Chrystia Freeland

You might call it the cognitive divide — the split between an evidence-based worldview and one that is rooted in faith or ideology — and it is one of the most important fault lines in the United States today.

President Barack Obama called attention to the cognitive divide, and reminded us which side he comes down on, at the beginning of this week, when he chose the Princeton University economist Alan Krueger to lead his Council of Economic Advisers.

Krueger is a labor economist, and at first blush, that focus may seem the important part of his résumé. Unemployment, after all, is still above 9 percent, and the president has said job creation is his priority. But when you talk to the insiders about Krueger, what they emphasize is his mastery of data and his utter commitment to the truths it can be coaxed to tell.

Lawrence Summers, the former Treasury secretary and a Harvard economist, described Krueger, his former student, as a “total empiricist” and a “great data monger following the data where it went.” Lawrence Katz, a fellow Harvard economist and one of the pre-eminent labor economists, enthusiastically agreed: “Alan has an open mind and lets the data speak.”

Krueger’s passion for data runs so deep that one of his major professional projects has been, as Katz put it, “to actually improve the data.” Krueger was the founding director of Princeton’s Survey Research Center. When he can’t find the data he needs to answer a particular question, he goes out and gets it.

“Alan is almost unique among leading economists in that much of his work is based on additional data he collected,” said Justin Wolfers, a professor at Wharton Business School at the University of Pennsylvania.

Krueger’s devotion to data is a key to understanding a question that has been puzzling a lot of Americans as they reflect on the past three years, and start thinking about how they will vote in the upcoming one: What does Obama really stand for?

To his critics on the right, the president is a socialist with dangerous foreign antecedents. To his critics on the left, he is a waffler with no real point of view and a craven desire to be liked.

Krueger’s nomination points to an entirely different explanation: The president is an empiricist. He wants to do what works, not what conforms to a particular ideology or what pleases a particular constituency. His core belief is a belief in facts.

Obama the empiricist is not the man who surged from behind to win the 2008 presidential election. That candidate was the Obama of soaring rhetoric, who promised hope and change.

But the pragmatist has always been there. Writing in September 2008, several weeks before the presidential election, Cass Sunstein, who has gone on to serve in the White House, had this to say about his candidate: “Above all, Obama’s form of pragmatism is heavily empirical; he wants to know what works.” Word crunchers found that the president’s 2009 inaugural address was the first one to use the term “data” and only the second to mention “statistics.”

That cognitive approach is one reason Obama attracted so much support, especially among younger people, on Wall Street and in Silicon Valley. Obama is a data-driven technocrat, and so are the traders and the Internet entrepreneurs. As one insider, who is equally familiar with Wall Street and with Washington, told me: “You want your money managed by people who are responsive to evidence, who care about results and who understand that the world is an uncertain place. Obama wants to get his economic advice from the same sorts of people.”

But as the presidential campaign begins to heat up, starting with the Republican primary race, the empirical worldview that Obama embodies is taking a beating. The candidates who have made the strongest start are those with a proudly faith-based approach. According to a Quinnipiac University poll released this week, Governor Rick Perry of Texas is the Republican front-runner. He spoke at a Christian religious rally on the eve of entering the primary contest last month and has questioned the science of evolution and climate change.

The Republican Party has its own evidence-based candidates, and they are struggling to respond to the faith-based worldview that Perry so powerfully embodies. One of them, Jon M. Huntsman Jr., is playing up his credentials as the right’s empiricist. He has said he thinks climate change is a fact and warned Republicans against becoming the “anti-science party.”

Mitt Romney, who was the front-runner before Perry blazed onto the scene, has been more ambivalent. Romney’s business background puts him squarely in the camp of the empiricists: it is hard to make millions in private equity without appreciating the power of data. But Romney knows who votes in Republican primaries, and last week he hedged his previously explicit position on climate change.

The divide between the empiricists and the believers is also the fault line between the highly educated, technologically adept super-elite and the squeezed and scared middle class. But those hoi polloi voters, who, in 2012, as they were in 2008, seem to be drawn to politicians with big ideas and strong beliefs, may also be responding to something even bigger than this cognitive divide.

We are today, as we were in 2008, living through an unprecedented crisis. The economies of the Western world are sick, and the international balance of power is shifting. To be driven by data is an admirable thing. But when you find yourself in dangerous and uncharted waters, there is no data to guide you.

On last Thursday’s edition of Davos Today, Chrystia interviewed a top Google executive about the internet giant’s recent management shake-up; chatted with President Obama’s former chief economic adviser about the State of the Union; heard from America’s principal union leader on what lessons Germany and Japan can teach the U.S. economy; and more.  Here’s the video and the guest list:

* Nikesh Arora, Senior Vice President and Chief Business Officer, Google

* Larry Summers, Former Director of the National Economic Council and Former Secretary of the Treasury

* Min Zhu, Special Advisor to the Managing Director, International Monetary Fund

* Henry Blodget, Editor-in-Chief, The Business Insider

* Nouriel Roubini, Professor of Economics and International Business, NYU Stern School of Business

* Clay Shirky, Adjunct Professor, NYU Interactive Telecommunications Program

* Richard Trumka, President, AFL-CIO

* Susan Glasser, Editor-in-Chief, Foreign Policy

* Richard Haass, President, Council on Foreign Relations

* Sunil Godhwani, Chairman and Managing Director, Religare Enterprises Limited

Posted by Peter Rudegeair.

