U.S. President Barack Obama did a miserable job of making his own case last week in the televised election debate. But speak to his supporters and the pitch is clear: The U.S. middle class is being hollowed out; Mr. Obama's self-appointed mission is to try to save it.
That is what I heard from Jeffrey Liebman, one of Mr. Obama's economic advisers, at a debate about the election I moderated at Columbia University on Monday. Mr. Liebman said the central difference between his candidate and Republican rival Mitt Romney is Mr. Obama's view that trickle-down economics doesn't work. Instead, he believes policy needs to focus on the middle class. Economic growth, he said, should come from the middle and radiate out.
In a separate interview, Mark Gallogly, co-founder of the private equity and credit investment firm Centerbridge Partners and one of Mr. Obama's earliest supporters on Wall Street, also emphasized the middle class. Mr. Obama's overriding concern, Mr. Gallogly told me, is with people who earn $24,000 a year. Their lot is a pressing issue, he argued, because even before the recession there was persistent downward pressure on middle-class wages. Yesterday's middle-class job can land you today among the working poor.
Two things stand apart in the Obama camp's analysis of the problem. First – and this is what has really riled the billionaire set – is Mr. Obama's belief that making the world safe for U.S. business doesn't automatically translate into a rescue of the American middle class. The second, related idea is that the globalized, high-tech economy of the 21st century poses a particular challenge to the sorts of well-paid jobs that were the backbone of the middle class in the 20th century.
But if Mr. Obama is serious about creating a 21st-century agenda for his country's middle class, he needs to connect the dots between his domestic and foreign policy. (Mr. Romney is sticking with the Reaganomics view that the way to assist the middle class is to support job-creating businesses and individuals through lower taxes and less regulation.)
It isn't difficult to explain why a domestic middle-class jobs policy has to be part of Mr. Obama's foreign policy. In a globalized economy, jobs no longer need a passport, but workers do. Creating jobs for your country's workers is about much more than ensuring that the balance sheets of your country's companies are strong, or stimulating domestic demand. It is about figuring out how your country's workers fit into the global economy.
While that problem has become obvious to many, the solutions are more elusive. Here are a few starting points.
The first is to understand and accept that the old link between the prosperity of your country's companies and its middle-class workers is much more fragile than it was in the past. The operative word is accept: The left scores political points, but offers little substance, when it berates corporate executives or private equity investors for making profits even as they reduce their domestic work force.
Corporations are not employment agencies, and judging them by that metric is a mistake. And although it can be fun for liberals to criticize business for going global, consider the alternative: Would the United States, or any other modern industrialized country, really be better off if its companies failed to integrate themselves into the world economy?
A related idea is to understand that capital, and capitalists, really have become global. Here, again, the liberal temptation is to mock the billionaires who threaten to pull a John Galt and exit the national economy if they are mistreated. But as shown by the example of Eduardo Saverin, the co-founder of Facebook who renounced his U.S. citizenship, this threat has moved from Ayn Rand's 1950s fantasy to real life.
Finally, to end on an encouraging note, champions of the middle class need to start seeing their problem as a global one. We are used to thinking about the traditional concerns of foreign policy – wars, disarmament, energy and the environment – as international issues that require some degree of collective action. The hollowing out of the middle class is a problem common to all Western industrialized economies. Maybe we should work together to solve it.