Washington’s fight over the debt ceiling has obscured a larger reality: Government has lost its ability to influence the economy. A nice analysis that explores the concensus that the state pulls the levers that determine economic health. Zachary Karabell suggests that is no longer true.

The essence of his summary: “What, then, can nations and their officials actually do? The ecosystem of global capital, in which trillions of dollars, goods, and services are traded daily, transcends the reach of any one government. That doesn’t mean the U.S. can or should walk away from its obligations to pay off creditors. It does suggest, however, that even if Washington finds some elusive formula on debt and spending that all parties can agree on, the structural challenges standing in the way of economic growth—from unemployment to foreign competition—will remain. Governments are essential in moments of crisis, and they retain the unique capacity to channel collective resources, promote research and development, set social priorities, and create incentives for the private sector. But they are no longer the principal actor in the drama.”
Read the full text here…