[SeattleTimes] For most of the past quarter-century, the worldview symbolized by the World Economic Forum -- of ever-freer world trade and closer ties between countries -- had dominated. Then came a backlash from Americans and Europeans whose jobs were threatened by low-wage competition from countries like China and who felt alienated at home by wealth inequality and immigration.In 2016, U.S. voters elected Trump, who advocated restricting immigration and scaling back free trade, and the British chose to leave the EU.
"The winners from globalization have had the megaphone," said Paul Sheard, a senior fellow at the Mossavar-Rahmani Center for Business and Government at Harvard University's Kennedy School. "The losers have been somewhat silent, but now are starting to express themselves through the ballot box and through the political process."
Indeed.
In a report this month, Sterne noted that most major economies performed dramatically worse than expected after the 2007-2009 Great Recession. He blames many central banks == besides the U.S. Federal Reserve == for not responding to sluggish growth more aggressively with easy money policies. And, Sterne says, politicians should have juiced growth with tax cuts and higher government spending.
"There was genuine underperformance by the big institutions," he said. The result is a populist backlash. "If you don't do anything about your failings, they can come back and bite you."
Sterne worries that the populist response "could trigger radical and ill-conceived" policies that overshoot and drive up inflation and swell government budget deficits.
The ride could get even bumpier. The World Economic Forum is focusing on what it calls the "Fourth Industrial Revolution" -- a series of rapid advances in technology and medicine expected to transform society. Advances in robotics and artificial intelligence could further threaten jobs and feed the populist revolt.
"We seem to be on the cusp of an incredible new era of automation and critical breakthroughs in health sciences," Sheard said. "But how do we manage this process? And how do we manage it in a way that doesn’t leave millions of people behind?"
Millions of yellow vesters.