Obama's new tack on global poverty

President Obama's speeches at the UN and his new policy for US aid show a strong pitch for leadership in lifting up the world's poor. Fortunately, his recent experience with job creation at home is helping him to look to the private sector for sustainable global growth.

President Obama spent much of his time at the United Nations this week trying to reestablish the US as a global leader, especially in the task of lifting up the global poor. He brought lessons from his own attempts to keep more Americans from falling into poverty.

After 18 months in office, Mr. Obama has shifted his recession-fighting efforts from that of a government largely creating or preserving jobs to one of coaxing private firms to do so, with tax breaks and other incentives. During two UN speeches, he often cited the role of entrepreneurs and a need for government to support opportunities for business.

This is what the UN needs to hear. With a goal of cutting world poverty in half by 2015, it usually gives only lip-service to the job-creating potential of the private sector. It prefers official aid, which has less success in alleviating poverty – and largely ignores the examples of China and many Asian nations that use trade and investment for wealth creation.

Obama plans big reforms for US efforts in global development, such as giving the head of USAID a seat at national security meetings. He wants to use US largess to push poor nations to remove impediments to growth. Countries will need to improve their investment climate, provide loans to small businesses, and set up transparent and fair regulations.

He smartly ties support of entrepreneurs to human rights, citing the empowerment of the individual to keep governments in check. “Experience shows us that history is on the side of liberty – that the strongest foundation for human progress lies in open economies, open societies, and open governments,” he told the UN.

Africa remains the hardest place to boost private business. But two programs are helping the continent, and they both need more US support. The World Bank’s International Finance Corporation put a record $2.4 billion of investments into private African firms last year. And a program called the African Growth and Opportunity Act, which removes trade barriers for African exports to the US, was able to triple such exports – from cars to flowers – between 2000 and 2008.

Partnering with poor nations to boost trade and investment – and thus reduce hunger and poverty – is the best security that the US can buy.

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