The best line in U.S. President Barack Obama’s State of the Union address was his contention that “this is our generation’s Sputnik moment.”

It was smart because the essence of the idea is obviously true: Just as the Sputnik launching in 1957 terrified Americans with the prospect that they might lose their global scientific supremacy, the rise of the emerging markets, particularly China, has made them worry they could be losing their technological edge.

Mr. Obama’s evocation of NASA and the moon landing was an emotionally powerful reminder that Americans haven’t always viewed government investment – or even government spending – as an unequivocally bad thing.

Today’s Sputnik moment is playing out in an utterly transformed world economy whose defining characteristic is its interconnectedness. That makes winning a lot harder to define. The United States wanted the Soviet Union to lose – not just in space, but back on Earth. This time around, it isn’t quite that simple. In the age of globalization, America wants to win, and it wants everyone else to win, too – except when it doesn’t.

The President’s speech reflected that ambivalence. At times, he framed the country’s economic challenge as a Cold War-style, zero-sum game: “the competition for jobs is real,” “we need to out-innovate, out-educate, and out-build the rest of the world,” innovation must “produce jobs in America and not overseas.”

But another part of the address was about enmeshing the United States more deeply in the global economy and making it even more dependent on the prosperity of its sometime rivals. The President talked up trade – boasting about agreements with India and China, claiming credit for his hard-won free-trade deal with South Korea and pledging to pursue similar pacts with Panama and Colombia.

Business people (and teenagers) are used to this sort of complicated relationship with counterparts that are sometimes rivals and sometimes partners – they call them frenemies. Nowadays, countries live in a world of frenemies, too. T.K. Kurian, CEO of pioneering Indian outsourcing company Wipro IT, said in an interview that to succeed in the fast-growing emerging markets, Western companies needed to move some of their research and development there. That, he said, was the only way they could truly “understand what a frugal environment means.”

Lest the point be lost on Davos attendees, Azim Premji – chairman of Wipro Ltd. and Mr. Kurian’s boss – told a cautionary tale of the mistakes Western multinationals make when they approach emerging markets with the “mindset of an American sitting in Milwaukee or the mindset of an automobile design engineer sitting in Detroit.”

Ford, Mr. Premji said, wanted to create a cheaper car for the Indian market. To bring down costs, it produced a model with only two electric windows, rather than four. But those two were in the front of the car, next to the chauffeur. Anyone able to spend $15,000 on an automobile sits in the back seat, and those owners weren’t pleased to be downgraded to manual windows.

The good news, Mr. Premji and Mr. Kurian said, was that Western companies that master emerging market research and development often find they have come up with an inexpensive product they can sell to cost-conscious consumers back home. Except that may not be such good news to the American in Milwaukee or the engineer in Detroit who joins his blue-collar brethren in being displaced by workers abroad. Hence – frenemies.

The biggest example of how we are all frenemies was Mr. Obama’s push for export-led economic growth. From a national perspective, it makes a lot of sense: After all, it is a strategy that is paying off for China and Germany, two of the world’s most robust economies. The catch is that export-led growth won’t work if everyone tries it.

“Not everybody can have export-led growth,” said Lawrence H. Summers, the President’s former chief economic adviser, who went back to Harvard at the beginning of this year. “The thing economists know is that all the trade balances, if you add them up, have to sum to zero,” he said, because “there are no Martians to whom we can export.”

And that is why the political leaders here at Davos are frenemies. Each one wants his country and its national champions to win in the new global arms race of producing high-tech, high-value-added exports. But he also wants his neighbours to be rich enough to buy those goods – and nowadays everyone, even consumerist America, has decided that the only path to prosperity is to likewise pursue a strategy of export-led growth.

Balancing these global appetites is the world’s Sputnik moment, and it may make putting a man on the moon – or even Mars – look simple in comparison.

“When governments seek to manipulate exchange rates for competitive advantage, it rarely ends well,”  White House economic adviser Larry Summers said at the Yalta European Strategy Annual Meeting this past weekend.

Summers stressed the need for reducing global imbalances, which require both smaller surpluses in surplus countries and smaller deficits in deficit countries. Regarding the U.S. economy, Summers reiterated President Obama’s pledge to double exports in the next five years. He added that growth, “while still clearly unsatisfactory, is positive. The economy is growing. The process of recovery is underway.”

When I asked Summers if he is worried about America’s budget deficit, he said only in the long term. In the short term, Summers says the focus must be on growth:

There is no prospect that we will achieve fiscal health without the restoration of satisfactory growth in the United States and in the rest of industrialized world. That’s why putting people to work is also a central imperative for our economy. I think that other nations have to recognize that as the United States reduces its budget deficit, that, of course, means the government will be providing less of the demand energy that pushes the economy further. So that demand energy will have to come from other places, which goes to the question of the global growth strategy, goes to policies in other countries that either promote surpluses or very severely limit trade deficits and rely on the rest of the world, including relying on the United States, for growth.