Monday, February 1, 2010

The US two-party democracy model

Never heard that before
Feb 01, 2010

AS A political barometer, the Davos World Economic Forum usually offers up some revealing indicators of the global mood, and this year is no exception. I heard of a phrase being bandied about here by non-Americans - about the United States - that I can honestly say I've never heard before: "political instability".

That phrase is normally reserved for countries like Russia or Iran or Honduras. But now, an American businessman here remarked to me: "People ask me about 'political instability' in the US. We've become unpredictable to the world."

People at international conferences love to complain about America. But in the past, it was always done knowing that America was this global bedrock that could always be counted upon to lead. This time it is different.

This year, Asians and Europeans, in particular, pull you aside and ask you some version of: "Tell me, what's going on in your country?"

We're making people nervous.

You can understand why foreigners are uneasy. They look at America and see a President elected by a solid majority and controlling both the House and the Senate. Yet, a year later, he can't win passage of his top legislative priority: Health care.

"Our two-party political system is broken just when everything needs major repair, not minor repair," said Mr K R Sridhar, founder of a fuel cell company. "I am talking about health care, infrastructure, education, energy. We are the ones who need a Marshall Plan now."

Indeed, speaking of phrases I've never heard here before, another goes like this: "Is the 'Beijing Consensus' replacing the 'Washington Consensus?'"

"Washington Consensus" is a term coined after the Cold War for the free-market, pro-trade and globalisation policies promoted by America.

As Ms Katrin Bennhold reported in The International Herald Tribune this week, developing countries everywhere are looking "for a recipe for faster growth and greater stability than that offered by the now tattered 'Washington Consensus'. And as they do, "there is growing talk about a 'Beijing Consensus'".

The Beijing Consensus, says Ms Bennhold, is a "Confucian-Communist-Capitalist" hybrid under the umbrella of a one-party state, with a lot of government guidance, strictly controlled capital markets and an authoritarian decision-making process that is capable of making tough choices and long-term investments, without having to heed daily public polls.

Personally, I wouldn't give up on the Washington Consensus so fast. The reason it is ailing is not because of its principles. It is failing more because of, well, Washington.

It was hard to read President Barack Obama's State of the Union address and not feel torn between his vision for the coming years and the awareness that the forces of inertia and special interests blocking him - not to mention the whole Republican Party - make the chances of his implementing that vision highly unlikely. That is the definition of "stuck". And right now we are stuck.

The sad and frustrating thing is, we are so close to being unstuck. If there were just six or eight Republican senators ready to meet Mr Obama somewhere in the middle on deficit reduction, energy, health care and banking reform, I believe that the President would indeed meet them in that middle ground to forge not just incremental compromises, but substantial ones on these key issues.

It is a shame because here we are as a country scrounging around for a few billion more dollars of stimulus, when the biggest stimulus of all is hiding in plain sight. And that is ending our political paralysis and the pall of uncertainty it is casting over everything from the cost of my health care to the way our biggest banks can do business.

If the two parties could get together and remove the growing sense that our country is politically paralysed, you would not need another dime of stimulus money. Investment and lending would take off on their own.

If, however, the two parties continue with their duel-to-the-death paralysis, no amount of stimulus will give us the sustained growth and employment we need.

[Perhaps Friedman is right and it is just the fault of Washington, but then again, perhaps it is precisely a two-party system that tends to engender polarity and partisanship. And that it would take remarkable statesmanship and a commitment to a higher purpose for a leader to "reach across the aisle" and build bridges instead of burning them. It may well be that Obama is not a product of such a system, but an exception to the rule. ]

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