In developing countries, labor organizations have often been suppressed, and the growth of the middle class has been held back by corruption and underinvestment. Mercantilist policies pursued by governments with export-driven models threaten to undermine the consensus that underpins global trade. And meanwhile, global capital is too often unaccountable — nearly $8 trillion stashed away in tax havens, a shadow banking system that grows beyond the reach of effective oversight.
A world in which one percent of humanity controls as much wealth as the other 99 percent will never be stable. I understand that the gaps between rich and poor are not new, but just as the child in a slum today can see the skyscraper nearby, technology now allows any person with a smartphone to see how the most privileged among us live and the contrast between their own lives and others. Expectations rise, then, faster than governments can deliver, and a pervasive sense of injustice undermine people’s faith in the system.
So how do we fix this imbalance? We cannot unwind integration any more than we can stuff technology back into a box. Nor can we look to failed models of the past. If we start resorting to trade wars, market distorting subsidies, beggar thy neighbor policies, an overreliance on natural resources instead of innovation — these approaches will make us poorer, collectively, and they are more like to lead to conflict. And the stark contrast between, say, the success of the Republic of Korea and the wasteland of North Korea shows that central, planned control of the economy is a dead end.
But I do believe there’s another path — one that fuels growth and innovation, and offers the clearest route to individual opportunity and national success. It does not require succumbing to a soulless capitalism that benefits only the few, but rather recognizes that economies are more successful when we close the gap between rich and poor, and growth is broadly based. And that means respecting the rights of workers so they can organize into independent unions and earn a living wage. It means investing in our people — their skills, their education, their capacity to take an idea and turn it into a business. It means strengthening the safety net that protects our people from hardship and allows them to take more risks — to look for a new job, or start a new venture.
These are the policies that I’ve pursued here in the United States, and with clear results. American businesses have created now 15 million new jobs. After the recession, the top one percent of Americans were capturing more than 90 percent of income growth. But today, that’s down to about half. Last year, poverty in this country fell at the fastest rate in nearly 50 years. And with further investment in infrastructure and early childhood education and basic research, I’m confident that such progress will continue.
So just as I’ve pursued these measures here at home, so has the United States worked with many nations to curb the excesses of capitalism — not to punish wealth, but to prevent repeated crises that can destroy it. That’s why we’ve worked with other nations to create higher and clearer standards for banking and taxation — because a society that asks less of oligarchs than ordinary citizens will rot from within. That’s why we’ve pushed for transparency and cooperation in rooting out corruption, and tracking illicit dollars, because markets create more jobs when they’re fueled by hard work, and not the capacity to extort a bribe. That’s why we’ve worked to reach trade agreements that raise labor standards and raise environmental standards, as we’ve done with the Trans-Pacific Partnership, so that the benefits are more broadly shared.
And just as we benefit by combatting inequality within our countries, I believe advanced economies still need to do more to close the gap between rich and poor nations around the globe. This is difficult politically. It’s difficult to spend on foreign assistance. But I do not believe this is charity. For the small fraction of what we spent at war in Iraq we could support institutions so that fragile states don’t collapse in the first place, and invest in emerging economies that become markets for our goods. It’s not just the right thing to do, it’s the smart thing to do.
And that’s why we need to follow through on our efforts to combat climate change. If we don’t act boldly, the bill that could come due will be mass migrations, and cities submerged and nations displaced, and food supplies decimated, and conflicts born of despair. The Paris Agreement gives us a framework to act, but only if we scale up our ambition. And there must be a sense of urgency about bringing the agreement into force, and helping poorer countries leapfrog destructive forms of energy.
So, for the wealthiest countries, a Green Climate Fund should only be the beginning. We need to invest in research and provide market incentives to develop new technologies, and then make these technologies accessible and affordable for poorer countries. And only then can we continue lifting all people up from poverty without condemning our children to a planet beyond their capacity to repair.
So we need new models for the global marketplace, models that are inclusive and sustainable. And in the same way, we need models of governance that are inclusive and accountable to ordinary people.
