President Obama's trip to India and the outlying Asian regional powers has been primarily about jobs, which is no surprise; however, a deeper look is worth mentioning for the future of the United States. India, to many Americans, has been seen as a black stain on the domestic economy, filled with prejudice as numerous companies outsource to the sub-continent. Some of this is true, but you can't simply blame the Indian government because their tax structure favors less business regulation and cheaper wages. With that in mind, free market supporters should see this as a logical "pressure release" for the higher regulations we have here in the United States. However, President Obama's trip so far has been quite productive in terms of "realpolitik" which Chancellor Otto von Bismark coined back in the late 19th century in Germany.
Realpolitik is exactly as it sounds, real politics or practical diplomacy for international relations of which the President has displayed at least a grasp when it comes to dealing with China and other foreign actions. The late President Bush spent much of his administration focusing on "human rights" for his foreign policy though in truth that term is quite nebulous even among western democracies. One of the best examples is the disparity between European and American views on legal citizenship, with France having a "right of blood" policy while the United States enjoys a "right of ground" method.
Back to the point, though. President Obama's main agenda with China is not human rights as mentioned before but on currency manipulation and trade imbalances. Usually such talks do not make it to high level United Nations meetings, though the President has made it his personal crusade in his latest speeches to the member nations. With President Obama's trip to India he enters Asia with modest approval in leadership, beating out China (the main regional power). It is no surprise then that the President recently announced his personal backing for India to become a permanent member of the UN Security Council in the coming year. Such an action would greatly improve relations with India, the world's largest democracy, and be a heavy hitter for the United States in containing China's growing influence. This is also coupled with the latest trade agreement which shows that the United States is taking a clear side for Asia's growth in the ever increasing globalization effect on the economy.
Going into the G20 summit, President Obama faces many challenges: most notably his handling of the world economy and the criticism of spending too much to break the post-recession slow growth. Germany and China are likely to balk at American leadership due to recent surpluses in their own domestic economies and state that the United States need to start slashing budgets, much like Britain or Germany. In addition to this hostility will be the Federal Reserve's decision to buy $600 billion in treasury bonds which may instigate renewed anger regarding trade and exchange-rate warfare. This, coupled with a protective tariff threat that has passed in the House of Representatives will surely stir emotions and test American leadership in combating China and the trade imbalances with the various nations of the world.
What will happen once the smoke clears will be a sense of direction of how the United States will combat the ever increasing problem of the jobless recovery we are facing. President Obama for now seems to be trying to ease domestic concerns relating to our exports which will assist manufacturers in the long run. India will always be linked to our economy and it is always good policy to work out differences with them rather than to simply blame them for "stealing jobs". It comes down to simple free market principles; not that we should abandon all regulations, we should simply adjust the business sector of our economy to encourage domestic job growth. China on the other hand will not back down, and will for a substantial amount of time be the number one contender for the United States. It's no surprise that Forbes Magazine recently rated President Hu Jintao as the most powerful man in the world, over Barack Obama. This caused some incredulity in the financial world.
With that, it's clear that China is the main target of the president and will call for assistance from the World Bank and the United Nations before resorting to drastic measures such as an import tariff on all Chinese products. In the end, if one thing is clear it is that the president has made it a strategy to plan for long term issues that will face this nation rather than immediate concerns. What remains to be seen is if that will pay off in the future, or be accused of doing too little for the here and now, but as they say, only time will tell.
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