As Barack Obama leaves the White House, it is an opportune time to assess the impact of his two-term presidency. Especially now that Donald Trump promises to take the US and the world down a different and, I believe, very dangerous path.
When Obama was first elected in 2008, the world economy had been smashed by the global financial crisis. He had promised a U-turn with respect to the inconsiderate policies of the George Bush era, including the largest tax cuts for the wealthy ever implemented in US history. This is why many expected that the new president would seek help from those economists and experts that had predicted the crisis.
Joseph Stiglitz, for instance, had been chief economic adviser to Bill Clinton and his knowledge of market irrationality, which won him a Nobel Prize, would have helped the government deal effectively with one of the greatest market failures of all time.
Paul Krugman, another critic of the free market economy whose work had indicated the risks of a systemic failure, has just won the Nobel Prize.
To the contrary, Obama turned to the bankers that had caused the mess in the first place, disregarding Einstein’s famous maxim that “we can’t solve problems by using the same kind of thinking we used when we created them”.
Not only did Obama appoint the head of New York’s Federal Reserve, Tim Geithner, as secretary of the Treasury, but he gave the important position of head of the National Economic Council to Larry Summers, a staunch supporter of Wall Street, closely associated with the most prominent investment banks in the country.
The rest, of course, is history: the government disbursed trillions
in successive bail-outs, according to a calculation published by The New York Times (well beyond Bush’s planned bail-out, the so-called Troubled Asset Relief Programme, which totalled $700bn), leaving little funding available to assist working-class people and small businesses, which bore the brunt of the crisis. No surprise that many critics described this phase as “capitalism for the poor and socialism for the rich”.
When in 2009 Obama surprisingly (and prematurely) won the Nobel Peace Prize, many felt such an honour would compel him to lead the world in a different direction.
We all expected that the president would question the US’s imperialist tradition and that his African roots would make him sensitive to the call made by the developing world for fair trade, elimination of subsidies for US exports, cancellation of debt for poor nations and a stronger focus on sustainable and equitable development.
Again, to the contrary, Obama has been pushing for the quick adoption of two massive international free trade agreements, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, which threaten not only the welfare of small businesses and middle-working classes in the US, Europe and Asia, but also the ability of many countries in the Global South, especially Africa, to carve a space for themselves in the global economy.
Read the full article in Business Day: https://www.businesslive.co.za/bd/opinion/2017-01-20-despite-the-achievements-barack-obamas-legacy-will-remain-controversial/