After gaining control of Congress, the cowboy from Texas, President George W. Bush, has been given a unique opportunity to re-energize the U.S. and global economies. Success may very well require a level of economic wisdom and political courage never before witnessed. If he is successful, history will remember him as one of this country’s greatest presidents; if he fails, history will remember him and his party’s failed ideas and actions.
For well over a decade, countries around the world have increasingly embraced global capitalism. Today, the global economy is struggling, because there is corruption and/or mismanagement of financial institutions in country after country around the world.
If you want to fully understand the consequences of failing to implement open trade correctly, go talk with an American farmer. He has experienced the downside of globalization.
Only a few years ago, during the writing of the 1996 farm bill, analysts were advising policymakers to transition American farmers into producing for the global marketplace. They reasoned that global capitalism was fast maturing to a level sufficient to sustain U.S. agriculture without government support.
This year policymakers reasoned, by mostly listening to their constituents, that an anemic global economy required stabilizing farm income; the noble goals of the 1996 farm legislation would have to be put on hold, while the global economy recovered from the financial flu caused by some combination of corruption, mismanagement, and political weakness.
Since the fall of Communism in 1989, countries around the world have increasingly embraced the concept of free trade. Opening up trade creates competition and competition gives consumers the best value for their buck.
From 1989 through 1996, increasingly open trade created robust global economic activity. Consumers and economies around the world experienced the good associated with globalization.
In 1997, the weaknesses in the new global economy began to appear with what became known as the Asian financial crisis, and the weaknesses have continued to emerge in some form in most countries. The most recent examples are Argentina’s economy, which has been devastated and now Brazil’s economy is in critical condition.
When a country’s economy weakens, its currency will decline in value to the U.S. currency. Even though this has serious consequences for the country in question, it also means they have an advantage in the export market. For American agricultural exports and the U.S. manufacturing sector, this advantage has been devastating.
What went wrong?
Global capitalism has accomplished much in the past 15 years and its future potential to generate explosive economic activity is quite real. The problems the global economy is experiencing rest with corruption and/or mismanagement of financial institutions in countries around the world, and political courage seems in short supply.
At this point, it is not about who is best suited for the job, and it is not about political parties, because those have been decided.
The president of the United States has the opportunity to put policies in place to grow the U.S. economy. The president is no longer a cowboy but now he is a statesman. And when you really stop and look at the world country by country, re-energizing the global economy seems almost undoable; but with the right moves it can be done.
Bobby Coats is an agricultural economist and farm policy specialist with the Arkansas Cooperative Extension Service in Little Rock. e-mail: [email protected].