Political Uncertainty Amid Economic Chaos
October 6, 2008
In their wildest dreams, the scheming terrorists behind the 9/11 attacks, could not have hoped for a more ominous situation than what confronts Western capitalist societies just seven years later. The G7 has entered its most synchronized economic downturn in over 30years. The international financial system is in disarray and will need sweeping changes and rebuilding. Increasingly bold initiatives to stabilize the problem are providing rapidly diminishing market support. The long-term outlook for public finances has taken a huge turn for the worse, and Bin-Laden is still on the loose. Economic data today picked up from the awful trends of last week: Canadian building permits plunged 13.5% in August, and British new car sales were 21.2% lower in September than a year earlier.
In the middle of all of this, confidence in political leadership is very low and sinking in the United States, Great Britain, Japan, Germany, France, and Italy. Canadian and U.S. voters go to the polls one week and four weeks from tomorrow. The vote in Canada will likely result in another minority. The U.S. outcome remains uncertain as to outcome and even more unclear as to what monetary, tax, spending, banking, and regulatory policies will be pursued by the new Federal Government, not to mention during the transitional 2-1/2 months to January 20th. It would be constructive if McCain and Obama were to reveal the people, whom they plan to nominate as key economic advisors as soon as possible and before Election Day, but that is very doubtful, because of the long vetting process. Meanwhile, plans for snap elections in the U.K. and Japan were scrapped because of worsening approval ratings for the incumbents.
The United States will be getting only its third president in 16 years. Since the first Clinton inaugural, Japan and Italy have had eleven and eight prime minister, while Canada experienced five different leaders. Britain, France and Germany have each been led by three people over the past 16 years. Revolving door politics is usually a sign of weak government, but it does not follow that having few leadership changes is associated with effective and good government. When markets flounder and leadership approval ratings are very weak, it is a vote of no confidence in the incumbent government but also a barometer of rising doubts that democracy and capitalism are an optimal framework for solving communal and individual problems. Digging out of the current hole will require inspiring, smart, emotionally stable, honest, and politically savvy national leadership in the government and private sectors. The spotlight is on the United States because it faces near-term change and has been a military and economic superpower, but better decision-making will be imperative from all the G7 governments to tackle a globally shared crisis. At the current juncture, a great deal more than economic well-being and the West’s fight against terrorism is at stake.
Tags: G7
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