American uncertainties

The recent United States congressional elections have given the impression of dissatisfaction on the part of the American people with the Democratic Party leadership in both Houses, and particularly in the House of Representatives. But more than that, the result is seen as indicating disappointment with President Obama’s tenure in the White House, a sentiment which the President himself seems to strongly sense. Much of the disappointment seems to stem from the stubbornness of the unemployment figures. And those put out last week, indicating more unemployment than in recent months, suggest that there is not likely to be the kind of improvement in the near future that can diminish the disappointment of the voters.

In all that has happened since the onset of the financial, and then wider economic crisis in 2008, the government has not done unreasonably, given the relatively rapid improvement of the banking system, the original source of the trouble. What has seemed to give rise to pessimism among Americans, including many economic analysts, however, is the relatively slow growth of the US economy, as is the case of other industrial economies like the United Kingdom and Japan, relative to the growth of the Chinese and Indian economies in particular. The analysts, though, would themselves know that historically there is nothing wrong with this, the industrial economies being more mature than the others.

Among some Democrats, it is felt too, particularly since the elections, that President Obama may be conceding too much to the demands of the Republicans, now acting more assertively than in the first years of his adminstration. And professional critics, like the Nobel Prizewinner, Paul Krugman, go further to assert that a result of his policy is likely to be a continuation of the low unemployment figures  and property prices even as the banks and other financial institutions return to reaping substantial profits. He claims that the President’s actions seem to suggest that he supports the pre-World War depression economic analysts who used to proclaim that measures similar to what the Republicans now support, would rebalance a faltering economy.

The President himself seems to believe that in the light of the election results he must make some concessions to the Republicans, particularly in the House, if he is to maintain the basic thrust of his economic policy. Some analysts believe that he is persuaded that such a thrust, pursued by President Clinton in similar circumstances during his first term, is likely to give him breathing space for the economy to recover over the next two years to the presidential elections. But as he pursues this course in domestic policy, his political critics also now throw at him that he is carrying this style of making concessions from the domestic sphere into his international economic policy, as he seems to believe that he should act in this way to China, in order to get the leadership of that country to cease manipulating its currency to ensure the continuation of the pace of its own economic growth. But the Chinese appear to give no sign of any major concessions themselves, the most recent meeting of the G20 being perceived as not making much forward movement in terms of a general revaluation of countries’ currencies that the industrial countries and the IMF/World Bank would like to see.

In international affairs, the President had, from the outset of his administration, tried to persuade the American people of the global changes in both economic and political matters that would mean that the United States would have to seek to persuade other powers, over whom it now has less influence than in an earlier period. He has portrayed the George W Bush policy of intervention in Iraq as misconceived, both politically and in terms of economic strength. And he has seen his task as being to extricate the United States from Iraq and from Afghanistan, in order to put itself in a position to deal with the issue of the emergence in global politics and economics of new powers.

But while he has pursued Bush’s policy of trying to persuade Iran to cease any attempt at creating an armoury of nuclear weapons, he has also followed Bush’s policy towards India, which suggests that once a country attains nuclear weapons, against the Americans’ advice, the US is willing to come to terms, once that country demonstrates a certain moderation. But while that policy has seemed to work in a parliamentary democratic India, it has not worked in the case of Pakistan, which the US has seen as a strategic ally since the Cold War era, but which seems to be drawing the US into a more complex maelstrom in Afghanistan, and hindering its policies towards India.

To some of his foreign policy critics, the President is seen as allowing, on the part of China, the same, to them, recalcitrance that it displays in economic policy. They believe too that China is too tolerant of North Korean policy towards the South and on nuclear weapons development; too tolerant to Sudan in terms of that country’s oppression of its southern section; and too uncooperative in its policy towards Iran. In the meantime, however, the Chinese have, in some respects, found allies for their policy towards Iran, in the recent policies of emerging countries like Brazil and Turkey, who prefer a more conciliatory line than the threat of ‘taking out’ Iran’s nuclear facilities. In addition, the Chinese have taken a line of almost contempt towards America’s main ally Japan, on the issue of post-World War II territorial settlements; and one of unwillingness to press North Korea too hard on its threats and bombings vis-à-vis Japan.

There is some sympathy in liberal American circles for the President’s relative moderation in the foreign policy sphere, in the context of their understanding of the changes that economic globalization is introducing into international politics. They understand the need for the United States to recognize that it is not the sole creator of global policy in the sense that it has been for most of the post World War II period. But there is also much fear among ordinary American citizens that the President’s foreign affairs policies are constrained by the weakness of the American economy, now seen by them to be in a fierce competition, not with the industrial powers of Europe or even Japan, but with China. There is little sense on their part, that the United States is still by far the largest economy in the world (even though followed at some distance by China), and that China itself is intertwined in a complex economic interdependence with the US which probably makes any hostile actions by China as likely to be as harmful to itself as they might be to the US. Instead the American people see an increasing dependence of their economy on China, even though that dependence is the result of intense American investment in that country over the last twenty-five or so years. And from that has evolved the feeling of fear and uncertainty, sentiments which the Republicans now feel sure they can convey into a wide sense of weakness on the part of the President, and make him a one-term occupant of the White House.

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