A time for greater influence by centre-left politics?

The recent election of Barack Obama as the US president, along with an increased Democrat majority in the US Congress, provides an opportunity for more effective national and international leadership, or does it?

Quite simply, the struggle of Western nations to balance national economic competitiveness with compassionate policies to protect the most vulnerable is getting harder with both centre-left and centre-right political parties struggling for answers.

Though many centre-left governments have been in power often for lengthy times, they have struggled to maintain the confidence of their people. One has only to note the election of many centre-right governments in recent years, as evident in France, Italy, Sweden, Germany and most recently New Zealand.

Western governments are under greater pressure to find enough resources to meet many economic, social and environmental needs as they pay greater attention to taxation levels and labour costs in order to compete in economic terms. Though social welfare spending to the disadvantaged at the domestic level increased in 24 of some 27 OECD nations measured between 1990 and 2003, including from 13.4 to 16.2 per cent of GDP in the US, 12 OECD nations already had a public debt to GDP ratio of between 50 and 180 per cent by 2007 (including the US).

But the US government still has the capacity to influence change more than any other nation.

A crucial question that confronts Obama and the Democrats is how far the US is prepared to tolerate freer trade.

As I have long argued in On Line Opinion and previously Quadrant, recent policy trends associated with freer trade have indeed favoured corporations and the wealthy most as national governments have been forced to compete to a greater extent than previous decades.

But consistent with my support for liberalism, President Bush (on November 13, 2008) was correct to argue that freer trade was not the evil villain as it has “delivered prosperity and hope to people around the world”, albeit that it has been a non-democratic China which has benefited most in recent decades.

This does not imply that much reform is not needed. As Bush elaborated, the financial system does need greater “regulation and more transparency”, improved accountancy rules, better co-ordination of national laws and regulations, while the World Bank and the International Monetary Fund need to become more representative of a changing world.

Yet, undermining processes associated with free trade would be an admission that the wealthy nations are not committed to a fairer world.

While the centre-left will argue that extra measures are necessary to help battlers in the US and other Western societies, this may actually harm the economic prospects of poorer people in developing nations at a time when 80 per cent of the world’s population still live on less than $10 a day.

Certainly we face interesting political times as Western societies will have to decide just how liberal the economy should be, a debate likely to become more heated in the US should industry icons such as General Motors and Ford become obsolete.