Articles

America’s Socio- Economic Conundrum

28 Dec 2007

At the dawn of the 21st century, the United States is still an economic powerhouse and the one and only superpower of this world. But its economy is facing competition from the rising giants such as China and India and as well as from its internal socio-economic differences. Its lower and middle classes are facing the economic heat, and the United States which was the world’s biggest creditor until the 1980s is now the world’s biggest debtor. Hence, it’s worth scrutinizing the United States and its socio- economy more closely.

For the most decades American economy has been one of the world’s stirring success stories. But Stagnation, deflation and recession have been much on the minds of analysts, businessman, and economists of late. Economic output has been losing its shine lately and in America , many fear that recovery has stalled and that economics may be on the brink of another downturn- the fear of recession lurks in.

Concerns about recession are understandable in the midst of white-collar insecurity and blue- collar anxiety. Even if economics are not getting worse for Americans as of now, they are, at best, improving much more slowly than in the past. So the question remains, how will they respond before it gets worse?

Budget surplus to deficit budget

It seems only yesterday when Al Gore and George Bush in their presidential debates in the year 2000 argued over how to spend America ’s anticipated $2.2 trillion budget surplus? Had it been used rationally where it mattered much, then the American economic story would have been different. But unfortunately, straight from budget surplus in the span of few years America has turned into deficit. When George Bush took office, America has a budget surplus of 2.4 percent of gross domestic product (G.D.P), and in another four years it turned into a deficit of 3.6 percent. Why this turnaround? The answer is simple. Less domestic investment in important areas while high expenses in failed missions in Iraq , and to some extent in Afghanistan .

Rising Hunger in America

“ America spends money everywhere except where it was needed much,” analysts are saying. Their analysis is acute and crude. After Sep 11th and after its war in Iraq , reports show that little had been done in research and development outside defense. Huge sum of American tax- payer’s money was used and it is still being used under the subject of defense- whether it is in strengthening the national security corridors, its war against terrorism or its lackluster war in Iraq . For many, this means the beginning of a downward spiral into poverty because more defense budget means less allocation of resources in other important sectors such as health, employment and social benefits.

Meanwhile, it is not economics that is taking heavy toll on America but it is hunger too. For instance consider this new report. More than 35 million people went hungry last year in America , according to the U.S Department of Agriculture’s latest Household Food Security report. Let me arrange this in straight and simple way: Government’s food programmes are falling short in world’s wealthiest country. And this certainly is not America we all are accustomed to.

Rising inequality in America

It is not only one thing that has gone wrong in America . America has always been and it is still a growing society but off late there has been rising level of inequality in America . The growing inequality is rampant in the economically powerful nations and most striking is the growing level of inequality in the USA , a country with the highest GNP.

Economic inequality has continued to increase in the USA since the last three decades and the ugly facades of the inequality can be seen in American socio-economic life. Problems such as growing income disparities, loss of employment opportunities, especially for women, disabled and minorities, inequality of health, education, benefits etc has been engulfing America .

According to the reports, one in eight people in the USA now live in poverty and this is an irony in itself because America is the world’s richest nation.

Falling Dollar

American is suffering and suffering much. It is fighting hard to balance its economic equation. But till date it has not been able to do so. Its currency with which it trades all over the world is losing its grip and as a result, there are speculations in the market about the dollar’s role as the world’s premier currency.

The dollar no longer fulfils the classic function of an international reserve currency and it seen my many as a non- reliable store of wealth.

“The dollar's value against the leading currencies tracked by America 's Federal Reserve has recently been at an all-time low. Against a broader range of currencies, the dollar has lost a quarter of its value in the past five years. Its decline has been especially marked against the euro. At one point in 2002 the euro was worth 86 cents; today it buys $1.48,” according to the report published by The Economist.

