US economic competitiveness derailed by political system

A report by Harvard Business School has stated that the trouble prone political system of the United States has threatened to torpedo its economic competitiveness. The present recovery rate in the form of 1.6 percent median annual growth is much behind any previous rebound in the country’s history. The last time, the recovery was slow at this rate was in the 1940s. The economic performance of the United States reached its zenith during the 1990s. It was slowing from that time.

Even though multiple studies have concentrated on the effects of the US financial crash to explain the dampened economic performance of the country, the report explicitly stated that the challenges were actually structural and long term in nature. Important barriers identified by businesses included the reformation of regulations, American infrastructure and tax code.

The study surveyed alumni of Harvard Business School. About 50 percent of respondents replied that they anticipate America to decline more over the coming three years. Only 30 percent of those queried said that they expect US to improve. The report also states that the business environment is worse for smaller companies compared to the larger ones. This scenario is repeated along all industries. Jan Rivkin of Harvard Business School was blunt in saying that US competitiveness is being marred by political dysfunction.

Rivkin however said that this conclusion should not be taken as an excuse to to take off the pressure of responsibilities from businesses. Local and state governments also must not take this as an excuse to slack off. He added that when one analyzes the factors that hold back the United States, much can be laid at the door of federal government. 

Progress has been elusive in recent years due to the stark breakdown in political cooperation. The major evidence comes in the form of multiple showdowns on the subject of agreeing on government debt ceilings and complications over agreeing on much needed reforms of the American tax code. He further added that the action of present political parties have further exacerbated the situation.

The survey revealed that business leaders have predominantly backed a number of political changes which will result in competitiveness benefits. Studies have revealed that when given political will, they can be eminently achievable. Notably, this is espoused by both political candidates- Republican candidate Donald Trump and Democrat Hillary Clinton.

Leave a Comment