Speaking to the Canadian Parliament in Ottawa on Wednesday evening, President Barack Obama took the opportunity to defend his administration’s broad approach to globalization and inequality, slamming isolationists and xenophobes on the right as well as the dogmatic laissez faire ideology that he believes gives them succor. But he also took to task critics on the left who see retreat behind national boundaries as the only way forward in a global economy — making a call for more globalization and bigger government combined as the key to a successful progressive internationalist approach to the world economy.
The content of the speech was determined in part by simple timing — the Brexit vote and Donald Trump’s presidential campaign are increasingly on the minds of people in the English-speaking world, and the address came in the context of a summit meeting of the NAFTA states’ heads of government, so globalization was a natural topic.
But the speech can also be seen as in some ways a passing of the baton of leadership to Canadian Prime Minister Justin Trudeau, someone who Obama sees as a like-minded figure who will carry forward his basic approach to policy. Hillary Clinton, of course, is more literally Obama’s successor. But Clinton and Obama are at odds on the Trans-Pacific Partnership. Beyond that, in realistic political terms, Clinton is likely to face the same congressional gridlock that’s bedeviled Obama for the past five years in ways that will make it impossible for her to govern expansively. By contrast, Trudeau, as the leader of a parliamentary majority, has enormous freedom to enact a progressive policy agenda and actually put an Obama-style vision into practice.
Obama’s message: Embrace globalization and fight inequality
An American president speaking in Canada about events in the United Kingdom is a bit unusual, but after briefly addressing the practical difficulties of Britain leaving the EU, Obama said that “while the circumstances of Brexit may be unique to the United Kingdom, the frustrations people felt are not.”
In particular, Obama said that “the long-term trends of inequality and dislocation and the resulting social division — those can't be ignored.” He means that as both an ethical and a practical “can’t,” arguing that “how we respond to the forces of globalization and technological change will determine the durability of an international order that ensures security and prosperity for future generations.”
In other words, if national governments insist on the David Cameron/Paul Ryan approach of leaving everyone on their own in the global economy, we’ll end up instead with the Donald Trump/Nigel Farage politics of backlash.
What’s needed instead are robust domestic policies to ensure that growth is broadly shared:
But if the financial crisis and recent recession taught us anything, it’s that economies do better when everyone has a chance to succeed. For a long time, it was thought that countries had to choose between economic growth or economic inclusion. But it turns out that’s a false choice. If a CEO makes more in a day than a typical employee makes in a year, that kind of inequality is not just bad for morale in the company, it turns out it’s bad for the economy — that worker is not a very good customer for business.
If a young man in Ohio can’t pay his student loans, or a young woman in Ontario can’t pay her bills, that has ramifications for our economy. It tamps down the possibilities of growth. So we need growth that is broad and that lifts everybody up — including tax policies that do right by working families, and robust safety nets for those who fall on hard times. As John Kenneth Galbraith once said, “the common denominator of progress” is our people. It's not numbers, it's not abstractions, it's how are our people doing.
But along with his criticism of both strains of right-wing politics current in the contemporary West, Obama also took a shot at the Bernie Sanders approach:
Of course, many who share this progressive, inclusive vision can be heard now arguing that investments in our people, protection for our workers, fair tax policies, these things are not enough. For them, globalization is inherently rigged towards the top one percent, and therefore, what’s needed is an end to trade agreements and various international institutions and arrangements that integrate national economies.
Obama is careful to say “I understand that vision, I know why it's tempting” but he argues that it’s unworkable:
There’s just one problem: Restricting trade or giving in to protectionism in this 21st century economy will not work. It will not work. Even if we wanted to, we can't seal ourselves off from the rest of the world. The day after Brexit, people looked around and said, oh! How is this going to work? The drag that economic weakness in Europe and China and other countries is having on our own economies right now speaks to the degree to which we depend — our economies depend, our jobs, our businesses depend — on selling goods and services around the world.
Very few of our domestic industries can sever what is now truly a global supply chain. And so, for those of us who truly believe that our economies have to work for everybody, the answer is not to try and pull back from our interconnected world; it is rather to engage with the rest of the world, to shape the rules so they’re good for our workers and good for our businesses.
The only way forward, Obama says, is to do both. To embrace trade and technology and globalization and change, but also to spend money on infrastructure and education and human services and build labor market institutions that encourage high pay.
Trudeau can carry this vision forward
The problem with this formula in the American political context is that the people who espouse it have often been unable to deliver in practice.
Bill Clinton preached exactly this approach during his administration in the 1990s. But given the congressional politics of the time, what we got in practice was a couple of big doses of globalization — NAFTA and, especially, China’s entrance into the World Trade Organization — and some very modest gestures at expanding human services at home.
Barack Obama’s done better than that, delivering a massive dose of redistribution in the form of the Affordable Care Act, paired later with some important changes to the tax code.
But those ideas have only very partially reversed the generation-long rise in inequality that preceded them, and there’s little sign that they’ve broken the trend. What would be needed to get the job done is not one more legislative initiative but a consistently engaged governing majority committed to making it happen. Obama doesn’t have that. And even though his designated successor Hillary Clinton has plenty of policy ideas that would contribute to this vision, there’s little chance she’ll have the votes in Congress to make it happen.
The risk for Obama-style politics in the United States is that people will see that and blame Democrats for failing to deliver on their egalitarian promises rather than blame Republicans for blocking their egalitarian initiatives. This is where a country like Canada, whose more majoritarian institutions have already allowed Trudeau to enact a big progressive tax shift plus a generous new cash benefit for parents and children comes into play.
Progressive internationalists in America are going to need examples to point to of places that have put their governing agenda into practice to sustain faith that the kind of vision Obama points to is more than a mirage. Previous generations of American liberals often looked to European welfare states for inspiration, but European social democracy is in a state of semi-permanent chaos induced by its inability to offer an EU-level governing agenda. Canada in this sense, though a small country, becomes a potent example — just as Sweden and Denmark have been in the past — for politicians in bigger countries looking for inspiration.