As the drama unfolds in the United States over the extension of debt limits and the conflict between the Republican controlled House of Representatives and the Democrat Senate and White House, observers have become fixated on the outcome as it relates to the ability of America to meet its financial obligations. At issue is the price being extracted by the House for increasing the debt limit and a demand for meaningful and real cuts in federal expenditure and tax reform that would simplify the tax code, close exemptions, lower rates and broaden the base.
As we are regaled by TV announcers and talk show pundits on the rapidly changing kaleidoscopic scene the focus is on mechanisms of the legislative process and the power plays between individuals. While this makes for good theatre, it seems to me that the larger picture is being lost and that the fundamental argument about the role and size of government and its relationship with those that it governs is not part of the script. That is most unfortunate for it is the role of government that is the single most important factor in the health of the American economy of the future.
Today, this debate is probably the most vigorous of its kind in the past century where liberals espouse an ever more statist view of government while their opponents point to the stifling effect that it has on economic growth, innovation and risk taking that has been the driving forces of the US economy.
On one hand there is an argument for expanding the role of government in an increasingly complex economy to ensure orderly growth, protection of consumers and the environment and in the provision of social safety nets. On the other, many have come to the conclusion that government has become too intrusive and society over regulated with well intentioned programs becoming fertile fields for corruption and waste. The evils of unintended consequences swamp the benefits and escalate costs way beyond the imagination of the original concepts.
When it comes to the private sector, business leaders seem to fall into two broad categories, those that embrace corporate welfare and feast on the special benefits of the federal trough, and those who recognize that the large successful businesses that they founded a generation ago would not see the light of day in today’s regulatory environment.
Today’s drama will be played out over the next 16 months and will factor heavily in the outcome of the elections of 2012.
Perhaps it is time for us in Barbados to engage in a long overdue discussion about the role of government in a modern day Barbados, one that is largely unrecognizable from the Barbados of 50 years ago. There needs to be a greater focus on the creation of wealth and an expansion of opportunity. We pay lip service to creating an entrepreneurial society and then avail ourselves of every opportunity to stifle creativity, innovation and individual expression while constructing barriers to entry.
It is time that government sees its role as a facilitator to encourage economic activity and diversity while at the same time reducing the size of the government and eliminating programmes that no longer serve any useful purpose. In doing so we could start on the principle of last in first out and abolish the constituency councils that add much cost and little value.
We clearly have our own debt crisis with a rapid and unprecedented expansion of deficit spending over the past few years. We should not fall into the trap of curtailing current expenditure by accepting commitments of a much greater magnitude that will fall due at a later date. The post Kadooment budget should be of great interest to us all.
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