America: From Anxiety to Hope

It has happened. He has overcome the race barrier. A black man has been elected president of the United States, a country deeply affected by its original sin, slavery. But can Barack Obama overcome another barrier, which dates back 20 years in America and which has touched Europe, that of class?

At the end of the First World War, America had become a large factory, turning all social classes into one middle class. Around the same time, the USSR was creating a society with “one class only” “the working class,” while the American dream was being built in the same way, but to provide opportunity for all. “It’s a country which allowed our grandparents and our parents to believe that, even though they couldn’t go to college, they could put a little aside each week so that their children could go to college, that even if they couldn’t own their own business, they could work hard enough that their children could open theirs,” Obama recalled. This “American dream” was, he highlighted, what allowed the country to represent the “best hope on Earth,” it was “its moral standing.”

Now, it is finished. The economic system which is currently in place is destroying the “middle class,” or so they believe. During the whole campaign, the Democrats relied on figures from the French economist Thomas Piketty, who calculated that, between 2000 and 2006, while the GDP of America increased by 18%, the average salary ($2000) decreased by 1%. At the same time, the salary of the Top 10% (the richest 10%) climbed by 32%, that of the Top 1% climbed by 203% and the Top 0.1% by 425%. The economy functions, argue the Democrats, like a pump which pulls in the rich at the bottom to bring them out on top. The possibility of “putting a little aside for the children” is finished. Other indicators (like university admissions) point towards the “social elevator” changing direction. The dream society is giving way to one of anxiety. “Americans will have a government which will invest in the middle classes,” Barack Obama promised. The question is: How? How, notwithstanding the financial crisis and the recession, can an occupant of the White House change the direction in which wealth moves? Can politics recreate the “American dream”?

Economists close to the newly-elected president admit that the problem is one of their most difficult and that they don’t have an instant solution. But, we can break it down into three possible options. The first is from the Clinton era, that of the “Third Way”: Growth will provide for all, as long as it is at a sufficiently high-level. “When the tide rises, all the boats in the port move upwards,” explained Larry Summers, adviser to the ex-president. Sadly, during the last economic cycle, larger salaries grew, while small salaries didn’t, without anyone really knowing why. In any case, “When the tide rises, only the yachts move upwards now,” admitted Larry Summers last year. The Clinton solution is inadequate.

The second option is to improve “equal opportunities.” That starts with primary and secondary level education in America, which is failing (in contrast to their universities) “We are going to recruit an army of teachers,” said Obama. Next, redistribution of wealth. The president’s policy plans to tax the rich (those earning more than $250,000 per year), to restructure pensions, and to build a social security system for all.

Quite rightly, Paul Krugman, the Nobel prize-winner of 2008, reminds us that black people were the reason why whites refused to pay social security contributions in the past: Now that the racial barrier is lifted, this obstacle is avoided. The second option will require State intervention and is needed, but has its downsides (being efficiency and cost).

The third option involves creating “average” jobs, aimed at the middle class. The only high-tech success story was not enough to provide opportunity for all, but even so, should General Motors be saved? How can we avoid protectionism?

In a global, developed society, with households heavily in debt, what new growth can Barack Obama offer? On the subject of the third option, which would be an indispensable accompaniment to the second, he has not said much.