My Pandora always defaults to Led Zeppelin, and it seems as if the political system in the country always defaults to the “ignore the real issues and hope for better times” option. That is exactly what the administration and congress did last week when they punted, and failed to make any real budgetary changes when they raised the debt ceiling.
This is exactly what we predicted would happen over a month ago.
Following the government’s punt, one of the bond rating agencies – Standard & Poor’s – responded by announcing that the American political system appeared to be broken, and therefore, the country’s credit rating should be downgraded. The other two major ratings agencies – Moody’s and Fitch – reaffirmed their AAA bond ratings on US sovereign debt.
Giving credit to Paul Krugman, (a man whom I agree with on economic issues about as often as I do Mahmound Ahmajinedad) S&P, Moodys and Fitch all have about as much credibility in their take on bonds as I do on my take on astro-geophysics. Come on, all three of these supposed wizards gave the same risk factor to a 4-year adjustable non-recourse mortgage as they did to a 30-year fixed mortgage with a 30 percent down payment. As such, I do not think that the current dislocations in world financial markets have much at all to do with the downgrade. I do; however, believe that investors are reacting to the inability of any Western political leader to step up to the plate and eat their peas.
This is not a new phenomenon, and I think it is a reflection on society, not on politicians. It is true that political parties, and elected officials play on the base instincts of the electorate, but it is also true that electorates throughout the democratic world keep returning the same people to office year after year after year. Therefore, the politicians must be representing what their constituents want, and that is the real problem with the world economy.
Since a market based economy is simply one of contracts between buyers and sellers, Capitalism relies on a couple of basic ground rules in order for the system to work. One of these is that both buyers and sellers are responsible for their actions. If a supplier fails to provide what was promised, then I should not have to pay, and may even be eligible for some sort of restitution. Likewise, if someone provides me with a good or service, I am obligated to pay them in a timely manner. In this system, both parties are “personally responsible” for their actions. Unfortunately, in the western world, we have given up on the idea of personal responsibility. Today, the government has taken responsibility over our health care decisions, over how we discipline our children, over what we choose to eat, drink or smoke, even over the kind of transportation we wish to use. We as citizens have surrendered many of these decisions and obligations to our governments.
When we ourselves cannot take responsibility for our own behavior, how can we expect our representatives to be any different? The economic problems faced by the major western economies pale in comparison to problems that we surmounted in the past. The recent recession was bad, and many of our fellow citizens are suffering, but we are not facing a depression, not facing a dustbowl, and not facing a destroyed and bombed out land.
What we are facing is a complete inability to take responsibility for problems; and until we as a citizenry are willing to do that, our politicians will continue to go sliding, sliding, sliding through.