U.S. has outpaced Europe during this period of rehab is due its economic structure, policy decisions and culture.
27th May, 2013
Washington has been rocked by various scandals starting from the Benghazi attacks, to the discriminatory tactics of the IRS and the Justice Department’s procurement of Associated Press phone records. The Obama Administration and its allies are a worried lot. But these political developments will not have any impact on the U.S. growth rate and its recovery from recession. The past few years have provided enough evidence that the dysfunction in Washington has no effect on America’s attractiveness to investors. The rates of U.S. treasury bonds have improved and America continues to be the place for investors to invest their money for higher returns. These developments make one thing very clear. Petty politics cannot control the fate of the country. Things are not that volatile in the U.S. Growth and have been moving in the right direction. The Obama Administration has shifted the regulation to the state level, allowing states such as Texas, Oklahoma and North Dakota to create jobs and bring down unemployment levels. America’s economic structures, its leader’s ability to make political decisions and cultural memories of the Great Depression have been some of the catalysts of its recovery. The economy may definitely not be on a high but the economy is expanding and jobs are being created, comparing to the Euro zone, where the unemployment has risen to a record where 1 person is unemployed of every 8 persons and the economy has contracted significantly over the last 18 months.
The main reasons why U.S. has outpaced Europe during this period of rehab is due its economic structure, policy decisions and culture. Structurally, America is a single market while Europe is not a single market. The rich states in U.S. subsidize the poor states. The labour market mobility means the workers who lose their jobs in one state of the U.S. and move to another state where prospects are brighter. In 2007 alone almost 900,000 Americans moved from the north-east to the south and west. The American public is frustrated by the gridlocks in Washington, however in times of crisis U.S. can move forward comfortably as it takes only a handful of policy makers to make the decisions. The President, the Chairman of the Federal Reserve and the treasury secretary make such decisions. The U.S. political system is also effective compared to the countries in Euro zone where approvals require the decision of 17 governments. The U.S. has been more imaginative to tackle the economic crisis. The recession in the U.S. was slowly averted by the non-interventionist, free market in U.S. that deployed full power to Washington to slash interest rates and pump Money into the economy and allow struggling banks to dispose of their assets. Under the Obama Administration, agencies have gone further than ever before in overturning decades of regulatory precedent to boost economic growth from damage caused to the budget due to economic slump.