Play It Cool at the G-20, Mr. President

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Barack Obama goes to this week’s Pittsburgh G-20 with what seems the weakest hand of any American president since Gerald Ford. In reality, he has a far stronger set of cards to play–he just needs to recognize it.

Our adversaries may like our new president, but they don’t fear him. And, on the surface, why should they? The national debt is rising faster than the vig for a compulsive, debt-ridden gambler. And our primary rivals, the Chinese, continue to put the squeeze on American producers by devaluing their currency, subsidizing exports and penalizing imports.

When the Chinese threaten to call in their debts, they can count on Timmy Geithner to kowtow like an obedient vassal. Some of Obama’s most important supporters–like Warren Buffett and The New York Times‘ Thomas Friedman–have discovered what Friedman calls “the great advantages” of autocracy over our cockamamie, boisterous democracy.

From Virgil, Maecenas and the court of August to Hitler-admirers Henry Ford and George Bernard Shaw, as well as and Stalin-fan Max Eastman, imperial scribes and money lenders have long demonstrated a weakness for even the worst autocrats. But our bedraggled democracy may have a lot more aces to play than many recognize.

Just look at the other players around the table. French President Nicolas Sarkozy, when not worrying about his (lack of) height, tells his countrymen to stop worrying about gross domestic product. Productivity, one presumes, doesn’t mean as much as a good baguette, long vacation or wet kiss from a former model.

Across the channel, Prime Minister Gordon Brown seems determined to take the Good Ship Brittania further underwater. According to Tony Travers of the London School of Economics, Britain, with the exception of London, is already well on its way to becoming “a second- or third-tier country.” And as my colleague Ryan Streeter points out, New Labour’s response to the economic crisis–basically raising taxes and doubling down on regulation–doesn’t seem a formula for a vibrant economy.

Germany, Italy, Spain and the rest of E.U. face equally daunting problems. These “progressive” role models suffer from unsustainably low birthrates, and many face a future more Islamic than European. Their “green” rhetoric may thrill some fans in the U.S., but these economies still run largely on oil and natural gas, which makes them ever more dependent on the autocrat of all–the Russias.

And Japan, once considered the mega-tiger of the future by American policy wonks, is transforming itself into something of a post-modern pussycat. It won’t take immigrants even as its population begins to shrink. Largely dependent on exports, its new government does not like globalization and wants to expand its welfare state. Moreover, Japan seems to be wobbling toward a future as a quiescent vassal for the Greater Chinese East Asian sphere.

So how does America compare? Let’s start with the basics. The U.S. is the only major advanced country that enjoys a steady population increase. Yes, immigrants are driving much of that growth, but our newcomers are generally very different from the largely alienated and isolated Muslim communities now nesting in Europe. America’s Mexicans, Chinese, Indians, Armenians, Carribeans and Africans–and more pointedly Arabs and Iranians–do not constitute a hostile “them.” Instead they are the ones redefining us by adding new dimensions to what Nathan Glazer once described as “a permanently unfinished country.”

Of course, it helps to be the only serious global military presence in the world. A strong military represents an invaluable asset in a world dominated by autocrats and lunatics. That doesn’t mean Obama should swagger like a Viagra-enhanced neo-con. He just needs to follow Teddy Roosevelt’s dictum: Speak softly, but keep a hold on that big stick.

A powerful military and better demographics represent just part of America’s strong hand. Compared with the E.U., Japan, China or even India, the U.S. remains phenomenally rich in resources.

Take our most basic need: food. The U.S. has the most arable land in the world and is its largest food exporter. Our $1.4 trillion food sector accounts for 12% of our economy, and prospects for expansion are enormous. By 2050, the population of the planet will be around 9 billion people–up from 6 billion today. More than 85% of the world’s population will reside in developing countries, most in cities, and they will constitute a gigantic future market.

Equally important, the U.S. is sitting on huge energy resources. Of course, renewable fuels should become a major, even dominant, factor, but in the short- and maybe mid-term, oil, gas and even coal will continue driving the economy. The Great Plains and even the Northeast, particularly Pennsylvania, have enough natural gas to become a junior Abu Dhabi.

Furthermore, despite its many weak links, our industrial base remains the most advanced in the world. If mindless “green” policies don’t force it us to dismantle it, we could produce, through the use of new technology and a better-trained workforce, virtually everything we buy from the Chinese and the Europeans.

This is not to argue for strict protectionism. But right now we buy almost $4.50 from the China for every $1 we sell there. China’s trade with us is worth 13 times to its economy than what our trade with them is worth to us.

Fundamentally, this means that the Chinese are more exposed to a potential trade war than we are. Without rising exports to the U.S., China’s leaders could face massive unemployment and internal unrest. For us, reducing Chinese imports means somewhat higher prices at Wal-Mart–and perhaps more vigorous business with better partners such as Mexico, whose future prosperity is directly tied to ours.

All this suggests that Obama has more leverage to demand better trade terms than some might think. There’s nothing in the Constitution that mandates that Americans be the world’s trade chumps. So you want trade war, President Hu? Give him a little Clint Eastwood. Make. My. Day. Then give them a wink or a chance to think about it.

How about the $1.5 trillion that the Chinese are holding? Well, they could call in their $1.5 trillion for yen or euros, ruining those economies by inflating their currencies. Polish zlotys? Iranian rials?

Of course, losing Chinese investors and cheap products would hurt in the short term, but it could prove beneficial in the long run. After all, during World War II, we learned to thrive without German machinery or Southeast Asian rubber. Best of all, a Chinese withdrawal could force Washington to live on a budget, just like the rest of us.

None of this suggests that Obama should discard his charm and morph into a svelte Dick Cheney. America’s preeminence rests on far more than missiles, resources, land or machines. The U.S. is more than a geographic place, or the home of a race, but, as Lincoln noted, the great human experiment about self-government and individual aspirations.

Whatever his faults–and there are plenty–Obama epitomizes this ideal with his very being. When he arrives in Pittsburgh, our president should play the American hand like the guy who knows he holds aces in the hole.

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