Angus Deaton

Angus Deaton: Poorly managed globalization feeds populism

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The 2015 Nobel Prize winner in economics, the Scotsman Angus Deaton, is not going to beat about the bush: "mismanaged" globalization exasperates people, increases inequality and fuels the discourse of politicians like Donald Trump.
The Trump phenomenon and Brexit "are the result of poor management of globalisation" which is leaving more and more people in rich countries out in the cold, Deaton warned in an interview with AFP on the occasion of the French release of his book. The Great Escape« published by PUF.
 
Alobalization, which has set the pace of the world economy since the post-war period, is currently in the hot seat. The American site Business Insider even going so far as to say that globalization is " to die a slow death« . The site was then bouncing off a study published on July 25 by the WTO. It revealed that between October 2015 and May 2016, WTO member countries had put in place 154 new anti-free-trade measures, or 22 per month.
 
In a study published at the end of last year, Sébastien Jean, an economist at the CEPIIThe World Economic Research Centre (WERC) pointed out that 600 measures that could be considered restrictive had been taken each year between 2008 and 2014. For BFM BusinessHowever, one thing is certain: world trade is growing more and more slowly. Between 1995 and 2008, world trade in goods and services grew by an average of 6.9%. Since 2010, their growth has not exceeded 3%. The WTO is counting on 2.8% for goods alone by 2016.
Yet these poor performances and the retreat of the nation states are not the only dangers that threaten globalization. The inequalities it creates and the gap it widens in populations are of a different order. More violent.
 
"Those who are not worried about the situation (of those excluded from globalization) will start to worry if Donald Trump is elected, warns the 71-year-old Professor at the American University of Princeton, dressed in a very classic style, with a large red bow tie.
His book is based on John Sturges' 1963 film "The Great Escape", which tells the story of how prisoners in a German camp try to escape. Only a few succeed.
In the eyes of the Scotsman, the same has been true for 250 years on the economic front, with people escaping poverty for a better life," he said. the narrative of progress is therefore also a narrative of inequality..."
 
Inequalities have been growing since the 1970s and have become more pronounced with a globalization that "hits certain categories of people, mainly in rich countries", says the economist.
"If we don't face this situation, if we don't somehow manage to make globalization beneficial for these people as well, or if we don't share its prosperity with them, then the danger is considerable", he warns.
 
Those who remain on the margins of globalization "are clearly no longer able to escape." alerts the Nobel Prize winner. And the danger, in his eyes, is populist candidates or votes against globalization. Donald Trump, the Republican candidate for the White House, who defends unbridled world trade, "is not a good voice" for those abandoned by globalisation, any more than the Brexit will "help" the British who supported the exit of the EU, he assures.

Angry citizens

"But it's not just globalization's fault. Many people in the United States and Europe feel that their governments no longer represent them, said the Nobel Prize winner, criticizing the behavior of the ruling political class.
In the United States, politicians are funded in a "crazy" way. "Members of Congress or the Senate spend about eight hours a day raising money to be elected or re-elected. With the result that they spend more time worrying about the interests of those who fund them."he says.
 
And the economic crisis is reinforcing the feeling of distrust among the population. "With weaker growth, the problems become more exacerbated". So much so that the middle classes now doubt that the next generation will manage to live better than the previous one.
And the bailout of banks after the 2008 crisis has left deep marks on public opinion. "When you think about those rescues, the government gave at our expense huge amounts of money to the richest people in the world in history! », reminds M. Deaton.
"I think a lot of Americans are still very angry" about the bailouts, " he says. "
"Not that they wished for the whole economy to collapse, but they feel that these people behaved badly and were rewarded handsomely when they had nothing but unemployment, Mr Deaton points out.
 
For him, "What happened in 2008 was partly due to inadequate regulation of financial institutions, which themselves lobbied for lower rules. "It is a cycle that makes these people richer at the expense of the people.
However, Mr Deaton is optimistic. « People want to live better. They want their children to live better, and humanity will be resourceful in the long run to achieve this."
 
The relative optimism of the man in the red bow tie is based on a very long-term perspective (since the birth of agriculture around 10 000 ans B.C.), in terms of health and life expectancy. XXe siècle accelerates this fundamental movement that has seen over the centuries a reduction in infant mortality, famine and disease. The Nobel Prize winner points out in his book that the share of the world's population living on less than a dollar a day was 42 % in 1981; it fell to 14 % in 2013.
 
While the emergence of the newly industrialized countries has reduced disparities between regions of the world, the last 30 years have significantly increased the disparities in living standards within countries themselves. Inequalities in income and wealth are now reaching staggering levels and seem set to increase. Does the traditional " pas of deux " between progress and inequality work toujours ? Or are we witnessing a reversal of the dynamics that would make progress an irreversible source of inégalités ? With its procession of anger, uprisings and choices dictated by passions more than by reason.
 
 
Source: AFP interview
Header image: AFP/ERIC PIERMONT

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