Restoring pragmatism in American governance

Purpose - The greatest asset of US capitalism until recently has been a blend of pragmatism with a passion to create the best socio‐economic system in the world. Today the USA is besieged by unprecedented budget deficit, public debt, financial crises, unemployment and rising anti‐governmentalism. The author believes the root cause lies in the elimination of the principles of pragmatism from governance, together with an assumption that the system which triumphed over communism is infallible. The purpose of this paper is not to find proof that an interventionist government would always be better or that higher taxes benefit the economy. Instead, using the examples of various policy mishaps, the paper seeks to prove the superiority of pragmatism over any ideology as a guiding principle of good governance. Design/methodology/approach - The author uses pragmatism as criteria for impartial, non‐partisan, non‐ideological evaluation of the state of the American economy and the causes for the rise of populist movements in the country. Findings - Neoconservatives were right to believe that markets do work. They will be needed to find solutions for skyrocketing costs of medicare, medicaid and job displacement caused by globalization. Neoliberals were correct to allow the development of profitable financial sector and give Americans access to cheap credit. However, what has been dramatically missing is a countervailing government economic policy to address increased riskiness of the financial markets, falling labor income, wealth distribution, education, energy dependence and an aging infrastructure. Liberal democrats did not propose comprehensive plan for government economic interventionism also they well understood its importance. Research limitations/implications - The paper is believed to be the first interdisciplinary (political economy, history, social economics, social psychology) attempt to identify the causes of the declining economic power of the USA. Practical implications - The paper can improve understanding of complex socio‐economic phenomena by the students of US economy and those who would like to sort out true facts from unproven beliefs and do not understand complex econometric models. Social implications - The paper can improve understanding of complex socio‐economic phenomena affecting lives of millions of people. Originality/value - The paper states clearly that the problems of the US economy are not caused by globalization but they originate at home from self‐imposed ideological straitjackets by the decision‐making elites and their departure from traditional US pragmatism.