US Debt Wranglings

The last six weeks have been torture watching the republicans and the democrats argue about raising the debt limit of the United States.  While the politicians haggled, the world markets tumbled with the prospect of a downgrade of Americas triple a rating hanging over their head. 

The ongoing debate has brought into focus two clear issues. First of all it highlights the significant ideological differences that exist between the two parties.  The Democratic Party has a philosophy that includes the idea that those who earn more should contribute more to the government by means of higher taxes.  It also believes that government must have in place programmes that provide a safety net for the poorest in society or to assist those going through challenging times.  The problem with these aims is that governments rarely do a good job of managing these projects resulting in inefficiencies and fraud taking place.  In the USA Medicare fraud is a huge multi billion dollar industry which is often times perpetrated by large criminal organizations within the country.  Social security has the disadvantage of encouraging persons to stay home and collect welfare.

The Republican Party on the other hand believes that the state should provide incentives and tax breaks to the wealthiest that will then invest in productive enterprises and create jobs.  They also believe that government should be small in size and have as few social programmes as possible.  This approach has a drawback in that providing tax breaks to the rich does not result in more investment but simply puts more money in the hands of the wealthy few.  In addition those most at risk in society are left to fend for themselves.

The second issue that has been raised by the debate is the realization that the continuation of the United States as a world power is at risk.  The years of borrowing to finance consumer purchasing has finally caught up with them and the reality has set in that they can no longer afford to live beyond their means.  Countries like Jamaica which have traditionally looked to the US as their main market now need to consider other markets.  The emerging powers in the world are the countries of China, India and Brazil and we have to diversify our offerings to take advantage of this.  Unfortunately only one of these countries, Brazil, is in close proximity to us.

The world economic power is shifting and the world needs to change with it.  Jamaica could learn many lessons from observing the past debate.  When a country is divided it is impossible to move the economy forward.  Too often our leaders talk about bipartisanship but the reality is that the self interest of the party usually takes precedence over what is best for the country.