By Philip Stephens
Published: November 4 2010 22:38
Angry at Barack Obama, angry at the world, America has turned its back on the president who promised to change everything. Now it may turn its back on globalisation.
Amid the cacophony of explanations for Mr Obama’s fall from grace, the most obvious was the most persuasive. The midterms were a referendum on an administration presiding over anaemic economic recovery and stubbornly high unemployment. The Republicans claimed a famous victory, but the country really wanted to punish the Democrats.
Mr Obama argued plaintively that he had nursed the economy through the crisis inherited from his predecessor. If he had not acted decisively to shore up the financial system and stimulate the economy, things would have been a great deal worse. Rescuing Wall Street was about saving Main Street.
Such protestations were lost to the sourness of the national mood. Nearly nine out of 10 voters told the pollsters they were worried about the economy; two-fifths said their own living standards had fallen. Someone had to take the blame.
Doubtless other things counted against Mr Obama. The great communicator of 2008 has seemed inexplicably wooden in the White House. His indisputable intelligence is not of the emotional variety. For some Mr Obama was too liberal; for others he lacked the courage of his convictions. His handling of healthcare reform was scarcely adroit.
Such flaws, real and imagined, were also-rans against the anxiety and anger stirred by high unemployment, squeezed living standards and record mortgage foreclosures. This discontent has deep underpinnings. Times have been hard for a lot longer than the past couple of years.
For some time, one of the most interesting numbers in US politics has been one not found in the opinion polls’ exit survey. It is published every month by the Federal Bureau of Labor statistics. It tracks changes in the real earnings – and thus the living standards – of middle America.
During the past 20 years the median earnings of these workers have risen in total by less than 10 per cent after adjustment for inflation. During the past decade they have stagnated. Someone has thrown a wrench into the escalator.
To put these figures into perspective, the economy grew by 60 per cent – six times as fast as median earnings – during the 20 years from 1990. Even during the past decade, which included the deepest recession since the 1930s, output expanded by 15 per cent.
For a time the effect on living standards was masked by the explosion of cheap imports and cheap credit. Americans could live their dream by borrowing from the banks and buying cheaply from China. The party came to an end with the global financial crash.
If Middle America has not shared in rising prosperity, the same cannot be said of the most affluent. The proceeds of growth have gone largely into corporate profits and into huge increases in boardroom pay. The richest have had a ball.
Figures from the Congressional Budget Office show that the share of overall incomes of the wealthiest 1 per cent of households stood at about 12 per cent in 1990. By 2007 that had jumped to more than 19 per cent. Measured in 2007 dollars, the incomes of this group more than doubled from a little more than $800,000 a year to $1.8m.
Globalisation, from this vantage point, has been good only for the few. It has enriched bankers and chief executives, but left the middle classes at once no better off today and more insecure about tomorrow.
Of course, it is a bit more complicated than this. My economist friends tell me that all sorts of other factors have been at work. Technology has changed the distribution of rewards from employment. Shifting comparative advantage was around long before the rise of China and India. For all that, it is not unreasonable for US voters to draw the conclusion that the world as well as Washington has been conspiring against them.
The Republicans, and particularly the Tea Party movement, tapped into this mood. The populist promise to reclaim the old America reaches beyond rage at the perceived evils of big government. There are other enemies within and without.
This pantheon of the wicked includes bankers who sold out to globalisation, the immigrants who took US jobs, the corporate chiefs exporting jobs overseas, and the Chinese factories flooding the US with cheap goods. America has been lost to the un-American values of cosmopolitan elites.
Efforts to forestall climate change are slotted into the meandering narrative of a conspiracy against the American way of life. The plan is to hand power to a world government run by the United Nations.
The Tea Party manifesto is shot through with contradictions and worse. Many of the movement’s supporters want at once smaller government and the government to do more to support them. Nativism plays to paranoia. In its nastier manifestations, it targets Mr Obama’s background and race as a personification of the threat. Some 30 per cent of Americans believe the president to be a Muslim.
The anger, though, is not confined to the insurgents of the right. Democratic as much as Republican candidates cast China as a threat in their campaign advertisements. Mr Obama’s party may well now tilt further towards protectionism in an effort to win back voters lost to populism.
And before Europeans scoff at what many of them see as the primitivism of America’s political discourse, they should take a look at what has been happening closer to home. Eminent Germans now write books insinuating that Turkish immigrants are inherently less intelligent; a French president expels Roma communities; Britain closes the door on foreigners.
It is the direction that America takes that matters, though. The US was the architect of globalisation. Paradoxically, its geography, natural resources and technological edge leave it better placed than most to retreat behind the barricades. We would all be the losers.
It is fashionable to talk about America’s shrinking role in the world. Even its friends sometimes seem to take satisfaction from its diminished power. They should be careful what they wish for.
Copyright The Financial Times Limited 2010
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