BARACK Hussein Obama last week began his second term as president of the United States of America with enormous challenges at home and abroad, and mindful that his historic legacy will be substantially shaped by how much progress he makes towards resolving them.

Of course, there are several paths to a legacy of historic proportion. My hope is that the president will traverse a route towards delivering on more of the hope he infused in the progressive coalition of American voters, especially in 2008; reversing growing inequality of income and opportunity in American society; and ‘earning’ the Nobel Peace Prize he was awarded in early anticipation of an era of multi-lateral co-operation replacing unilateral flexing of American power.

In his first term there were some notable achievements despite deep and hateful opposition from the Republican right. The economic recovery — albeit weak — from the recession, and passage of the Affordable Health Care Act are signal achievements. But for a leader who promised so much to so many, these do not rise to the level of legacy.

There’s much more to do. Mr Obama touched on some of the challenges immediately after his re-election last November when he envisioned a United States “that is not burdened by debt, weakened by inequality, threatened by the destructive power of a warming planet” and a world that is safer, and where America is respected for its responsible leadership in an inter-dependent world.

He reaffirmed those and related themes at the inauguration, making it clear that he would fight for some of the fundamental changes he championed during the election campaign.

These themes are important to both the domestic and the global policy agenda. Joseph Stiglitz, the respected Nobel prize-winning economist, argues that inequality and the slow recovery are two sides of the same coin.

“With inequality at its highest level since before the Depression, a robust recovery will be difficult in the short term, and the American dream — a good life in exchange for hard work — is slowly dying,” he wrote in a recent article in the New York Times.

The data indicate that over the last 30 years in the United States, the rich have been getting richer at the same time that the poor and the middle class have become poorer.

A study, The Asset Price Meltdown and the Wealth of the Middle Class by Edward N Wolff of New York University published August 26, 2012 examined wealth trends from 1962 to 2010.

“The most telling finding is that median wealth plummeted over the years 2007 to 2010, and by 2010 was at its lowest level since 1969. Indeed, from 1983 to 2010, the share of total wealth in the US held by the richest 10 per cent of American households increased from 68.2 per cent to 76.7 per cent, while the other 90 per cent of the population got poorer.”

Similarly, the free-market-oriented magazine The Economist in a special feature last October concluded that “the magnitude and nature of the country’s inequality represent a serious threat to America”.

Stiglitz spells out the economic costs of inequality to the recovery: “The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth.”

Also, “the hollowing out of the middle class since the 1970s means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses; and the weakness of the middle class is holding back tax receipts.”

Stiglitz said, “As Mr Obama’s second term begins, we must all face the fact that our country cannot quickly, meaningfully recover without policies that directly address inequality. What’s needed is a comprehensive response that should include, at least, significant investments in education, a more progressive tax system and a tax on financial speculation.”

These are not easy things to do, as most will require legislative approval which the Republican right can hardly be expected to approve.

We in Jamaica have a vested interest in how these issues get resolved. A strong recovery will have positive spinoffs for tourism, bauxite/alumina and inflows from remittances. In these uncertain times we are more than bystanders.

And there is a broader global issue: Persistent inequality in the heartland of capitalism and chief promoter of globalisation can hardly be an advertisement for the magic of free markets. Gross inequality is a threat to stability everywhere and is, therefore, a global challenge requiring a new kind of multilateral co-operation to share the rewards of enterprise more equitably.

A different kind of global engagement

President Obama’s first foreign trip after his historic election as first African-American to hold that office was to Cairo, Egypt where he declared that the United States had embarked on a new, non-interventionist course after eight years of his predecessor.

As Amitai Etzioni, professor of international relations at George Washington University, reminded in a recent blog on Huffington Post, Mr Obama was “going to engage other nations rather than confront them, work closely with allies rather than rush ahead unilaterally, restore the good name of the United States across the word and win over the Arab street”.

Things have not quite turned out as expected in the Middle East or elsewhere. There is a view that after four years there is a new opportunity for a dose of realistic idealism for a multi-polar world where the United States has less influence and control over events.

Professor Etzioni believes that “the main place for renewed hope is in the Far East”. It has been noticeable that in recent times, President Obama has “pivoted” to China in recognition of China’s growing influence in the world.

What’s not so clear is how a new relationship with China might emerge. According to Professor Etzioni, some American students of foreign relations see China as a rapidly rising global power that will challenge the USA. They call for increased military spending and presence by the United States and even preparations for a war with China.

Others hold that China merely seeks to secure the flow of raw material and energy on which its economy depends, and that its main aim is to continue to provide for its people rather than impose its regime upon other nations, let alone take on running the world.

With China playing an increasing role in investment and development assistance in Jamaica, securing raw materials and markets in Africa and Latin America and flexing in its own neighbourhood in Asia, there is no shortage of discussion about China’s motives. Personally, I believe the threat is overstated, especially when it comes from places that have had their own history of exploitation of these lands and peoples.

Given that China will shortly overtake the US as the largest economy, and given its influence, it is not surprising that some analysts believe that President Obama’s response to that challenge may be the most important actions of his second term.

Professor Etzioni puts it this way: In terms of weighty consequences for the future of the world, and for the United States’ role in the future world order, “nothing will be as determinative as developments in the Far East. The final judgment on the hope Obama generated will be much influenced by whether he leaves to his successor a United States embroiled in a new Cold War and arms race, or a United States that is part of an ever-reforming world order in which China, Japan, India, Brazil and many other nations all have a peaceful, albeit largely regional, role to play”.

I hope it is the latter, and the president’s progressive coalition in concert with liberals across the globe should nudge him in that direction. That way he will earn his Nobel Peace Prize.

kcr@cwjamaica.com