RKGLOBALANALYSIS

TheRealdebatebehindthecurrentUSGovernmentShutdown
Vol.107 October1,2013

Among the most formidable of the obstacles which the new Constitution will have to encounter may readily be distinguished the obvious interest of a certain class of men in every State to resist all changes which may hazard a diminution of the power, emolument, and consequence of the offices they hold under the State establishments; and the perverted ambition of another class of men, who will either hope to aggrandize themselves by the confusions of their country, or will flatter themselves with fairer prospects of elevation from the subdivision of the empire into several partial confederacies than from its union under one government. Federalist No. 1 The Federalist Papers- General Introduction Alexander Hamilton, October 1787

It is not a new debate. In fact, the argument has been going on for ages. Albeit it has new faces and is being broadcast live on all the major networks in the US. In the American context, this debate started as soon as the new Republic was born. The debate shaped the central point of the Federalist Papers and was between Hamilton and Jefferson. Hamilton believed in creating a strong central government specially for the new Republic and Jefferson sought to balance the central government authority by supporting the private property owners. Both Jefferson and Hamilton debated on one critical question which was asked in the early days of the Republic: who has the last word when it comes to exercising the legitimacy on the affairs of the nation- is it the free-market (land owners in the initial thirteen colonies of the Republic) or the state? Tax hikes or tax cuts (how the new Republic should finance its affairs); spending vs. revenue (which type of taxes to be levied in the new Republic and how much each state must get the federal share of its revenue). In that sense, as you can see, the parameters of the

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current debate were set long time ago. Serious people within the state and market realm in the US are quite aware that the current shutdown is nothing compared to the grand challenges the US is facing. Rising income inequality; poor job growth; and rising public and private debt- to name a few. Several states are also falling behind in their pledge to balance the books and kick-start the economic renewal. Within this context, the debate to repeal or not to repeal the Obama care must be understood. Eventually, the government will open; cheques will be mailed and the passports will be issued. But what is also true that the poisonous partisan atmosphere in Washington is a symptom of confusing priorities, lofty gestures and crippled leadership. One could argue that there are certain natural limitations on the tools available to political leaders to tackle any crisis. Yet, one can not deny the fact that the test of the true leadership and bold initiative is when you deny the conventional wisdom to choose tough choices for a greater benefit. Imagine if Lincoln had shied away from taking on the gigantic issue of slavery. He, by issuing, Emancipation Proclamation, silenced those who had a blind faith in the conventional wisdom that the lesser race will never enjoy the glorious fruits of liberty. The continued saga of the fiscal mess only proves the lack of iron will and resolve in the American leadership theater. It is time to halt the comedy of sincerity and start building the broken institutions. It is never too late to choose the right path.

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