In international market, the rise and fall of currencies is nothing new but America dollar has suffered a serious setbacks. What frustrates American policy makers is the following report. “What lends the dollar's decline an air of crisis is that the worlds bloated currency reserves are crammed with depreciating dollar assets. Foreign-exchange stockpiles have almost tripled to $5.7 trillion since the beginning of the decade. China alone has $1.4 trillion of reserves. Japan 's $1 trillion or so make it the second-largest holder,” as revealed by The Economist.

Falling currency, whether it’s Euro against Dollar, or Dollar against Euro or Yuan, has the capabilities of making the respective nation weak, because a weak currency weakens the purchasing capacity of the nation as whole. In this mark to, the falling dollar has made the United States more vulnerable. The government has pumped dollar into the world economy so vigorously that the weak dollar can now be brought to the point of collapse in the era of soaring Euro and Yuan.

Soaring oil price

And then there is this demon to deal with. Ever soaring oil prices has been troubling America . “Higher fuel costs are the equivalent of a tax on consumers, reducing the amount of money they can spend on other things,” most Economists are saying.

Personally speaking, I think if not direct, inflation certainly is an indirect tax. It takes away along with it the privileges of the consumer. It cripples the consumption capacity of the consumer by reducing the amount of money they can spend on other important things of their choice.

Furthermore, in the midst of the rising oil prices, what if some OPEC members push oil prices up again? Traditionally, this means rise in inflation leading to financial instability. Hence, this makes it even more important than ever that American policy maker pursue sound fiscal and monetary policies. In particular they cannot afford to take relaxed attitude toward the rising oil prices and its fading dollar.

Humiliating war in Iraq

Sometimes in the near future, when historians tell the exact story of America’s war in Iraq, they will have to acknowledge that the war was not its most glorious moment, it was another Vietnam or much worse than Vietnam, given the magnitude of humanitarian and economic loss. In the United States , political pundits and ordinary folks are vocally condemning the embarrassing lack of progress in a military campaign which was supposed to destroy or severely deter the network responsible for making Iraq a living hell. Instead of boasting that the situation in Iraq is under their control-as the Pentagon had claimed a few days after the bombing started- the Defense Department has now admitted that the enemy had proved to be tougher than expected. What does this all sum of to? Only four words are needed to sum it up: Lack of strategic planning.

Immigration’s Dilemma

America is the land of immigrants. One in eight people living in the United States is an immigrant, according to the Report published by the Center for Immigration Studies. In total it has been reported that there are about 1.3 million illegal immigrants in this country. But is America the best country to immigrate. The debate can go on and on. And is America being good for the immigrants. But it seems that it is not taking the immigrants issue seriously, and if it does this, then it is making a grave mistake because America is built by the immigrants and their role cannot be redeemed.

The immigrants have their own story of suffering and frustration to tell but yet large numbers of people from all over the world are immigrating to America. For instance, the report published by the Center for Immigration Studies in Washington stated that Immigrant families account for almost three-quarters of the increase in the uninsured in the past 15 years and Immigration over the past seven years was the highest for any seven-year period in American history, bringing 10.3 million new immigrants, more than half of them without legal status.

This report presents before us, the tragic picture of the Immigrants in the United States. So let me quote some of the major findings from the report.

“About 30 percent of all immigrants and their children lack health insurance, compared with 13 percent of native-born Americans. One of every three uninsured people in the country is an immigrant or a young American-born child with at least one immigrant parent, according to Steven A. Camarota, director of research at the center which is known for its immigration reduction advocacy.

Furthermore, according to Mr. Camarota, about 31 percent of immigrants over 25 years old, both legal and illegal, have not completed high school compared with 8.4 percent of American citizens. Among adult Hispanic immigrants, nearly 51 percent do not have high school diplomas, he revealed furthermore.

Whatever his finding reveals or whether we agree to his findings or not, it is completely left upon us to do so, but Mr. Camarota though his center advocated reduction in immigrant has presented before us the sordid statistics of the immigrants. It is not yet known, whether the immigrant themselves are to blame for this uneven statistics or is the state to blame or is it the American Immigration policy that commands the lions share of indictment.

