Chrystia Freeland

Why have the rich turned against President Barack Obama?

That has been a persistent theme of this campaign: We were reminded of it at the beginning of this week, when Mitt Romney’s team raised more money than the president’s for the second month running, and more colorfully in weekend reports of the Republican candidate’s lavish fund-raisers in the Hamptons.

If you were a Martian, or even a European, the animosity of America’s 1 percent toward the president might be rather mysterious. Although those at the bottom and in the middle are still suffering from the downturn that began in 2008, with unemployment above 8 percent, the affluent economy has bounced back quite smartly. The stock market has recovered, corporate coffers are overflowing with cash, and the luxury goods market is booming.

Even Wall Street, where hostility toward the White House is especially acid, has reason to be grateful. Bankers got the biggest government bailout of all – much more than laid-off workers or beleaguered homeowners received from this Democratic administration – and the president resisted calls from the left to nationalize the banks he rescued, as did the British.

Part of the answer is simple self-interest. As the economics writer Matthew Yglesias has argued, there is one easy and obvious explanation for the animosity of the rich toward the incumbent: He wants to raise their taxes significantly. That is certainly right. On Monday, Obama reiterated his support for letting the Bush-era tax cuts for household incomes of more than $250,000 expire, while keeping the lower rates in place for everyone else.

This is a powerful point. It can be tempting to imagine that the affluent might fret less about their tax bills than the poor, who are struggling to get by, but the elaborate tax avoidance strategies of superrich Americans suggest otherwise.

Go to the Aspen Ideas Festival – or to any similar confab of affluent elites gathered to solve the problems of the world in luxurious, remote hamlets – and you can be sure that a dominant theme will be a lament for the vanishing political center.

Where, panel after panel will ask, are the wise moderates, able to seek compromise and rise above partisanship in pursuit of the public good? America’s biggest problems, and its inability to tackle them head-on, will usually be cited as the consequence of this lack of a sensible middle.

Most of the wealthy and well-positioned people in the rooms where these sorts of discussions are conducted see themselves as members of that sadly disempowered middle, so reflections along these lines are generally well received.

Liberal democracy faces a new and decisive challenge – figuring out how to deal with the “post-Communist oligarchies” of Russia and China. These regimes – authoritarian, capitalist and eagerly integrated into the global economy – are without precedent. Figuring out how to deal with them is the greatest strategic and moral question the West faces today. How we answer it will determine the shape of the 21st century, much as the struggle with communism and fascism shaped the 20th.

This is the assertion Michael Ignatieff, a Canadian intellectual and a former leader of the Liberal Party, made in a powerful lecture in the Latvian capital, Riga, at the beginning of this month. Ignatieff’s thesis came to mind during the annual St. Petersburg International Economic Forum, held last week as the gracious former imperial capital for which the forum is named glowed in the pure white light of the summer solstice.

Central to Ignatieff’s argument is his insistence that “history has no libretto.” It isn’t marching toward any particular destination, including liberal democracy, he said: “As late as Benedetto Croce, liberals still thought of their creed as being the wave of the future and thought of history as the story of liberty.”

This column originally appeared in the July/August 2012 issue of The Atlantic.

We buried my grandfather last spring. He had died in his sleep in his own bed at 95, so, as funerals go, it wasn’t a grim occasion. But it was a historic one for our small rural community. My great-grandparents were early settlers, arriving in 1913 and farming the land throughout their lives. My grandfather continued that tradition, and now rests next to them on a hillside overlooking the family homestead.

If you’re a part of the roughly 99 percent of the North American population that doesn’t work on a farm, you might guess at what comes next – many a lament has been written about the passing of the good old days in rural areas, the family farm’s decline, and the inevitable loss of the homestead. But in many respects, that narrative itself is obsolete. That’s certainly true in my family’s case: The Freeland farm is still being cultivated by my father. And it is bigger and more prosperous than ever.

My dad farms 3,200 acres of his own, and rents 2,400 more – all told, a territory seven times the size of Central Park. Last year, he produced 3,900 tonnes (or metric tons) of wheat, 2,500 tonnes of canola, and 1,400 tonnes of barley. (That’s enough to produce 13 million loaves of bread, 1.2 million liters of vegetable oil, and 40,000 barrels of beer.) His revenue last year was more than $2 million, and he admits to having made “a good profit,” but won’t reveal more than that. The farm has just three workers, my dad and his two hired men, who farm with him nine months of the year. For the two or three weeks of seeding and harvest, my dad usually hires a few friends to help out, too.

