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The emergence of a more or less fungible world labor market means that Western wages will continue to be pulled down by the 2 billion potential new workers in China and India. The instantaneous movement of capital worldwide puts grinding pressure on Western employers and employees to be ever more productive. The deleveraging of excess debt, both public and private, in the U.S. and the West also is probably going to continue to create economic agony for more than a decade.
Once it becomes understood by Western politicians that incumbency is likely to lead to defeat, not re-election, a positive side effect is likely to be bold, even desperate policy initiatives by incumbents.
President Obama may be the last American president (for the duration of this anti-incumbent epoch I am predicting) who will permit himself to be stuck in a passive condition and assume that the trappings of incumbency will naturally lead to his re-election.
Whether they are socialist or free market politicians, we are likely to see them press hard for more vivid versions of their policy proposals. Kicking the can down the road will be seen as risky — not safe — politics. We are just beginning to see hints of this on the Medicare issue.
We should also expect to see ever-stronger third parties. This is already happening in Europe, which does not have the strong two-party tradition we have in the United States. But it will happen in the U.S. as well — and sooner than we expect.
These third parties are likely to have eclectic policy combinations. For example, the fast emerging True Finn Party in Finland is a mix of cultural (ethnic/religious) conservatism and hostility to the European Union, but pro-social benefits for Finns. The hallmark of third parties will be nationalistic and “do what it takes” economically to protect the middle class from the global pressures.
If we are lucky, here in the U.S., this will be an historic opportunity for the re-emergence of a starkly de-regulated free market experiment.
President Obama has enacted in his first two years — and is in the process of politically road testing — a classic big, statist government response to economic hardship. Unless it succeeds beyond current expectation, Obama will have established a failed template — against which future economic proposals will be aggressively contrasted.
Franklin D. Roosevelt’s New Deal could never have been sold to the public in the absence of the perceived failure of Hooverism. De-regulated free markets would not be given a serious re-consideration across the political spectrum without the imminently manifest failure of the Obama model.
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