Economic Crisis: The Challenge & Opportunity for Barack Obama

On January 20, 2009 when Barack Obama becomes the 44th President of the United States, history will be made in more than one sense. The symbolic importance of his election – as the first bi-racial American to assume this office - cannot be over-stated. True, symbols by themselves do not lead to revolutions. Symbols, however, kindle hope in people and hope leads to the determination for change.

The deep roots of discrimination and oppression that have divided the American society into the privileged and the despised cannot disappear with just one election. From the virtual absence of the Blacks from the key economic and political decision making processes of the country to teen age pregnancies and gun fire on high school campuses, the stamp of racism today has deep roots in the American society. It would thus be too premature to herald the current Presidential election as the advent of a post-racial society, as some analysts have described it. Deep rooted contradictions do not disappear overnight. And questions about Obama’s presidency will continue to be raised - and legitimately so – in the days and years to come.

Obama has come to power at a time when the United States is undoubtedly in a deep crisis, both on the domestic and international front. Domestically, the country is passing through the worst economic crisis since the Great Depression of the 1930s. To some extent, it is this very crisis that has pushed Obama up to his present position. During the presidential campaign, as the economy worsened leading to mounting job losses, the Democratic candidate powerfully conveyed to the electorate the urgency for a change and also, his preparedness to lead the nation in this crisis. He had a credible policy for a new social order and he seemed sensitive to the plight of the millions who fell by the wayside as the economic scene worsened. As Rahm Emmanuel who will be Chief of Staff in Obama’s White House said recently, “Rule one: Never allow a crisis to go to waste… They are opportunities to do big things.�

Even during the presidential campaign, Obama had identified a few sectors as priority areas for the new president. As he swings into action, it is important for us to briefly review these areas with regard to their challenges and their potential:

Economy: December 2008 alone saw the loss of more than 500,000 jobs in the United States, the most in a single month since the end of 1974 which means that a recession already expected to be the longest since World War II will become even worse. Unemployment levels rose to 7.2 per cent, the highest since January 1993. There has been heavy loss of jobs in most sectors – construction, manufacturing, investment, transportation, warehousing etc. The only areas that have withstood heavy loss of jobs are healthcare and, to some extent, education. The government says that more than 11 million Americans are now unemployed. And another 8 million are under-employed, working part-time because they cannot find full-time work. "Many Americans are both anxious and uncertain of what the future will hold," Obama said earlier this month.

Analysts point out that these very challenges could be the opportunity for the new president. Some of the most profound policy changes in recent American history have been achieved by presidents who were elected in times of great economic stress. To cite one instance, dissatisfied with President Herbert Hoover’s economic policies, at the height of the Great Depression in the 1930s, the Americans elected Franklin D. Roosevelt as their new President. Roosevelt succeeded in pushing through the New Deal, with its jobs programmes, Social Security, and regulation of the stock market. Although the recovery of the economy was incomplete until the 1940s, the programmes initiated by Roosevelt, particularly the Social Security system, played a key role in ensuring a certain amount of protection and a safety net for the people.

Health care: The United States is one of the few developed countries in which affordable health care is beyond the reach of most people. For long, the health care sector of this country has been caught in the stranglehold of powerful insurance and pharmaceutical lobbies. These special interest groups have in the past successfully vetoed all proposals to make health care cost efficient and affordable. A unique exception is the state of Massachusetts in which, two years ago, the authorities adopted the Medicare policy that has a universal health care plan. Accordingly, 95% of the people of Massachusetts have some form of health insurance coverage. However, in the other parts of the country, affordable health care is still a luxury for most people.

Obama has identified as one of his key challenges the need to provide affordable health care to all. The details are yet to be worked out. Should medical insurance be made a mandatory requirement for all? Will people be free to buy the policies they prefer? Will the unemployed and lower income groups be covered? The new administration would soon have to grapple with these questions.

Education: While, with limitations, the public school system in the United States has ensured a fairly decent quality of education for most children, higher education today is too expensive a prospect for most high school graduates. In particular, American schools and colleges have been inexcusably deficient in providing fair educational opportunities to the economically and socially weaker sections of the society. It is pertinent to note that two of the fastest growing groups in the country’s population have the lowest college graduation rates: only 37% for black Americans who start college and 44% for Hispanics who start college. In the light of the increasing marginalization of public institutions imparting education, a few leaders of America’s higher education sector reminded the new President in an open letter recently:

“The United States cannot surmount its growing education challenges without strong public universities and community colleges and a healthy education sector. Public institutions educate about 80% of all college students, and carry an even larger responsibility for the nation’s training and adult-education programs. They have the scale and transformative power to contribute to the security of our nation’s future.�

These educationalists therefore, asked Obama to ensure that public universities remain accessible to all students, thereby providing opportunity and hope to families from every social and economic strata.

Relevance for India: Barack Obama’s election has generated an enormous amount of hope across the globe including in India but this euphoria needs to be tempered with caution. What could be the implications of the Obama presidency for India? Some of the American concerns which would have a direct bearing on India would be nuclear non-proliferation, religious extremism and terrorism. It is true that India and the US has had strained relationships for almost 40 years and much of this was the result of divergent views on the nuclear issue. Columnist Uday Bhaskar pointed out recently that after President Bush in his second tenure innovatively recast the template of the bilateral and after the NSG waiver of September this year and the signing of the 123 agreement, Indo-US relations have been qualitatively transformed. “They have moved from long estrangement to preliminary engagement. This basic orientation will not be altered by the Obama victory�, Bhaskar stated.

What would be of direct interest to the Indian public would be the implications of the Obama presidency for India’s economy. The new President’s proposal to deny tax reliefs to American companies that ship jobs overseas would obviously have a direct impact on the economy of India, the country that benefits most by outsourcing. However, it needs to be reiterated that the larger global trade dynamic and the choices made by the Democrat-controlled US Congress will, in the ultimate analysis, decide the final Obama approach to India with regard to trade and commerce.

Like most other leaders who aspire for a just and democratic society, Barack Obama too is irresistibly attracted to Mahatma Gandhi’s message of non violence and resistance to tyranny. "In my life, I have always looked to Mahatma Gandhi as an inspiration, because he embodied the kind of transformational change that can be made when ordinary people come together to do extraordinary things," Obama wrote in an article. The question as to whether the new President is willing or capable of rising up to his Gandhian vision would be interesting for us to watch and see. What was expressed at the last election was the determination of the people for a change. The significance of the moment is that it is the power of the people – where “ordinary people come together to do extraordinary things", that has propped Obama up in power. That is the conviction that time and again, the people decide to take destiny into their hands and bring about changes. This is one such time.