Obama needs two things to get re-elected: A much improved economic situation (especially employment) and the financial and political support of those big industries that backed him and traditionally back Democrats (Wall Street, media, entertainment, and high tech). He's probably concluded, rightly I think, that there's nothing he can do between now and November 2012 to fix the economy because nothing that might work can get through the Congress. So he's apparently decided to solidify the support of Big Business and just hope for the best on employment, wages, and the economy in general.
To this end, in his State of the Union Address last evening he proposed lowering corporate tax rates and fixing regulations that put "an unnecessary burden on businesses." Most importantly, he reaffirmed as his own premise the MNC/Wall Street doctrine that globalization must continue, that trade liberalization should be accelerated, that exports can be doubled, and that US workers must compete head to head with the rest of the world including low-wage developing nations like China. "The competition for jobs is real," he said.
But his plan for how the US will win the competition is the same as it's been for three decades:
We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business. We need to take responsibility for our deficit and reform our government. That's how our people will prosper. That's how we'll win the future.
Like second marriages, this is a triumph of hope over experience. We did not lose jobs to Chindia because they out-innovated us, but they are rapidly catching up in innovation. We did not lose jobs to Chindia because their people are better educated—they are not better educated, but they are catching up. We did not lose jobs to Chindia because they had better infrastructure, but they are catching up. We lost jobs to Chindia because labor there is much cheaper and more docile, because health, safety, environmental, and labor regulations do not exist or are not vigorously enforced, because of extraordinarily generous subsidies, and because China in particular requires foreign companies to transfer technology and higher-skill jobs as a precondition to Chinese market access.
The truth is that, while better education, innovation, infrastructure, quality, and fiscal stability can't hurt American competiveness, the major competitive battleground is always price. If the US is going to compete successfully with Chindia, wages and salaries for the bottom 80-90% of Americans must continue to come down, purely domestic businesses must continue to suffer from shrinking demand, and governments at all levels will have shrinking tax revenues. Only MNCs, Wall Street, the owners, managers, and servants of capital, and developing nations benefit from this. I believe Obama knows this, but of course he can't say it if he hopes to be re-elected.