Tolstoy may have been right about families – “All happy families are alike; each unhappy family is unhappy in its own way” – but the opposite of his famous first line is true when it comes to countries: The world’s disparate unhappy nations are very much alike when it comes to the causes of their unhappiness.

That’s not immediately apparent – austerity-strangled Greece, cheap-money America and military-ruled Egypt are all exhibiting quite different symptoms. But it is no accident that so many of the world’s economies are sputtering at the same time, or that so many people around the globe are angry.

One reason for the synchronized gloom, of course, is the synchronization of the global economy. But the world is suffering from more than a shared summer cold. Rather, we are all, both together and apart, trying to figure out three big questions. Our answers to them will shape the 21st century.

Close families and flexible labor markets don’t go together. That’s the conclusion of a fascinating paper by a quartet of transatlantic economists. Their work should be required reading for all European politicians and for the economists and pundits around the world who seek to advise them.

One truth universally acknowledged in Europe today is that the countries of the south need to overhaul their labor markets: Rigid rules on hiring and firing and on the minimum wage are blamed for the high unemployment and subpar economic growth in these states.

Economists are right to point out that inflexible labor markets exact a high economic toll. So why has there been such resistance in countries like Spain and Italy to changes that would create more jobs and stronger growth? One classic answer is the ability of vested interests – workers who do have protected jobs – to defend their own cushy deal at the expense of everyone else. Another is political dysfunction.

Spending time with top European policymakers at the moment is scary and slightly nauseating, like the final, slow-motion moments before a car accident, when you can see precisely both how you will probably crash and what it would take, if only you could force your paralyzed muscles into action, to swerve to safety.

That’s why Christine Lagarde, the formidable French chief of the International Monetary Fund, told me this week that she wants to lock Europe’s dithering leaders in a room and leave them there until they figure things out.

“If I was able to do one thing, I would lock them in a room, take the key and let them come up with a comprehensive plan,” Lagarde said, when I asked what her fantasy scenario was for Europe. “I’m sure they can make it. I know the fundamentals are solid. The numbers on an aggregate basis are good. And, as I said, we have to take the key because they cannot escape unless and until they’ve firmed up the plan. But they can do it.”

The big economic question in much of the world today is usually framed as the fight between advocates of austerity and advocates of growth. But another way to view the debate is as a contest between those who think that 21st-century government can be effective and those who don’t.

Indeed, some of America’s most outspoken capitalists have begun to fight the “Buffett Rule,” which would set a minimum tax level for millionaires, and other calls to raise taxes for those at the very top, with the argument that money is best left in the bank accounts of the superrich because they are more effective at using it than the state is.

“I’m a job creator. I’m one of the guys who can help us out. I’m a Silicon Valley guy who can invent and create,” T.J. Rodgers, chief executive of Cypress Semiconductor, told me. “If you tax me more, I will either give less to charity or I will fund venture companies less, or I will sell the stock in my own company or other companies I own, like Intel and Google. I will do one of those three things to return the money to the government.”

Are your taxes too high? When Gallup asked that question in April, tax month in the United States, 46 percent said they were. An additional 47 percent said their taxes were “about right.” Just 3 percent said their taxes were too low.

This campaign season reflects that result. Mitt Romney, the Republican candidate, is offering a 20 percent tax cut for everyone. Given the mood of the conservatives in the United States today, that may not surprise you. But even President Barack Obama, who is routinely described as a socialist by his opponents, is peddling a plan under which 99 percent of Americans would pay less than they did under the last Democrat in the White House, Bill Clinton.

This bipartisan agreement that the overwhelming majority of Americans should pay lower taxes than they did in the 1990s is remarkable for many reasons. For one thing, we are constantly hearing – and it is true – that U.S. politics is more polarized than ever. But unless you are a member of the 1 percent, on this core issue there is a lot more consensus than you might think. Political strategists on both sides, it turns out, know how to read poll data.

Are equal rights good for the economy? Campaigns against discrimination, like the battles for women’s rights and civil rights in the 1960s and the fight for gay marriage equality today, are usually framed as struggles for justice.

We think of these issues as entirely separate from economic concerns and sometimes as even running counter to them. Equal pay legislation and rules against discrimination have often been opposed by business on the grounds they would raise costs.

But there is actually a powerful economic argument for equal rights. If you believe that talent isn’t determined by gender, race or sexual orientation, but is instead a roll of the genetic dice, then the most productive society will be the perfectly fair one. A society that is blind to gender, race and sexual orientation will choose the best person for the job – not just the best white, straight man.