offer up demagogic attacks on those who produce our country’s wealth in an attempt to curry favor with voters who are inclined to blame business for their personal failures.
We cannot forget that we’re not the only place in the world where someone can do business. If we continue to put barriers up and make it too expensive, companies will make the rational decision to move to places where they can maximize their profits.
Having politicians scream about taking the profits out of business doesn’t help anyone.
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Comments
4 Responses to “On Our Do Nothing Congress”
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Hi Chris,
You hit it on the head when you mentioned the focus on winning the next election. The politicians incentive is to raise funds for another election cycle and another win. So he has to act accordingly with his incentive, or goals, which is not always the best interest of the constituency. This is how unions and special interest groups gain stroke over the politicians they support.
Hi Aaron,
It’s always interesting that polls always show that people are upset with Congress but always (99% of the time) vote for their incumbent legislator.
It’s always frustrating to hear republicans & their sympathizers speak about the present congress’s disapproval rating while ignoring the fact that their popularity first plummetted right after Pelosi’s infamous “impeachment is off the table” remark.
Since the main criticism of NAFTA involves the resultant moving of factories(jobs) to Mexico, I don’t really understand the threat of companies leaving if NAFTA is repealed.
I agree with your implied suggestion that term-limits should be repealed so that future congresses would not be so focused on short-term gains. Indeed, it is this same attention-deficit style of focusing on short-term gain at the expense of sustainability which makes it so necessary to regulate business’ behavior.
“instead of thinking about ways to help businesses that will employ the workers who make America great.” — That sounds like you’re saying American workers, but you didn’t actually say that. I suppose Indonesian sweatshop, New Delhi customer service, & Chinese factory workers are what make America great?
I am most certainly in favor of “fostering economic growth that will cause everyone to benefit” — This would require putting limitations on those practices that benefit only a few and foster a race-to-the-bottom for everyone else.
Hi Wayne,
Thanks for stopping by and commenting!