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May
4
On Our Do Nothing Congress
Filed Under economy, politics | 4 Comments
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.
May
2
Fareed Zakaria describes the major problem facing the American economy in the 21st century. It is not the rise of China and other foreign powers as competitors in the global marketplace. The real problem, according to his article “The Future of American Power,” is our dysfunctional political system that can’t solve problems.
The problem today is that the U.S. political system seems to have lost its ability to fix its ailments. The economic problems in the United States today are real, but by and large they are not the product of deep inefficiencies within the U.S. economy, nor are they reflections of cultural decay. They are the consequences of specific government policies. Different policies could quickly and relatively easily move the United States onto a far more stable footing. A set of sensible reforms could be enacted tomorrow to trim wasteful spending and subsidies, increase savings, expand training in science and technology, secure pensions, create a workable immigration process, and achieve significant efficiencies in the use of energy. Policy experts do not have wide disagreements on most of these issues, and none of the proposed measures would require sacrifices reminiscent of wartime hardship, only modest adjustments of existing arrangements. And yet, because of politics, they appear impossible. The U.S. political system has lost the ability to accept some pain now for great gain later on.
As it enters the twenty-first century, the United States is not fundamentally a weak economy or a decadent society. But it has developed a highly dysfunctional politics. What was an antiquated and overly rigid political system to begin with (now about 225 years old) has been captured by money, special interests, a sensationalist media, and ideological attack groups. The result is ceaseless, virulent debate about trivia — politics as theater — and very little substance, compromise, or action. A can-do country is now saddled with a do-nothing political process, designed for partisan battle rather than problem solving.
