Political Posturing And The Economics Of Democracy

By Jackson Henry –

Academicians have long debated whether the free market system operates more efficiently under democracy or under benevolent dictatorships. Proponents of the former opine that it is a natural system whereby everyone posses the freedom to debate issues openly. On the opposite end of the spectrum, opponents claim that such system only invites dirty politics into the economic picture. 

The bone crunching debates among Democrats and Republicans regarding the extension of theUSdebt ceiling by $2.4 trillion has brought this issue sharply into international focus. While personal egos and filibusters continue to rampage through the halls of the US Congress, the world equity markets are paying the ultimate price with stock values plummeting. A CNBC anchorman commented that, “the congress should stop the Kabuki Dance and put real leadership forward”.

Yes, the debt debacle inAmerica, which has reached $14.3 trillion, has caused quiet a stir in the world economy. Its delay has caused stock markets worldwide to slide for five consecutive days. Being the largest economy in the world, the delay in extending theUSdebt affects the entire world, includingPalau. The $250MM compact II funding can be delayed and Palauan recipients of entitlements, such as Social Security and VA benefits, will not get their checks. Senator Diaz, VA beneficiary himself, will find this a breach of fiduciary responsibility.

Many average Joes acrossAmericaand businesses around the world wonder how theUSpoliticians can place their party politics ahead of the interest of the entire world. Why so few bickering adults subjugate the world’s financial system so close to Armageddon?  Why has democratic “chicken game” become imperious to economic realities and the needs of the masses who voted them into office in the first place.

All the while, the Chinese are watching the American politicians holding the world economy captive. In the privacy of their mental dialogue, they probably say, “democratic governments are poor allocators of capital and lousy stewards of world resources, particularly the common man”. In time, history may just prove the Chinese have a better free market system guarded by one non-bickering party. After all, their metrics is proving them right.China’s economy grew by 9% last quarter and they lent $1.4 trillion to theUS.America’s economy grew by a trivial 1.7% last quarter and they are now finding themselves quarrelling over a mountain of debts.

The lesson in all this is that, people should not bear the brunt of political posturing and the economy should never be the captive of political “chicken fights”.


2 Comments to “Political Posturing And The Economics Of Democracy”

  1. Good article. Let’s not forget that this global recession that’s in front of us is an aftershock of the the Great Recession caused by the free market system that we love deadly (2007,08 wallstreet and their greedy financial derivatives). China on the other hand, along with Brazil and Germany managed to fight through with their centrally planned economic policies (maybe not so much Germany but still).

    What’s happening to the U.S. Is similar to Britain in the 19th century. This last global recession has shown us that neo-liberal policies do not work anymore. Multinational corporations are too big to fail and the global economic fabric is interconnected than before. Thus, the Chinese do offer an alternative: a balance between capitalism and a centrally planned economy, minus all the human rights violations and infringement on personal privacy of course. It’s not the perfect model but at least it points to it.

    John Locke couldn’t survive in today’s world where resources are running out.

  2. I meant Adam Smith and his invisible hand. Locke too.

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