Just got back from vacation and spent a fair bit of time listening and watching the US news. I have always been a tremendous admirer of the USA. I love their entrepreneurship and as a marketer have always loved the marketing that comes out of the USA. So it with great sadness that I see a great nation losing some of its luster for reasons (i.e. the debt ceiling) that are baffling.
Why does a country that produces the greatest business persons, entrepreneurs, scientists, entertainers’ athletes etc. produce such mediocre politicians?
While listening to the woes of the USA over the past few weeks it made me think about one of my favourite songs.
In the autumn of 1971 Don McLean’s American Pie entered our collective consciousness, and many years later remains one of the most discussed popular music ever produced. A cultural event at the peak of its popularity in 1972, it reached the top of the Billboard 100 charts in a matter of weeks, selling more than 3 million copies; and at eight and a half minutes long, this was no mean feat. This was no ordinary song. What set American Pie apart had a lot to do with not totally understanding what the song was about, provoking endless debates over its epic cast of characters. But however open to interpretation the lyrics may have been, the song’s emotional resonance was unmistakable: McLean was clearly relating a defining moment in the American experience—something had been lost, and most Americas at the time knew it. Opening with the death of singer Buddy Holly and ending near the tragic concert at Altamont Motor Speedway, Americans were able to frame the span of years the song is covering—1959 to 1970—as the “10 years that the USA had been on their own.” It is across this decade that the American cultural landscape changed radically, passing from the relative optimism and conformity of the 1950s and early 1960s to the rejection of these values by the various political and social movements of the mid and late 1960s.
Coming as it did near the end of this turbulent era, American Pie seemed to be speaking to the precarious position the USA found itself in, as the grand social experiments of the 1960s began collapsing under the weight of their own unrealized utopian dreams, while the quieter, hopeful world receded into memory. And as 1970 came to a close and the world this generation had envisioned no longer seemed viable, a sense of disillusion and loss fell over the USA; Americans weren’t the people they once were. Source
Sound familiar? Again America is going through a major transformation.
I used to think America would solve its problems, after all else failed. Now I’m not so sure. The political class is looking more dysfunctional than ever. You can’t help but be depressed by the game of debt-ceiling chicken being played in Washington.
“The only thing that unites the Democrats and the Republicans in Washington today is their mutual desire to suppress the truth. Nobody wants to come clean about how deep the fiscal hole really is. None of the players trying to negotiate a deal has anything to say about entitlement programs such as social security, Medicare or Medicaid. Together, these account for more than 40 per cent of all federal spending. All sides are silent on what Robert Bixby, executive director of the non-partisan watchdog group Concord Coalition, calls the underlying structural deficit. Even the toughest version of the deals on the table will shave less than one-half of 1 per cent from the entitlement spending that’s mandated over the next 10 years”. Source
What is really troubling is the impact that the Tea Party has on the country’s politics. For the record I am a strong proponent of people having a voice in politics but there is always a danger when you let a “squeaky wheel” overpower all other opinions.
Very few sensible people support spending money you don’t have; this is true in running a government as well as running a family budget or a business. But anyone who seriously believes that the USA will be able to significantly reduce their debts and deficits without generating more revenue is “dreaming in Technicolor.”
For example almost half of the U.S. federal budget today is accounted for by Medicare, Medicaid and Social Security. If nothing changes, these three programs will consume more than 100 per cent of the U.S. budget in 25 years’ time. PIMCO bond king Bill Gross argues the U.S. situation is actually much worse, when one includes the unfunded liabilities of Social Security ($8 trillion), Medicare ($22.8 trillion) and Medicaid ($35.8 trillion). Silicon Valley venture capitalist Mary Meeker calculated the balance sheet for the U.S. if it was a company, and estimated that USA Inc. presently has a negative net worth of $35 to $40 trillion.
This is clearly unsustainable and is why there must and will be major cuts to social programs in the U.S. in conjunction with significant tax increases. Source
Winston Churchill once quipped that “the United States invariably does the right thing, after having exhausted every other alternative.”
I wish my American friends well as they are going through a rough patch and hope sanity and common sense will prevail among their politicians during this very difficult time.