Joseph Stiglitz: We're Living in an Obama World. Here's Why!

Most people around the world will not be able to vote in the upcoming US election, even though they have a great deal at stake. Overwhelmingly, non US citizens favor Barack Obama's re election over a victory for his challenger, Mitt Romney. There are good reasons for this. In terms of the economy, the effects of Romney's policies in creating a more unequal and divided society would not be directly felt abroad, but in the past, for better and worse, others have often followed America's example. Many governments quickly subscribed to Ronald Reagan's mantra of deregulated markets, policies that eventually brought about the worst global recession since the 1930's. Other countries that followed America's lead have experienced growing inequality, more money at the top, more poverty at the bottom, and a weaker middle class. Romney's proposed contractionary policies, the attempt to reduce deficits prematurely, while the US economy is still frail, will almost surely weaken America's already anemic growth, and, if the euro crisis worsens, it could bring on another recession. At that point, with US demand shrinking, the rest of the world would indeed feel the economic effects of a Romney presidency quite directly. That raises the question of globalization, which entails concerted action on many fronts by the international community. But what is required with regard to trade, finance, climate change, and a host of other areas is not being done. Many people attribute these failures partly to an absence of American leadership, but while Romney may summon bravado and strong rhetoric, other world leaders would be unlikely to follow him, owing to the belief, correct in my judgment, that he would take the US in the wrong direction. Moreover, it turned out that US style capitalism was neither efficient nor stable.