Political Economy of rhe US - Essay Example

Running Head: POLITICAL ECONOMY Political Economy Political Economy Introduction The 1990s were the time of the United s’ vigorous economic performance. Indeed, it was in the 1990s that the United States performed the role of the engine for economic growth at the global level. Specifically, output grew rapidly along with employment; respectively, unemployment was low as was the inflation; the rapid development of information technologies brought benefits to the U.S. service-producing industries and propelled productivity, and the U.S. market played the key role in the economic recovery promotion thanks to its openness. However, the situation radically changed in 2001. With the sudden failure of the capital spending boom, the U.S. economy found itself in hard times. Fuelled by a number of serious economic challenges, the present recession seems to be long and quite drawn out. This paper examines some economic challenges faced by the U.S. today, both domestically and internationally. It is based on the review of a range of peer-reviewed articles in the field that focus on various aspects of the U.S. economic challenge. The paper identifies some common themes in the sources explored, as well as attempts to provide solutions to the questions raised. Inflation and Budget Deficit as Major Economic Challenges A well-known American economist Shapiro says that inflation is one of the signs of the economic system’s lack of capacity to handle its copious responsibilities. He defines inflation not as a purely economic problem, but above all the problem of social and political origin. Shapiro writes, “To understand the basic underlying causes of inflation, we must ask ourselves why our government has persisted, through Democratic and Republican administrations alike, in making the political choice of running large budgetary deficits and financing these, in part, by increasing the supply of money.” (Shapiro, 1981, p. 145). Therefore, combating the inflation is inseparably linked to overcoming the budget deficit, which has grown enormous in the last decades. Shapiro explains that the current inflationary policies are not the result of incompetent governmental acts. They rather illustrate the response of the government to the pressure on the part of those constituents that demand increasing and additional benefits from the government, yet do not want to accept tax increases. Additionally, the current inflationary policies are illustrative of legislators’ wish to avoid dislocation costs of risen unemployment and reduced output which could be the result of a policy less inflationary (Shapiro, 1981, p.144). Weakening of the Science and Technology Capacity and Job Outsourcing In his research “Science, Technology, and Intellectual Property Rights in American Foreign Policy”, Mendis explores how strengthening the science and technology capacity will benefit American economy both domestically and internationally (Mendis, 2004, p.26). Mendis examines the impact of science and technology development on a variety of areas of human life and exploration, including economy. To specify, he analyzes the role of S&T in terms of its adding commercial value to the American economic growth thanks to its innovations, addressing most important research fields in environment as well as biodiversity, HIV/AIDS and more contagious diseases, safety in chemical terrorism along with biological terrorism, nuclear energy, nanotechnology, and medical applications – areas of transnational importance. Mendis claims that the United States hold the S&T leadership, while he also acknowledges the need to move beyond the existing reality and adopt measures of strengthening the American capacity in both technology and science. Seeing the development of the state-of the-art technologies and finding innovative technological solutions as a thing that promotes America’s trade on the international level, Mendis places the objective of enhancing this field through so-called “investment” strategies into the developing countries, as well as the former USSR’s states as the first and foremost priority. To add, he views this approach as the one that will surely benefit the U.S. economic policy goals (Mendis, 2004, p. 18). Analyzing this approach to strengthening the science and technology capacity of the state, one should definitely mention another challenge that arises here. This is job outsourcing. To specify, most science and technological research for the major U.S. corporations is done by white-collar workers from the Russia, the Philippines, China, India, etc. This is caused by the fact that highly qualified and competent workers from these countries work for lower wages than their U.S. counterparts, which is convenient for American firms. As a result, the latter are becoming more and more prosperous. At the same time, this