Measured in absolute numbers, an awful lot of wealth will be lost. Small groups of well-organized winners will take income away from diffuse and unorganized groups of losers.
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And more of the focus of economic policy will be on the division of the proverbial pie rather than how to make it larger. The losses to income created by cross-border barriers to competition will grow. Some of the consequences are predictable. Businesses, ideas and people seeking to cross borders will face more daunting barriers. More of what is made will probably be consumed at home rather than linked into global supply chains. Hence it doesn’t take much of a crystal ball to foresee a few decades of backlash to globalization in our future. The media, including the more fact-based media, tend to let elected officials set the agenda. Politicians have a strong incentive to pin it on people other than themselves or those who voted for them. * In any complicated policy debate that becomes politicized, the side that blames foreigners has a very powerful edge. There is a prima facie not implausible argument linking those disappointing outcomes for blue-collar workers to ongoing globalization.The past 40 years have not been bad years, but they have been disappointing ones for the working and middle classes of what we now call the “Global North” (northwestern Europe, America north of the Rio Grande and Japan).But I believe that most of the answer can be laid out in three steps: So why is globalization now widely viewed as the tool of the sorcerer’s apprentice? I am somewhat flummoxed by the fact that a process playing such an important role in giving the world the best two-thirds of a century ever has fallen out of favor. But the consequences of globalization were also felt in cultural and political terms, accelerating the tides of change that have roughly tripled global output and lifted more than a billion people from poverty since 1990. The mechanism (and impact) was largely economic. This period, dubbed the “Great Moderation,” was by most economists’ reckoning largely the consequence of the process of knitting the world together. Yet after a troubled decade - one in which oil shocks, inflation, near-depression and asset bubbles temporarily left us demoralized - the subsequent 23 years (1984-2007) of perky growth and stable prices were even more impressive as far as the growth of the world’s median income were concerned. *Milken Institute Review: When Globalization is Public Enemy Number One: The first 30 years after World War II saw the recovery and reintegration of the world economy (the “Thirty Glorious Years,” in the words of French economist Jean Fourastié).
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