JANUARY 12th marked a milestone for the Obama administration with what is likely to be his last State of the Union address before the end of his term on January 20, 2017. The State of the Union address is a constitutional requirement for the president to “from time to time give to Congress information of the State of the Union and recommend to their consideration such measures as he shall judge necessary and expedient”. The tradition for an annual message was started in 1790 and although it has experienced variations in how it is delivered, it has become a yearly report that is given in January or February of every year and often times accompanied by an emotive speech.
Although addressed to the country, with increased globalisation, the message is relevant to not only the US but also globally. Make no mistake, US retains its position as the largest world superpower, and it’s poised to retain this title into the medium-term, if not the long-term. Even though China has risen significantly in the last three decades to command the respect of the world as the second largest economy and a challenger to the US, the US continues to set the pace for world policies and retains greater influence on the world’s democracy and economy. As the saying goes, when the US sneezes, the world catches a cold.
According to Knoema statistics, in 2015 the wealth of the US at a GDP of $17,968 billion remains significantly higher than that of China at $11,384. If this wealth is divided by the population of each country, to obtain the per capita income, US is way ahead at $55,904 GDP per capita while China is at $8,280, almost seven times over. Nevertheless, China’s economy is growing at a phenomenal rate with 6.8% growth in 2015 and expected to retain the momentum at over six per cent in the medium-term. On the other hand the US economy has struggled especially since the financial crisis of 2009 posting a growth rate of 2.6 per cent in 2015 and expected to remain at the lower end of the to to three per cent range in the medium-term. Needless to say, if these growth rates persist, the possibility of the China overtaking the US in the long term is real.
The State of the Union address considered four interesting issues which are a priority to the US, two of which are also relevant for the wider global democracy and economy.
One, how to give everyone a fair shot at opportunity and security in the new economy. The quest for shared prosperity is a global concern, and well highlighted by the recent UK charity Oxfam that one per cent of the world population has more wealth than the other 99 per cent. Locally, the recent annual budgets under the Jubilee administration have directly addressed the need for shared prosperity with the 2014 and 2015 budget statements themed on shared prosperity. In 2014, the theme was “Economic Transformation for Shared Prosperity” while in 2015 the theme was more emphasized as “Enhanced Economic Transformation for Shared Prosperity”.
Security continues to be a major concern for Kenya with the continued threat of terrorism on individuals, businesses and international tourism. Increasingly, a significant share of the tax revenue is spent on security, funds that could be deployed in other productive plans such as infrastructure, health and education.
Two, how to harness technology to work for you, and not against you as a means of solving challenges. The global economy is driven by technology, with new technologies continuously unfolding on many fronts. The rapid advances have the potential to be disruptive, making old business models redundant and leading to job losses. They also have the potential to deliver transformations in life, business and the global economy. This makes the primary school laptop programme and delivery of modern technology to the classroom and building on new innovations a priority for any economy in order to build skills that will shape the future. Research has shown that adopting new technology would increase a nation’s wealth. In fact, according to a study by a Harvard Business Associate Professor Comin, the rate at which countries adopted new tools hundreds of years ago strongly affect whether they are rich or poor today.
Third, and perhaps reflecting the direction of its foreign policy, was how the US could keep safe and lead the world without becoming its policeman. In its usual self-aggrandising manner, US acknowledges that it spends more on its military than the next eight nations combined, giving it the strongest military in the world. Perhaps this point is also an acknowledgement that the exercise of military power is rarely necessary and global partnerships and negotiations may be less expensive, more durable and productive.
Finally, the US wishes to make its politics to reflect what is best for it and not the worst. This priority addresses mostly social liberties and politics, especially those affecting special groups such as the youth, blacks and women. This includes promoting gender equality, and fighting for fairer criminal justice system, job creation as well as building on social cohesion. While the US continues to struggle with race issues that tend to reflect the worst in its society, locally we continue to struggle with tribal issues. We have a lesson or two to learn from this address.