Meanwhile, it is not wise to blame America because America is trying and trying hard to accommodate the immigrants and give them benefits. For example, the report found that about one-third of immigrant families received some kind of public assistance. These developments are encouraging. Yet they have not been sufficient to resolve the difficulties of the severely indebted, low income immigrant families.

Having said so, America must do more to solve the Immigrants quandary as it is the number one issue in America , as exemplified by the ongoing presidential debates. America though it is open to immigrants must do more for them and their wellbeing but the available evidence suggests that America does not provide an optimal model for balancing their freedom with regulation. The policy and system that prevails there is too weighed down with over-regulation and over- control. There is too much protectionism. There is too much bureaucracy.

Public indolence to private distress

Rising oil prices, rising hunger, inflation, its war in Iraq and the immigration dilemmas are the major problems of the America but none of these has the gravity to match the problem which I as a neutral observer has spotted in the America of the 21st century.

Most newspapers, TV debates, radio shows, and the online magazines including, “The Global Politician,” have argued about America’s falling dollar, rising oil prices and its depreciating influence in the world, and we all are doing a good job by letting the public know about these problems faced by the nation but what we seem to have forgotten or ignored is the fact that the mother of the entire American problem is Public indolence to private distress.

By private distress, I mean vast majorities of those in the professional classes who cannot get a job even though they have a sound educational qualification, or of those working in a job, where there is no health insurance or of those working in the meanest of the meanest working conditions without life insurance; that of a child shot by another child at school, that of an alcoholic son beaten my an alcoholic father, or of the children of teenage mothers or raped girls on social welfare. Whereas Public indolence manifests itself in various ways: popular support for detestation to those without work, support for the free availability of guns, support for war, and support for hooliganism, death penalty and drugs.

Meanwhile, having said the above, it is tempting, when analyzing any society, to examine one aspect of its social affairs and ignore others. In America most people agree that “the core of the American setback is insecurity because of declining economic prospects and increasing economic uncertainties. However, the more basic problem is this: the awkwardness many American’s feel about social and moral issues. This unease has been generated by the core American malaise, which is a public indifference to private anguish.

Conclusion

U.S is going through the most turbulent period of its economic history. Fear of recession, rising oil prices, stagnant or falling incomes, and skyrocketing debts is hitting American hard. Many experts are predicting an economic collapse, but no one in an official capacity has provided a convincing explanation. Although the stage is set for the recession in the U.S, I don’t think it shall occur. But future may prove me wrong.

In the interim what makes me sure that America will be able to shave its crisis off is because some indicators suggest that America ’s economic decline many soon slow. For example, it has been reported by the economist that the dollar’s decline may soon slow. “In the past few weeks it has regained ground against a handful of important currencies, including the pound and the Australian dollar. America 's trade balance is narrowing, despite the effects of expensive oil imports, suggesting that a weaker currency is already working to correct imbalances,” according to the Economist.

For now, the American economy is in mess and it needs a Herculean effort to clean the mess. But America is a great nation, and it has the capabilities, technical know how and the human resources to solve its problem as it is the most balanced and well equipped nation in the world. But armed even with these truths, America is not going to be able to regain its lost economic glory within a matter of weeks or even months.

Long, slow and above all sweaty- that is how the U.S economic recovery is likely to evolve. It will be an embarrassment to any American who believed that normal, healthy growth is defined by the spectacular achievements of the past. But out of it should emerge an economy with a stronger financial system than in the 1990s, to meet any further crisis with a bang, and a more balanced social equation.

If America wants to stay as a powerhouse in the future too and balance its deteriorating socio-economic equation, now is the time to act more vigorously. Much depends on the quality of policies despite its financial difficulties. Whatever happens, a new American socio-economic blueprint will have to be rewritten. Then build from there, not race by race, class by class, state by state but issue by issue, according to national and collective interests.

LOGIN HERE

LATEST ARTICLES

ARTICLE SEARCH