By Karl Reiner
President Obama is said to be somewhat distracted, not fully engaged in the tumble of everyday domestic politicking. He may have his reasons. One of his daily briefings includes a litany of the problems and threats festering and lurking outside the nation’s borders. The ongoing problems in Afghanistan, Iraq, Iran, global terrorism and the uncertainty of the Arab Spring movements need his consideration.
Every time his helicopter lifts off from the White House lawn, the president can see the white markers on the graves in Arlington Cemetery. It is a constant reminder of the human cost of his decisions. Looking out the opposite window, he sees the U.S Capitol, the home of a dysfunctional Congress. Here, federal debt reduction and budget programs are ensnared in gridlock.
The full impact of the Great Recession has yet to be determined. Its lingering effects continue to grind on America and rest of the world. The U.S. suffers from a slow economic recovery. Europe struggles with a currency crisis and attempts to resuscitate faltering and indebted economies.
Economic crises often have calamitous consequences. The Great Depression of the 1930’s overwhelmed economies and political systems. It helped bring about the demise of the Weimar Republic in Germany and fostered the rise of militarism in Japan. It assisted in setting the stage for World War II.
Although the U.S. has been the world’s leading economy since around 1900, the world’s economic ranking is changing. At some point during the next 10-15 years, China, with its population of 1.3 billion, is expected to displace the U.S. in the top spot. The shift will affect much of the economic and military orientation in the Pacific region.
The factors that led to the recession have raised doubts about the effectiveness of liberal capitalism in much of the developing world. America and the debt-ridden countries of Europe are seen as having not practiced what they preach.
The West’s brand of democratic welfare capitalism has resulted in turmoil. Having permitted the misallocation of resources and the amassing of debt, it may no longer be the model developing nations desire to follow. The authoritarian style of China’s capitalism offers a stark developmental alternative.
The illegal drug trade and its associated violence continue to afflict Mexico, spreading fear in the border region. Due to the recession, better security and an improving economy in Mexico, the number of illegal migrants attempting to cross the border to find work in the U.S. has substantially declined.
In the aftermath of the recession, Mexico’s economy has made a respectable recovery. It is expanding at an annual 4% rate. Mexico’s debt stands at about 43% of GDP, less than half of the U.S. level. Its banks missed the subprime fiasco, they are among the best capitalized in Latin America. Mexico’s consumers have low levels of personal debt.
Mexico now has some of the best economic fundamentals in Latin America. As the situation in Mexico continues to improve, Arizona may find that its singular rush to become involved in immigration enforcement (SB 1070) was not the brightest of ideas.