I recognize not every country in this hall is going to follow the same model of governance. I do not think that America can — or should — impose our system of government on other countries. But there appears to be growing contest between authoritarianism and liberalism right now. And I want everybody to understand, I am not neutral in that contest. I believe in a liberal political order — an order built not just through elections and representative government, but also through respect for human rights and civil society, and independent judiciaries and the rule of law.
I know that some countries, which now recognize the power of free markets, still reject the model of free societies. And perhaps those of us who have been promoting democracy feel somewhat discouraged since the end of the Cold War, because we’ve learned that liberal democracy will not just wash across the globe in a single wave. It turns out building accountable institutions is hard work — the work of generations. The gains are often fragile. Sometimes we take one step forward and then two steps back. In countries held together by borders drawn by colonial powers, with ethnic enclaves and tribal divisions, politics and elections can sometimes appear to be a zero-sum game. And so, given the difficulty in forging true democracy in the face of these pressures, it’s no surprise that some argue the future favors the strongman, a top-down model, rather than strong, democratic institutions.
But I believe this thinking is wrong. I believe the road of true democracy remains the better path. I believe that in the 21st century, economies can only grow to a certain point until they need to open up — because entrepreneurs need to access information in order to invent; young people need a global education in order to thrive; independent media needs to check the abuses of power. Without this evolution, ultimately expectations of people will not be met; suppression and stagnation will set in. And history shows that strongmen are then left with two paths — permanent crackdown, which sparks strife at home, or scapegoating enemies abroad, which can lead to war.
Now, I will admit, my belief that governments serve the individual, and not the other way around, is shaped by America’s story. Our nation began with a promise of freedom that applied only to the few. But because of our democratic Constitution, because of our Bill of Rights, because of our ideals, ordinary people were able to organize, and march, and protest, and ultimately, those ideals won out — opened doors for women and minorities and workers in ways that made our economy more productive and turned our diversity into a strength; that gave innovators the chance to transform every area of human endeavor; that made it possible for someone like me to be elected President of the United States.
So, yes, my views are shaped by the specific experiences of America, but I do not think this story is unique to America. Look at the transformation that’s taken place in countries as different as Japan and Chile, Indonesia, Botswana. The countries that have succeeded are ones in which people feel they have a stake.
In Europe, the progress of those countries in the former Soviet bloc that embraced democracy stand in clear contrast to those that did not. After all, the people of Ukraine did not take to the streets because of some plot imposed from abroad. They took to the streets because their leadership was for sale and they had no recourse. They demanded change because they saw life get better for people in the Baltics and in Poland, societies that were more liberal, and democratic, and open than their own.
So those of us who believe in democracy, we need to speak out forcefully, because both the facts and history, I believe, are on our side. That doesn’t mean democracies are without flaws. It does mean that the cure for what ails our democracies is greater engagement by our citizens — not less.
Yes, in America, there is too much money in politics; too much entrenched partisanship; too little participation by citizens, in part because of a patchwork of laws that makes it harder to vote. In Europe, a well-intentioned Brussels often became too isolated from the normal push and pull of national politics. Too often, in capitals, decision-makers have forgotten that democracy needs to be driven by civic engagement from the bottom up, not governance by experts from the top down. And so these are real problems, and as leaders of democratic governments make the case for democracy abroad, we better strive harder to set a better example at home.
Moreover, every country will organize its government informed by centuries of history, and the circumstances of geography, and the deeply held beliefs of its people. So I recognize a traditional society may value unity and cohesion more than a diverse country like my own, which was founded upon what, at the time, was a radical idea — the idea of the liberty of individual human beings endowed with certain God-given rights. But that does not mean that ordinary people in Asia, or Africa, or the Middle East somehow prefer arbitrary rule that denies them a voice in the decisions that can shape their lives. I believe that spirit is universal. And if any of you doubt the universality of that desire, listen to the voices of young people everywhere who call out for freedom, and dignity, and the opportunity to control their own lives.
This leads me to the third thing we need to do: We must reject any forms of fundamentalism, or racism, or a belief in ethnic superiority that makes our traditional identities irreconcilable with modernity. Instead we need to embrace the tolerance that results from respect of all human beings.