It is not surprising that the partisanship that paralyzed the U.S. Congressional process around the raising the debt ceiling debate has now shifted to a blame game surrounding Standard & Poor’s downgrading of the U.S. dollar credit rating from AAA from AA+. As the European Union calls emergency meetings and Asian stock markets examine whether Sovereign borrowers in the Asia-Pacific region would be affected, few have mentioned an intangible cost that is likely to have even greater long term effects – the erosion of a belief in the American political process.
America is a brand that is exported daily through its protection of fundamental human rights around the world, through its currency dominance and through its Hollywood movies and pop culture appeal, among others. But when its own system proves to be paralyzed by self-serving politics that would risk the well-being of the country as a whole, and by extension financial markets worldwide, the legitimacy of the brand is thrown into question both at home and overseas.
The effects of such politicking extend far beyond Wall Street, foreign stock markets or Congressional job approval ratings of 13%. Consumer confidence, a critical driver in economic renewal, cannot help but stall in the face of such political inertia. In fact in August it reached its lowest level in three decades. As Reuters reports:
High unemployment, stagnant wages, gridlock in Congress, and a stockmarket slump all contributed to a consumer mood that was as grim as when Jimmy Carter was President during the recession of 1980 and interest rates were more than 20 percent.
At home, employers will be likely to reconsider whether to hire new staff further frustrating full-time job gains, while overseas belief in the values and political process that underscore the United States brand will suffer in direct proportion to our domestic dysfunction.
The success of all brands turns, in part, on belief in the story that they tell. Beyond stimulus packages, tax relief or even debt ceiling extensions, parties on both sides of the political divide must now inspire companies, employers, entrepreneurs and employees to believe that it is possible to achieve the changes and growth we need to restore this country if we are to achieve sustained economic growth.
Politicians on both sides of the aisle ignore this fact at their peril. A demoralized political base is far harder to reanimate and a depressed economy more difficult to stimulate when belief in the very system they uphold has dimished. By eroding our belief in the political process politicians hijack our belief in ourselves, costing this country far more than dollars or profits.
In the short term the responsibility for brand stewardship of the political process falls to the debt super committee whose constitution does not bode well for a swift or substantive result as both parties rise to the challenge of compromise. But as we enter deeper into the Presidential election cycle both parties would be wise to restore a fundamental belief in politics that underpins support for any and all politicians.
Do you believe the political process is damaging belief in America around the world or simply in politicians?
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