There is no denying
that the American Presidential Primaries are the best show in Town at the
moment. They have it all – thrills, spills, reversals, knife edge results, and
a cast of colourful characters.
Yet the hard-working
entrepreneur with a business to run is entitled to ask, “Does any of this
True, what happened in
America once determined everything: Wall Street sneezed and the world caught a
Yet America is now
only one of a number of major players in the global economy – and, in any case,
even within in the USA, the President, for all the pomp of his office, is not
as influential in economic policy as most Heads of Government are in their own
countries. In fact the President comes a poor third, after the Federal Reserve
and Congress, in the big economic
He cannot influence
interest rates directly. His role in the budget is restricted to sending his
suggestions to Congress – which usually ignores them – and having the right of
veto over what Congress decides – a right he would usually be foolish to
However, as so often,
there is more to reality than the bare facts. The structure of the global
market place gives the USA far more practical influence than its GDP might
suggest, and the practicalities of politics give the President far more power
than the Constitution intended.
He might not set
interest rates directly, but he nominates the Federal Reserve Board which does.
He also has considerable political patronage at his disposal, with which he can
lobby, bribe, and blackmail Congress.
It is a curious fact
that, in recent years at least, this has been done most successfully when the
President has been of a different Party than the one controlling Congress, or
at least one of the Houses.
Reagan charmed a Democratic Congress into approving the economic side of the
Reagan Revolution. Democrat Bill Clinton only got to grips with the deficit
once he had a Republican Congress. The same Bill Clinton had previously got
nowhere with a Congress run by his own Party.
George W Bush made little progress on the economy with a Republican Congress.
Now, in only a few weeks, a Democratic Congress has passed a version of a
“stimulus package” he suggested.
This has little to do
with cross-party co-operation. It is, on the contrary, pure capitalist-style
competition. Neither Party wants to be portrayed as being an obstacle to
tackling major economic problems – especially in an election year.
Out of this creative
conflict comes progress. The free market works even in politics. Democracy,
like the free market, only prevails where there is a real choice between
It is not for any
foreigner to tell American citizens how to vote. However, speaking purely as an
entrepreneur, with a stake in the global economy, the best thing for business
would be for the President and Congress to be of different Parties, so that
this healthy competition continues.