Amy Stuart in her reply to my response to President Obama’s speech on the deficit pointed out the need to clarify what the political left, right and center mean. I think she’s right. The terms have been used loosely and quite imprecisely. But on the other hand, their continued use suggests that there may be good reasons for the continued use of the schema.

I, myself, became convinced, after the fall of the Soviet Union, that the terms left and right were obsolete.  I thought (it turns out incorrectly) that since it was becoming clear to just about everyone that there was no systemic alternative to capitalism, to the modern market economy, and since there really were simply alternative capitalisms, that we might best abandon the terms. Then we would pragmatically address the practical problems of the day, and express, identify and pursue various specific political commitments, e.g. individual freedom and social justice, and not put them in the large baskets of the left and the right. I thought that the terms hid more than they revealed, that it was too hard to find and consider specific commitments in these very large bins.

Yet, given the systematic polarization of our political world, I am convinced that I was wrong. These old categories still have life, helping illuminate distinctions and commonalities in the political landscape. And there is an additional benefit as it applies to the present American scene. The distinction between left, right and center provides a way to understand the creative political action of Barack Obama, who in this regard is a leader.

The notion of the political left and right has a history, dating back to the French Revolution: Monarchists, right; revolutionaries, left. It was used to understand the Manichean battles of the Twentieth Century: Communists and their sympathizers, left; Fascists and their sympathizers, right. And it also has been used to understand ordinary domestic politics: Republicans, right; Democrats, left, very conservative Republicans, far right, very progressive Democrats, far left (though I think this is a small group at best).

The notion of center is less sharp. Vaguely, it means in between left and right, but I think it can be more than this. It’s not only in between, but also what happens in between, in a meeting ground. In the sense of reading Elzbieta Matynia’s reading of bridges with kapias, it is a principled commitment to kapias. Obama is a centrist of this sort, and I don’t think he can be understood without keeping this in mind.

American rightists believe in the market. They follow Reagan. Government is the problem. American leftists believe in the power of the state. They follow Roosevelt and his descendants: government is a primary means to establish a sound economy and social justice. Centrists are agnostics, believing neither in the government nor in the market, pragmatically committed to one or to the other on instrumental grounds, whether or not they work to achieve given goals. Center-right then includes those who tend to think that on controversial issues the market is likely to work to the exclusion of the government, center-left tends to think that the government can play a significant role. Obama then on pragmatic grounds is center-left.

But he is, more creatively, primarily a principled centrist. He is not just in between, leaning left (or leaning right according to his leftist critics). He wants people with different convictions to come together, discuss their differences, find a way to agree to some common position and act on it. His desire for open debate and open negotiations is not instrumental. It is a fundamental commitment, very difficult to execute in these polarized times. He is more than willing to compromise on practical matters. He judges that on the grounds of social justice and pragmatic economic performance Republican policies advantage the rich, do not adequately address the needs of the middle class (this is the political mantra), but crucially the needs of the poor and disadvantaged. The state is needed for this. The market doesn’t do the trick. But he seeks engagement with his opponents.

His project, which I fully support, is to move the center left. I am torn between the judgment that he is sometimes not tough enough in executing this project, and an appreciation that he balances the most desirable with the possible and succeeds in the long run. I am not sure.

But I am sure that in order to make sense of Obama as a political leader, it is absolutely necessary to understand his principled commitment to the creative center, which is, as he puts it, not in the blue (on the left) states or the red (on the right) states, but in the United States, in the center.

President Obama’s goal of “doubling exports over the next ten years” seems like a win-win in that it will boost employment and reduce the troubling U.S. trade deficit.  At first glance, his position makes sense politically and economically.  But there is a problem.  Because of the globalization of production that U.S. companies have championed over the past 20 years, exports from sectors other than agriculture require a much higher level of imports than ever before.  As a result, the job creation from expanding exports is much lower than it was in the 1980s and 1990s.

In economic terms, the President’s goal of doubling exports makes sense.  Foreign demand is expected to be the fastest growing component of U.S. demand in the coming years.   And other, domestic, sources of economic growth are less promising than they have been in the past.

We can’t consume our way out of our problems. Consumption demand is going through a long-term adjustment from the build up of consumer debt over the past ten years.  Private investment also is not a likely singular basis for recovery.  It stopped being the most dynamic source of U.S. economic growth years ago.  With fear of a double-dip recession, lots of built-up excess capacity and still inexplicably tight credit, private investment spending is unlikely to be a driver of US economic growth.  Government spending has been politically excluded by the bi-elections.  Federal spending has grown rapidly over the period of economic crisis, but calls for deficit reduction mean that the kinds of increases we have seen in government spending over the last few years may not be politically feasible in the future.

That leaves the export sector.  With the dramatic growth rates of the emerging markets — most prominently Brazil, India and China, — the potential for growth in U.S. exports is considerable.

A rapid doubling of exports also makes sense politically, since it relies on the spending power of foreigners not the U.S. government, and in this sense is a “free lunch.”  Moreover, if export growth is blocked by tariffs or exchange rate manipulation, the source of the failure lies outside U.S. borders not within.

There are two problems, though, with the policy goal of doubling exports.  One is that it may require beggar-thy-neighbor devaluation on the part of the U.S.  This is the accusation the U.S. faces from Brazil, Korea, Germany, Japan and others as a result of the Fed’s second round of monetary easing, as we saw dramatically revealed during the President’s trip to Korea.  These countries are concerned that  U.S. export growth will be at the expense of their own exports.

The second problem is more serious for the President, since it relates to the employment effect in the U.S. of an export expansion.  U.S. exports increasingly rely on U.S. imports, as manufacturers in the U.S. import many components of their products.  This is true of Boeing’s 777, Apple’s iPod, Cisco’s servers and IBM’s consultancies.  More than ever in U.S. history, U.S. exports depend on U.S. imports and (outside of the farm sector) the most profitable U.S. companies are also those most reliant on the importation of inputs.

So while a doubling of exports may be attainable, its employment effect is much less than it was 20 years ago.   It would be misguided for many reasons to try to return to the nationally-integrated production structures of the 1980s.  So a substantial and sustainable program of job creation will necessarily have to confront the slow pace of growth of domestic demand.  This, in turn, will require a reform of firm innovation policy and perhaps even a new set of social protections that redistribute the high profits earned by many exporters (and simultaneously importers) today for social protection or decent wages to other, domestic, areas of work, along the lines described in my previous post.