The post‐conservative orphan: why the USA needs an effective government economic policy

Abstract

PurposeThe purpose of this paper is to address the root causes of rising imbalances in the US economy. There is the view that the dominance of the liberal economic philosophy among the American decision makers and business elite resulted in marginalization of the role of the economic government. As a result, the US economy is facing problems in many sectors and might be poorly prepared to face the challenge of globalization in the knowledge‐based industries.Design/methodology/approachThe paper provides review and critique of the contemporary literature of “declininists” proclaiming the end of the American Empire.FindingsIn order to restore the strength of the US economy and utilize its potential, Americans must consider a new generation of politicians and legislators capable of reforming the tax system, stepping up the supervision of the financial sector, eliminating inequality in education and reforming the electoral system.Research limitations/implicationsAmerica is at a turning point. The problems of the American economy are home‐made, but their implications are international. In the last two decades the USA pursued a dysfunctional dual dependence on imports of manufactured goods and capital. Allowing the dollar devaluation has been a short‐sighted policy which will have dire consequences on import‐dependent economy and the USA's position in the world economy. Liberal prescriptions of self‐regulating markets cannot replace long‐term government economic strategy which America badly needs today.Practical implicationsSince the liberal wishful‐thinking failed, economists, politicians and legislators should stop evoking conservative liberal mantras and start working on responsible economic policy solutions before the US economy plunges into a deep recession and years of damaging pessimism.Originality/valueRather than repeating arguments of the authors proclaiming the end of American Empire, the paper looks for chances and opportunities for the US economy's rejuvenation in the future.