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  • Writer's picturePete Jonson

President Obama reflects

With two such current candidates, there can be no doubt that American politics has many flaws. An article in the latest edition of The Economist suggests one great positive feature - the limit of two four year terms for a president. The article is a 'lightly edited' version of the retiring president's views on the state of the nation, largely its economy. The article is long and well argued, and far from nakedly self serving. While it finishes by celebrating the economic progress of the past eight years (when the economy has been experiencing and slowly recovering from a Great Recession), most of the article is pointing to underlying weaknesses and identifying mainstream liberal solutions.

Discontent is widespread in America and many other nations. Not all is due to economic issues, says the President. Anti-immigrant, anti-Mexican, anti-Muslim and anti-refugee sentiment expressed by some Americans have been seen and overcome in the past. 'But some of the discontent is rooted in legitimate concerns about long-term economic forces'.

* Decades of declining productivity growth and rising inequality have resulted in slower income growth for low- and middle-income families. * Globalisation and automation have weakened the position of workers and their ability to secure a decent wage. * Too many bright people spend their careers moving money around in the financial sector rather than applying their talents to innovating in the real economy. * And the financial crisis of 2008 only seemed to increase the isolation of corporations and elites, who often seem to live by a different set of rules than ordinary citizens.

'So it's no wonder that so many are receptive to the argument that the game is rigged'.

The President hastens to remind readers that 'capitalism has been the greatest driver of prosperity and opportunity the world has even known'.

* Over the past 25 year, the proportion of people living in extreme poverty has fallen from nearly 40 % to under 10 %. * Last year, American households enjoyed the largest income gains on record.

These gains could not have been achieved without the global and technological transformation that, paradoxically, drives some of the anxiety behind current political debate.

We are reminded that markets, 'left to their own devices', can fail. 'More fundamentally, a capitalism shaped by the few and unaccountable to the many is a threat to all'. We are warned that economies are more successful when the gap between rich and poor is closed. 'A world in which 1% of humanity controls as much wealth as the other 99% will never be stable'.

This President is proud of what he has achieved but recognises that much remains to be done. 'Fully restoring faith in an economy in which hard-working Americans can get ahead requires four major structural challenges: boosting productivity growth, combating rising inequality, ensuring that everyone who wants a job can get one and building a resilient economy that's primed for growth'.

President Obama continues his essay by offering an agenda for 'Restoring Economic Dynamism'. Subscribers to The Economist can read it for themselves, and borrow a friend's copy if necessary. (It seems that people can register to gain the right to read 3 articles per issue.) Whatever type of economics or politics you subscribe to I suspect you will agree with about 90% of President Obama's agenda.

Surely any honest leader in any western economy would agree with President Obama's statement of the major matters that must be attended to if his or her nation is to again grow strongly and with greater fairness. Australia's government instead of facing the same challenges as the USA however keep telling us we've never had it so good, and all we ('the punters' in Canberran argot) need to do is spend up big and the good times will continue to roll. This despite the large and rapidly growing private and government debt which is sure to bring on a severe crisis before too long.

Of course, Australia's government is clinging on with a one seat majority in the lower house and a mostly hostile Senate. But imagine if the Australian Prime Minister had a maximum of only two four year terms to lead a government. And had the goodness of spirit to leave an honest assessment of what his government had achieved and the (much larger) agenda that remained to be achieved. At least at the end, he or she might feel able to tell it like it was, and if not then posterity would be a harsh judge.

Warm congratulations both to President Obama for writing the article linked below and to The Economist for such a splendid idea. One hopes it is a regular feature of future presidential handovers.

More here

See also the thoughts of PD Jonson, linked here.


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