America’s middle class goes global
President Barack Obama did a miserable job of making his own case last week. But speak to his supporters and the pitch is clear: The American middle class is being hollowed out; Obama’s self-appointed mission is to try to save it.
That is what I heard from Jeffrey Liebman, one of the president’s economic advisers, at a debate about the election I moderated at Columbia University on Monday. Liebman said the central difference between his candidate and Mitt Romney was the president’s view that trickle-down economics doesn’t work. Instead, he believes policy needs to focus on the middle class. Economic growth, he said, should come from the middle and radiate out.
In a separate interview, Mark Gallogly, co-founder of the private equity and credit investment firm Centerbridge Partners and one of Obama’s earliest supporters on Wall Street, likewise emphasized the middle class. The president’s overriding concern, Gallogly told me, was with the workers who make $24,000 a year. Their lot is a pressing issue, Gallogly argued, because even before the recession there had been persistent downward pressure on middle-class wages. Yesterday’s middle-class job can land you among the working poor today.
You may be tempted to say that focusing on the middle class is about as distinctive as supporting motherhood. That is true enough. Two things stand apart in the Obama administration’s analysis of the problem.
One – and this is what has really riled the billionaire set – is Obama’s belief that making the world safe for American business doesn’t automatically translate into a rescue of the American middle class. The second, related idea is that the globalized, high-tech economy of the 21st century poses a particular challenge to the sorts of well-paid jobs that were the backbone of the U.S. middle class in the 20th.
These are two powerful assertions. What is missing is the connection between this domestic focus on the middle-class American worker and Obama’s foreign policy agenda.
At this stage in the campaign, it would probably be political malpractice to ask the president to venture into this esoteric land, appealingly dubbed “geo-economics” by its most wonkish explorers. So far only Tom Friedman of the New York Times has managed to explore this terrain and retain his popular following, and a lot of proper nouns and metaphors have been tortured in the process.
But if the president is serious about creating a 21st-century agenda for the American middle class, he needs to connect the dots between his domestic and foreign policy in a new way. (Judged on his own terms, this intellectual challenge is less pressing for Romney, who is sticking with the Reaganomics view that the way to aid the middle class is to support American job-creating businesses and individuals through lower taxes and less regulation.)
It isn’t hard to explain why a domestic middle-class jobs policy has to be part of Obama’s foreign policy. In a globalized economy, jobs no longer need a passport, but workers do. Creating jobs for your country’s workers is about much more than ensuring that the balance sheets of your country’s companies are strong, or stimulating domestic demand. It is about figuring out how your country’s workers fit into the global economy.
But while that problem has become obvious to a lot of us, the solutions are more elusive. In lieu of answers, here are a few starting points.
The first is to understand and accept that the old link between the prosperity of your nation’s companies and of your nation’s middle-class workers is much more fragile than it was in the past. The operative word is accept – the left scores political points but offers little substance when it berates chief executives or private equity investors for making profits even as they shrink their domestic workforce.
Corporations are not employment agencies, and judging them by that metric is a mistake. Likewise, while it can be fun for liberals to criticize business for going global, consider the alternative: Would America, or any other modern industrialized nation, really be better off if its companies failed to integrate themselves into the world economy?
A related idea is to understand that capital, and capitalists, really have become global. Here, again, the liberal temptation is to mock the billionaires who threaten to pull a John Galt and exit the national economy if they are mistreated. But as the example of Eduardo Saverin, the co-founder of Facebook who renounced his U.S. citizenship, shows, this threat has moved from Ayn Rand’s 1950s fantasy to real life.
Finally, to end on an encouraging note, champions of their own national middle class need to start seeing their problem as a global one. We are used to thinking about the traditional concerns of foreign policy – wars, disarmament, even energy and the environment – as international issues that require some degree of collective action. The hollowing out of the middle class is a problem common to all Western industrialized economies. Maybe we should work together to solve it.