Does the world recognize problems ahead for business in America?
*The Economist, May 28, 2009
“In his zeal to fix capitalism, Barack Obama must not stifle America’s dynamism
DEFENDING American capitalism these days is a thankless job. Reckless lending by American financiers produced a crisis that has pushed the world into its worst recession since the 1930s. Tales of greed and fraud during the boom years abound.
Small wonder that although Americans still prefer their government neat and local, they are a little less hostile to federal activism these days. Such sentiments, last November, helped propel Barack Obama into the White House and his Democratic Party to bigger majorities in both houses of Congress. As Rahm Emanuel, the president’s chief of staff, says, Mr Obama does not want to waste this crisis. He is using it to create a bigger role for government throughout the economy, from education and health care to banking and energy.
He, and Congress, risk overreaching. America has experienced a failure of finance, not of capitalism. Its broader economy remains an astonishing Petri dish of creative destruction. Even in boom times, 15% of American jobs disappear each year. Their places are taken by new ones created by start-ups and expansions. This dynamism remains evident today, amid the most crushing economic conditions most businesses have encountered. As icons of consumer excess like Starbucks and Neiman Marcus stumble, purveyors of frugality like Burger King and Wal-Mart prosper. Americans are adept at finding opportunity in adversity.
Where government helps
The American economy is dynamic because Americans like it that way, even now. A Pew poll released on May 21st found that 76% of Americans agree that the country’s strength is ‘mostly based on the success of American business’ and 90% admire people who ‘get rich by working hard.’ These proportions have changed little in two decades, and they tend to produce government policies that make America, according to the World Bank, consistently one of the best places to do business.
Yet Mr Obama—and, even more, his Democratic allies in Congress—could do lasting damage to this marvellous machine.”
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