How Washington is destroying the economy
By Allan Sloan, senior editor-at-large at Fortune. Reporter Associate Doris Burke.
Our current mess is different from the Lehman-related horror because it stems primarily from politics, not economics…
Today’s crisis was completely avoidable. You can blame it directly on the fools who brought our country to the brink of defaulting on its debts in the name of saving us from … I’m not sure what. Yes, the Tea Party types bear primary responsibility — but they couldn’t have done it without the cowardice and incompetence of the Obama administration, which let things get way out of hand…
So why is today scarier than 2008-09? Because this time not only have we got troubled financial institutions to deal with, but we have serious, substantial countries facing possible default on their debts. Including, heaven help us, the U.S. …
The root of our current problem is that there are no grownups in positions of serious power in Washington… I never felt there was a total absence of adult supervision in our nation’s capital. Now I do…
We need more jobs, more growth, and more tax revenue… cut rates, eliminate the alternative minimum tax, and broaden the tax base by drastically reducing itemized deductions… modify Social Security and Medicare formulas, imposing higher costs on higher-end retirees…
Yes, rationality is out of style, and fanaticism is the new normal. But do we really want a national life like the one we’ve had the past few years? All shrieking and no thinking?
Source: Fortune Term Sheet / Article is from the September 5, 2011 issue of Fortune (XXX)
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Another Opinion:
The Debt Ceiling Deal: The Case for Caving
Washington’s deal satisfied no one.
Game theory explains why it couldn’t have turned out any other way
Bloomberg Businessweek by By Brendan Greeley
The outcome of the debt ceiling talks left everyone in a foul mood, not least the President himself…
Looked at through the prism of game theory, it’s hard to see how the outcome could have turned out any other way.
Game theorists distinguish between “cooperative” and “noncooperative” games. A cooperative game looks to divide a pie in a way that leaves both sides with trust in the process. Binding arbitration, where two sides are obliged by law to submit to a judge’s decision, is a cooperative game.
The two parties in Washington pretended to be playing a cooperative game this summer.
Washington, as a game theorist would describe it, is noncooperative… A noncooperative game lacks a higher authority to impose agreements on both sides… A game theorist would say that the President is trying to play a cooperative game in a town that can’t play along with him…
Everyone, however, is playing a game called “election,” and the only possible goal in that game is to win the next one.
Obama and the House Republicans, says Steven Brams, were playing chicken this summer, a noncooperative, non-zero-sum game in which both players can lose. A compromise outcome is difficult to achieve in chicken, because it’s not stable…
Frustration can actually turn a noncooperative game cooperative. In the Aristophanes play Lysistrata, the women of Athens and Sparta withhold sex until their men sue for peace…
Like the women in Lysistrata, the Tea Partiers, in effect, have withheld their affections from both the Democrats and the Republican leadership. That has forced Congress into what may prove to be a cooperative game: the next round of deficit negotiations, with a super committee composed of members from both parties charged with finding consensus.
Source: Bloomberg Businessweek (XXX)
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