STAFF NEWS & ANALYSIS
America's Broken Politics
By Staff News & Analysis - November 24, 2009

Social polarization, the growth in lobbying and a loss of faith in process has left government paralyzed in the face of huge challenges … It is hard for international observers of the United States to grasp the political paralysis that grips the country, and that seriously threatens America's ability to solve its domestic problems and contribute to international problem-solving. America's governance crisis is the worst in modern history. Moreover, it is likely to worsen in the years ahead. The difficulties that Barack Obama is having in passing his basic program are hard to understand at first glance. After all, he is personally popular, and his Democratic party holds commanding majorities in both houses of Congress. Yet his agenda is stalled and the country's ideological divisions grow deeper. Among Democrats, Obama's approval rating in early November was 84%, compared with just 18% among Republicans. Fifty-eight percent of Democrats thought the country was headed in the right direction, compared with 9% of Republicans. Only 18 % of Democrats supported sending 40,000 more troops to Afghanistan, while 57% of Republicans supported a troop buildup. In fact, a significant majority of Democrats, 60%, favored a reduction of troops in Afghanistan, compared with just 26% of Republicans. On all of these questions, a middle ground of independents (neither Democrats nor Republicans) was more evenly divided. – UK Guardian

Dominant Social Theme: A tragedy in the making?

Free-Market Analysis: Granted this is the leftist Guardian, so commenting on such an analysis from a free-market point of view is a bit like shooting fish in a barrel. But the article also provides us with a dominant social theme of sorts – that America will do better when the federal government is more efficient. We beg to differ. If America has any more federal efficiency, the country will become even more unrecognizable than it already is.

Long, long ago, America was an "exception" in the world, a country that subscribed to the idea of minimalist government, respected state secession if necessary, lacked a progressive income tax, a central bank, an oppressive (or overly large) military-industrial complex and was organized along republican lines so that the "tyranny of the majority" was averted.

Today, America resembles the EU more than it does the nation it once was. Its president is almost avowedly socialist, its middle class is riven by ruinous federal, state and local taxes, its money is inflated by the Federal Reserve, its nearly unaffordable military power is projected abroad by over 1,000 bases and its federal government is generally increasingly untethered and uncontrollable.

Seen from this point of view, the Guardian analysis (which is also in a sense a larger dominant social theme of sorts) beggars logic. America has moved from minimalist government to maximalist government and it would be difficult for a clear-sighted individual to ascertain where improvements have been made. Is America a fairer society today than it was? Perhaps for African-Americans, but it is difficult to maintain that many progressive changes that have taken place in America have truly benefited the poor or middle class.

The Guardian analysis maintains that America's problems are BECAUSE of broken government. In fact the American republican model has been broken BY government, along with powerful private interests that have sought a dysfunctional (for most) mercantilist state.

Here's some more from the Guardian article:

Policy paralysis around the US federal budget may be playing the biggest role of all in America's incipient governance crisis. The US public is rabidly opposed to paying higher taxes, yet the trend level of taxation (at about 18% of national income) is not sufficient to pay for the core functions of government. As a result, the US government now fails to provide adequately for basic public services such as modern infrastructure (fast rail, improved waste treatment, broadband), renewable energy to fight climate change, decent schools, and healthcare financing for those who cannot afford it.

Powerful resistance to higher taxes, coupled with a growing list of urgent unmet needs, has led to chronic under-performance by the US government and an increasingly dangerous level of budget deficits and government debt. This year, the budget deficit stands at a peacetime record of about 10% of GNP, much higher than in other high-income countries.

Obama so far seems unable to break this fiscal logjam. To win the 2008 election, he promised that he would not raise taxes on any household with income of less than $250,000 a year. That no-tax pledge, and the public attitudes that led Obama to make it, block reasonable policies.

There is little "waste" to cut from domestic spending, and many areas where increases in public spending are needed. Higher taxes on the rich, while justified, don't come close to solving the deficit crisis. America, in fact, needs a value-added tax, which is widely used in Europe, but Obama himself staunchly ruled out that kind of tax increase during his election campaign.

These paralyzing factors could intensify in the years ahead. The budget deficits could continue to prevent any meaningful action in areas of critical need. The divisions over the wars in Iraq and Afghanistan could continue to block a decisive change in policy, such as a withdrawal of forces. The desire of Republicans to defeat the Democrats could lead them to use every maneuver to block votes and slow legislative reforms.

A breakthrough will require a major change in direction. The US must leave Iraq and Afghanistan, thereby saving $150bn a year for other purposes and reducing the tensions caused by military occupation. The US will have to raise taxes in order to pay for new spending initiatives, especially in the areas of sustainable energy, climate change, education, and relief for the poor.

We actually agree with some of this analysis. America's out-of-control federal spending will demand sooner or later that its current live wars be reduced considerably. It may even be that the overall military budget will be reduced slightly, though not very much. But the trend toward larger government and a more dysfunctional state is NOT going to be reduced by the players in either major party, their business backers or the monetary elite itself.

The last thing that America needs in our opinion, however, is a more effective federal government. When one looks at the industrial and sociopolitical model that vaulted a sparsely populated nation into the ranks of the world's most powerful and wealthy states, one can make a good argument that it was pre-Civil War free-markets that positioned America for her vast prosperity. It is easy to miss this fact, however, just as it is easy to mis-identify Rome's success. Both Rome and America, in our opinion, utilized the republican model of fairly minimalist, representative government to build powerful, market-driven economies. In the case of Rome, empire actually signaled the decline of the society. The signs of American empire similarly signal decline.

After Thoughts

We do not know if America, unlike Rome, can return to the roots of her greatness. But the Internet itself has certainly provided millions (not only in America) with a powerful learning tool. Those interested in culture and polity – and how societies function properly – have relearned the lessons of minimalist government and the value of honest money (gold and silver) in the past two decades. These great lessons may in fact provide a launching pad for the reinvigoration of America and the West if one is to come. Perhaps, then, the Guardian has it backwards. The problems that America faces are not going to be solved by government but by an expansion of freedom.

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