Normally, the dog days of summer are a quiet time around the globe, when there are always preparations under way for the fall. For example, on Thursday evening the first preseason National Football League games were played. With the players strike at an end and a new 10-year collective bargaining agreement in place, the teams are starting to prepare for the regular season. Even the baseball division and wild card races do not normally draw much attention until September, but this year it has been different.
In London, Prime Minister David Cameron had to cut short his Tuscany vacation because of several nights of rioting and looting in London, which soon spread to several other cities in the U.K. Fortunately, by mid-week there was a strong show of force by the police and an uneasy calm had been restored to the London streets. It is expected that the police will maintain their force of 16,000 police officers on the London streets throughout this weekend. We also have learned that the governing coalition will consult with Bill Bratton, chairman of the private security firm Kroll and the former police chief of Boston, New York and Los Angeles, where he has a successful history of dealing with youth violence. (Financial Times, August 13, 2011)
In the U.S., Standard & Poor’s (S&P) moved to downgrade the U.S. bond rating from AAA to AA+. This followed an agreement to raise the debt ceiling, after months of political theatre, that no one on either the Democrat or Republican side of the aisle seemed to embrace. The Congress headed home for a five-week summer recess and President Obama seemed in no rush to call them back. Global stock markets reacted with volatility that had never been seen before, with swings of 400+ points in either direction to the Dow Jones average. On Tuesday the U.S. Federal Reserve board announced that the economy was in such a precarious state that they were committed to keeping interest rates at historical lows of near zero until at least mid-2013. (Wall Street Journal, August 13, 2011, “This Time, Maybe the U.S. Is Japan“)
Buried among all of this news on Friday, I noticed the article, “Shrinking in a Bad Economy: America’s Entrepreneur Class.” (WSJ, August 12, 2011) “Which leads to the question: Will the damage done by the weak economy have a long-lasting effect, discouraging the next generation of entrepreneurs?” The article contrasts the strong growth of “Silicon Valley and tech hubs throughout the U.S.” with the “meat and potatoes economy.” “You have a real dichotomy between the technology and Web-based economy versus the meat and potatoes economy,” says Steven Kaplan, who teaches entrepreneurship at the University of Chicago Booth School of Business.
I believe that we need to unleash entrepreneurs in both the U.S. & U.K. and let them, once again, create the jobs that will drive more revenue into the government coffers from an engaged workforce that has been idled by unemployment for too long. Our practical Mayor of New York, Mike Bloomberg, joined the debate on his weekly WOR radio show. “Taxes should be increased for everyone – not just the rich – to break the logjam in Washington over how to reduce the deficit. So if you want to raise taxes, don’t pick one class of people and say, ‘I think they have too much money,’ or ‘I don’t think they have enough money or whatever. Raise everybody’s taxes 1 or 2 percent, whatever it was.” (NY Post August 12, 2011) We need political leaders in the U.S. and U.K. that will not play on our divisions but will bring us together to solve the structural issues that are holding back our economic growth. Many of us long for the days of Margaret Thatcher and Ronald Reagan, who together brought an end to malaise of the late ’70s and early ’80s and put us on a path of strong economic growth that lasted into the early ’90s.