By Chrystia Freeland
NEW YORK Oct 11 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
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
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.