A cliffhanger or cliffhanger ending is a plot device in fiction which features a main character in a precarious or difficult dilemma, or confronted with a shocking revelation at the end of an episode of serialized fiction. A cliffhanger is hoped to ensure the audience will return to see how the characters resolve the dilemma….Wikipedia

In the United States, the fiscal cliff is a term used to refer to the economic effects that could result from tax increases, spending cuts and a corresponding reduction in the US budget deficit beginning in 2013 if existing laws are not changed by the end of 2012. The deficit—the difference between what the government takes in and what it spends—is expected to be reduced by roughly half beginning in the first days of 2013. This sharp decrease in the deficit in such a short period of time is known as the fiscal cliff. The Congressional Budget Office (CBO) estimates the sudden reduction will probably lead to a recession in early 2013 with the pace of economic activity picking up by late 2013..Wikipedia

The fiscal cliff has turned out be a reality show where at the end, the plot thickens. As some movies end their story with “ To be continued” or “The End”, this outcome will affect not only US economy but it will affect economies in Europe and Asia.

The fiscal cliff is created by ideological differences existing in extreme factions of Republican and Democrat political parties. The ideological divide is responsible for creating the conditions of the fiscal cliff through political and executive branch process. The technicality of this story is easy to understand as various laws have created the perfect storm through increase in tax by not allowing tax reduction and applying austerity measures by reducing federal expenses. This double whammy can affect the GDP of the US economy in double digits. Fixing this technical issue is easy as long as the parties come to center and address the issues which are affecting people around the world.

The real issue is the ideological positions of the parties. This difference is key to the future of capitalism. When the Berlin wall collapsed, communism was defeated but it did not mean capitalism won. The current dilemma around the world about how to fix economy is because new capitalism is evolving. Since the end of the cold war, we have a shortage of dictators, more than 100 countries have elections, new smaller countries have come up, more smaller regions want to become economically independent and more Tahrir Squares suggest that people are craving for fairness, opportunities for all and personal independence. At the core of this issue is the role of the Government and large business.

Let us look at the large business and multinationals. As many have suggested, these corporations have no soul and their focus is on shareholder’s benefits. People as employees, contractors, vendors or clients are dispensable as long as it is in interest of the economic bottom line. Starting from Japan to Europe and to the US, in last two decades we have seen horrible outcomes for millions of people while corporations look after the interest of a single stakeholder, their shareholders. In the process they lobby and influence Governments to tweak laws in their favor as they claim to be “job creators”. The same companies also do massive layoffs to increase profit. The world is waiting for a new model of stakeholder interest and triple bottom line approach.

The core of the issue is the role of the Government. On one hand, market economy has created explosive growth after the last world war. On the other hand, economies like that of Scandinavia offer alternative models where the Government has successfully provided prosperity to their residents and business. In the US, Republicans believe that the role of the Government should be as low as possible and treat each individual as a responsible person to manage his or her economic affairs.The Tea Party has an extreme Libertarian view . During elections, candidate Mitt Romney touted his experience in business and he claimed that he will be the CEO of the US. The problem with this line of thinking,  in business you can fire your employees, a country cannot fire its citizens, even if you don’t like 47% of the population. ( Referencing a remark made y Mitt Romney during the campaign that 47% of Americans do not pay tax and they will vote for President Obama ).

On the other side of the isle, Democrats believe that the Government has a role to play in education, healthcare, infrastructure, defense, innovation and immigration. I believe that Democrats are right as long as the implementation is done by private sectors and a process to manage private sectors should be designed for 21st century digital economy.

I believe that American business and people have already factored in the fiscal cliff as a possible bump on the way to 2013. The US economy is robust and I think congress will compromise before the deadline.  President Obama received a clear mandate on raising tax for people earning more than $250,000 and he is prepared to cut spending which does not affect social programs. If this happens then it will be a good example for the European economy. Austerity can work only if growth happens. There is only so much you can cut. People have to survive and need hope to do better. It will take strong leadership and voters will have to send a message to politicians to come to center. Austerity has to start at personal level.

Let us hope fiscal cliff drama has an ending of “A New Beginning For A New Center”…