Summary of Grave New World

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Recommendation

In this intriguing if opinionated overview, economist Stephen D. King argues that globalization is in jeopardy. From Ronald Reagan through George W. Bush, the dominant economic theory held that taxes and regulation were bad and that free markets and light regulation were good. This conventional wisdom seemed incontrovertible. Then, suddenly, conventional wisdom didn’t work anymore. The Brexit vote and Donald Trump’s improbable victory proved that globalization is no longer a political panacea. With middle-class voters struggling, free trade agreements and lenient immigration policies no longer appeal to the electorate. King makes a compelling case that none of this should be a surprise. If one constant has held throughout geopolitical history, it’s that economic might ebbs and flows – and that economic theory goes in and out of fashion, like jeans and hairstyles. getAbstract suggests this analysis to investors, policy makers, NGOs managers and anyone trying to make sense of the dizzying shift in global politics. 

In this summary, you will learn

  • Why globalization may not endure,
  • Why world orders and economic orthodoxy change, and
  • Why populists gained appeal.
 

About the Author

HSBC’s senior economic adviser Stephen D. King is the author of When the Money Runs Out: The End of Western Affluence and Losing Control: The Emerging Threats to Western Prosperity

 

Summary

Globalization

Globalization’s promised a new world: Residents of rich countries could keep their comfortable living standards, while citizens of the developing world suddenly would discover a path out of poverty. It appeared that economists and politicians had unlocked the mysteries of endless growth, mild inflation and muted volatility. In recent years, however, geopolitical realities complicated this optimistic vision of globalization. The rich grew richer while everyone else treaded water at best. Many realized that globalization benefited the fortunate few without lifting all boats. The 2008 financial crisis only underscored the realization that globalization is not a panacea. Amid a widespread backlash, populist politicians and disgruntled voters have registered strong protests against an economic order of free trade and open borders. The march of globalization has stopped, raising the possibility that it could “go into reverse.” Enthusiasm for globalization has cooled even in Europe, where income gaps are comparably mild. From the 1980s to about 2007, prevailing wisdom said free market capitalism and liberal democracy were the unquestioned solutions to every economic and political question. History offers a valuable lesson: Political power is nearly always fleeting, and economic might ebbs and flows.

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