There is no doubt that the fiscal cliff tug-of-war, in the short term, is not good for brand America. A country that is supposed to be an economic leader should not put its partners, let alone global markets, through this kind of uncertainty. The event does contribute to the primacy of politics over economics, which is a theme of the period we’re in. It comes after the twenty years when economics clearly drove political thinking. (See China’s accession to the WTO, for instance).
But there is a time warp in parts of American politics. The core of Tea Partiers and anti-tax advocates still operate under the assumption of the US’s undisputed power and influence. The genius of the Obama Administration is to recognize that the US is facing vastly changed economic circumstances today than two decades ago, and it’s positioning the US economy accordingly.
Not only two decades of so-called “free trade” have helped spur growth in and competition from nations like China, Brazil, India and Indonesia. But the nature of the global economy has changed too, with products and services on offer across borders. The brain race is well and truly underway. Obama understands this.
But it’s worth noting a couple behind the scenes trends highlighted by the fiscal cliff drama.
1) It shows that the US is serious about its debt problems.
2) The fact that Republican House Speaker John Boehner suffered a revolt by Republicans over his Plan B, shows the Republican party is increasingly in disarray. What’s important is that whatever platform is rebuilds itself around takes into account the vastly different situation the US finds itself in now compared to the early 1970s when it last created an image of itself.
3) The Republican instransigence also highlights the last-standism of parts of the white America. This is difficult to write about for the mainstream media but there is an element of right wing behavior which traces back to the culture of the Lost Cause of the South’s defeat from the US Civil War, mingled of course with rigid views on religion and race.
For these Americans it’s a matter of honor to fight to the end. Make no mistake, these are the Americans who conquered the frontier. They fought to the death at the Alamo. If you’re in combat, you want these guys by your side. But during negotiations about the finances of the USA, they don’t understand the basic ingredient of American democracy: compromise.