situation leads to huge losses in the domestic market and badly influences the overall domestic economy. Active Foreign Policy as an Economic Challenge In his “Need for an Active Foreign Policy”, ex-President Bush states that in order to maintain the economy on the level of the “mild recession” (which is comparatively better than the possibility of “deep depression” that the U.S. economy is faced with), the United States should keep control of the oil market. Active foreign policy here means “liberating”, “resisting”, “defeating”, “protectionism”, etc., which leads to certain economic benefits (Bush, 1992, p.211). In the light of the recent warfare in Iraq and Afghanistan, these claims seem dubious. Thus, Bush’s “excerpts of remarks from the Nixon library dinner” published under the title of “The Need for an Active Foreign Policy” should be interpreted in a reverse manner, since it seems even average American citizen understands that these wars kill the welfare of ordinary people and negatively influence the American economy. Climatic Changes as Economic and Security Challenges Global changes in climate caused by the greenhouse effect lead to grave economic consequences. The U.S. with its slow reaction to climatic changes in favor of economic prosperity risks losing much more by avoiding adopting adequate legislation. Fear of cutting off manufacturing responsible for the carbon dioxide emissions and income growth may pay back by a string of natural disasters which occasionally take part in various parts of the world (Japan and Haiti are just two examples) and have an irreversibly negative impact even on the prosperous economies, like Japan. Besides, climate changes are likely to cause scarcity of resources, which will predictably lead to conflicts over food, water, etc, both on domestic and international levels (Lewis, 2009, p.1198). Developing this view, Ponzio says that the serious climate change poses a threat to biosphere and “if not soon addressed, deforestation, ozone depletion, desertification, ocean degradation, topsoil destruction, rapid species loss, and the underlying engine of global population growth would likely lead to conflicts over scarce resources ... mass migrations with incalculable consequences for developed and undeveloped nations alike... [and] spirals of... social, economic and environmental collapse....” (Ponzio, 1996, p.149). In this context, the U.S. efforts in reducing the effects of climatic changes are minimal. It rejected the Kyoto protocol and has not developed a viable framework for handling its domestic impact on climate through. Thus, the need of strong anti-warming legislation is urgent. The latter should focus on how to reduce carbon emissions by decrease in manufacturing and not to put a tough economic burden on an average American citizen. Also, the focus should be on using more alternative sources of energy rather than those that produce toxic wastes, etc (Eizenstat, 2009, p.9). Consequently, the economic development needs to gradually change its focus from dominant growth and models of maximum production towards alternative modes simultaneously providing encouragement to resilience (Brooks, Gist, & Brown, 2009, p.741). Economic Inequality and Family Hardships Economic inequality is best traced through differences in economic outcomes for non-whites. White & Rogers assert that racial differences in unemployment and income are great. They make up a persistent portrait of American class structure. In particular, economic well-being is closely linked to problems of marriage and race (White & Rogers, 2000, p.1047). In this context it is worth mentioning that handling economic inequality should first of all be directed at single-mother families, which have been recognized the households with the highest poverty level. In addition, the problem of family hardships is worsened by the fact that there is a tendency for manual jobs to be paid worse with each next year, while the demand for white-collar workers, especially, with the college/university education, is rising. Hence, economic inequality turns into social inequality, which undermines the very notion of a democracy. This once again points at the fact that dealing with the economic hardships in American families, especially of the representatives of non-white races, is a primary objective if one wishes to ensure economic stability. Competitiveness as an Economic Challenge Competitiveness is another economic challenge that US policy makers have to deal with. National economic competitiveness along with sustainability, as suggested by Sahlberg and Oldroyd, are the key factors of the nation’s prosperity and development (Sahlberg & Oldroyd, 2010, p. 284). Given adequately educated and highly qualified human capital, the United States may increase their competitiveness in the labor market. Sahlberg and Oldroyd consider education one of