America and the World after Barack Obama

Let's hope so...

Can you imagine the job description: “Executive needed to turn around organisation of 300 million people, $ 10 trillion in debt, spending 40% more than earning, and involved in two large and expensive wars. Must provide own management team.”

This is the job that President Barack Obama now has. The American Left is resurgent. Democrats now control the Senate, the House, and the presidency. In short, they can now pass any legislation, limited only by the constitution.

There are a few big economic objectives that Obama had in mind: raising taxes on the richest 5%, fining companies who export jobs from the US, curbs on the fees that lenders can charge, instituting a national health system similar to many of Europe’s socialised services.

The explosion in the national debt may put paid to many of these plans, as they will be expensive to finance. Tax increases, in particular, may have to be a bit more widespread than just the top 5% of earners.

How does this impact on the rest of the world, and, particularly, on Africa?

Democrats tend to be more like old-style lefties; anti-trade, pro-unionisation and in favour of collective action. Their instincts will be to raise tariff barriers on foreign trade and, especially after the adventurism of the Bush years, to cut their involvements with the outside world.

In a global era, with companies that are largely supranational anyhow, blocking them from moving existing jobs from America may have the perverse effect of promoting investment in the rest of the world. Companies, aware that they face penalties if they move jobs offshore, may not create them at home in the first place.

The likelihood is that, given China’s massive and growing internal market, Asia Pacific will be the destination for much of US investment. China’s massive budget surplus of $ 1.8 trillion is proving a healthy cushion against the global financial crisis, and China is a major customer of African resources.

In other words, business can continue as normal in the rest of the world even as the US turns inwards and divests itself.

In many ways there are parallels between the US today and the UK of the 1960s and ‘70s. Then, as now, economic crisis was met with a dramatic turn to the left. Then, as now, the crisis was deepest in the largest economic power-house. The UK went from being the most important economy in the world, to massive labour unrest, regular power failures, critical food shortages, a three-day working week and crumbling infrastructure. It wasn’t until Maggie Thatcher arrived in 1979 to divest the country of the worst of its political baggage that the nation turned around.

That doesn’t mean to say that Obama promises the sorts of economic silliness that Harold Wilson and James Callaghan unleashed, but the potential to unilaterally go leftward, as George W Bush went unilaterally rightward, exists.

The tragedy of such an approach to governance is that, in Barack Obama, the US has the most inspiring leader in generations. He has the potential to remind people exactly what they find so interesting and exciting about American culture. If he limits himself to isolating the US, he also isolates the American view on culture, economics and society.

Europe is a rapidly aging region, with a less engaging vision for the future. The most aggressively outward-looking parts of the world have many unattractive features. China has a dictatorial approach to free speech and limited tolerance for human rights. The Russians responded to the results of the US election by deploying missiles in Kaliningrad, near Poland, and aimed at NATO members.

As President-elect Barack Obama assembles his cabinet and prepares to introduce his objectives to his nation, I wish him well. He has an extraordinarily hard job ahead of him.

But let him not squander the international goodwill that has greeted his victory.