the pivotal drivers of the development of human capital and, respectively, of the economic competitiveness of every nation. In their interpretation, it is related to quality enhancement, providing broader access, as well as better mobility. In addition, it is inseparably linked to considering what kind of education has to be maintained in order to cultivate qualities necessary in a “sustainable knowledge society” (Sahlberg & Oldroyd, 2010, p. 285) Providing Adequate Health Care as an Economic Challenge Despite the efforts of Obama administration to improve the situation with the health reform, health issues are still one of the most painful issues of American society. Costs is the major reason of insufficient health provision for the poor class. Yet, as Lester, Benfield and Fathalla argue, it should be the key priority for the developed nations to ensure access to basic medical services. Thus, it is understood as an economic challenge: how to spend necessary financial resources and to adequately address the problems of health care for the needy. For example, women’s health needs serious attention as illustrative of the state’s development level (Lester, Benfield and Fathalla, 2010, p.2081) Transnational Terrorism as an Economic Challenge In the article “Economic Globalization and Transnational Terrorism: A Pooled Time-Series Analysis”, Li and Schaub explore the link between levels of transnational terrorism and economic processes within and between states. In particular, the scholars contest the widely accepted view that economic integration and globalization are the cause of transnational terrorism increase. It is asserted that economic globalization and openness are part of the solution to handling the issue of terrorism which the USA is currently facing. Besides, economic development and reduction of poverty are important for coping with the problem (Li & Schaub, 2004, p. 254) Relationship with China as an Economic Challenge Just as China has grown into one of the most powerful economic nations in the world, it changed the economic map. In particular, China’s economic strength has turned it into the key player in the Asian market. This requires rethinking of the U.S. policies and directions of partnership in the conditions of the global crisis. To illustrate, Overholt in his “China in the Global Financial Crisis: Rising Influence, Rising Challenges” writes, “Washington and Beijing could make big decisions and deploy vast resources in a focused way” (Overholt, 2010, p. 33). Conclusion To sum up, this paper has discussed the overall economic challenge the United States is facing today, focusing on both domestic and international issues. Economic recession and global crisis, lack of finance and budget deficit, as well as economic needs of population and necessity of new legislation and reforms are common themes for the challenges examined. Each of the challenges has been examined in relation to the possible solution in the present circumstances. Yet, the list of economic challenges could be extended: with the problems in the housing market, challenges of illegal mass immigration, etc. References 1. Brooks, N., Grist, N., and Brown, K. (2009) Development Futures in the Context of Climate Change: Challenging the Present and Learning from the Past. Development Policy Review, Vol. 27, No. 6 (2009), pp. 741-765. 2. Eizenstat, S. (2009) The U.S. Role in Solving Climate Change: Green Growth Policies Can Enable Leadership Despite the Economic Downturn. Energy Law Journal, Vol. 30, No. 1, pp. 1-9. 3. Lester, F., Benfield, N., and Fathalla, M. (2010) Global Women’s Health in 2010: Facing the Challenges. Journal of Women’s Health. Volume 19, Number 11, 2010, pp. 208-2089. 4. Lewis, J. (2009) Climate change and security: examining China’s challenges in a warming world. International Affairs International Affairs, Vol. 85, No. 6 (2009), pp. 1195–1213. 5. Li, Q. and Schaub, D. (2004) Economic Globalization and Transnational Terrorism: A Pooled Time-Series Analysis. The Journal of Conflict Resolution, Vol. 48, No. 2 (Apr., 2004), pp. 230-258. 6. Overholt, W. (2010) China in the Global Financial Crisis: Rising Influence, Rising Challenges. Washington Quarterly, Jan 2010, pp. 1-34. 7. Ponzio, R. (1996) Beyond 1995: Negotiating a New United Nations Through Article 109. World Affairs, Winter/Spring1996, pp. 149-156. 8. Sahlberg, P. and Oldroyd, D. (2010) Pedagogy for Economic Competitiveness and 9. Shapiro, H. (1981) The Social and Political Challenge of Inflation: an Economist’s View. Journal of Law Reform, Vol. 14, No. 2, (Winter 1981), pp. 143-147. Sustainable Development. European Journal of Education, Vol. 45, No. 2, 2010, Part I, pp. 280-299. 10. White, L. & Rogers, S. (2000) Economic Circumstances and Family Outcomes: A Review of the 1990s. Journal of Marriage and Family, Vol. 62, No. 4 (Nov., 2000), pp. 1035-1051. Read More