by Adam S. Posen, Peterson Institute for International Economics
Op-ed in the Financial Times
April 10, 2006
© Financial Times
We have had four years of solid global growth, minimal economic shocks, low inflation, easy credit—and therefore four years of room for policy to respond to those shocks that did occur. We have also seen years of every country but China and the United States exporting to China or the United States without protectionist or exchange rate pushback. As far as macroeconomics goes, this is as good as it gets.
Despite this prosperity, the response of citizens over the past year or two has been to throw the incumbent rascals out, be it in Canada or the Philippines or India—or possibly Thailand and Italy—and even to seek out actively governments with long-failed populist policies as in Bolivia, Venezuela, Belarus and, to a lesser degree, Poland.
Why so much popular disdain when the times are good? Fiscal and monetary rectitude have had the desired effect, but the desired effect has been far from broadly satisfying. Could it be that there is more to life or at least to politics than economics? Well, there are those who talk about “happiness.” But none of these votes or protests is in support of parties offering spiritual meaning or even more leisure time. Often, in fact, it is the religious parties that lose the elections. Is it nationalism or, more benignly, desire for sovereignty and autonomy? No, at least not enough to motivate any of these people to push for policies that would require them to give up anything economic for the sake of la belle patrie.
Is it that individual anxiety outweighs general prosperity? This is the frequent claim of globalization opponents, particularly in the advanced world. But for developing-world workers in countries that are part of the global economy, the recent increase in global integration of production (that is, outsourcing), the absence of financial crises, and the rise in commodity prices accompanying China and India's growth—as well as low interest rates—have meant less uncertainty, not more.
In the developed world, the average low-skilled or unemployed worker whose income security is most at risk from globalization is not the one protesting or voting. The university students on the barricades, who do have the political pull, are the same people whose relative incomes and security are rising as a result of globalization, which rewards the skilled and the holders of capital (from whose families the university graduates still mostly come).
No, the politically expressed disdain for prosperity reveals that we now live not in the “age of anxiety” but in the “age of ennui.” Thanks to television and the internet, in democracies everyone above the poverty line has already experienced true wealth virtually. Many are never satisfied with the performance of their economies—and certainly never unaware of the foibles of their governments. Yet, they are also too jaded to have unreserved faith in mass movements as did their forebears.
Thus, the greatest threat to continued economic prosperity is the failure of the beneficiaries to recognize its benefits—or the tendency to simply become bored with bloodless technocratic policy. The dangers from antimodernist Islamic fundamentalists should not blind us to the fact that the frustrations and “sell-outs” of the 1968 generation have made Daniel Bell's “the end of ideology” reality for the vast majority of democratic publics outside of the Islamic world (and even some within it).
It is unfortunate that low interest rates and macroeconomic stability do not make good television. Perhaps the International Monetary Fund and other institutions need to start public service announcements à la “Save the Children,” or get a Bono for the bourgeoisie. Ultimately, however, there is a gap between the policies that produce good macroeconomic outcomes and the politics of an aware but blasé electorate. Even Bill Clinton was unable to bridge the gap between economic policies that brought low interest rates and growth and motivating a clear majority of Americans to vote for sustaining those policies past 2000.
Our current age of ennui is thus a period of repeated turnover in elected governments with little turnover in policy. It is an age where economic performance will not be a dependable predictor of election results; but no ideological or spiritual programs will replace it—instead, reports of corruption and the rise and fall of politicians’ personal popularity will drive voting. And it is a period where globalization will continue to be scapegoated for more vague dissatisfactions by those who are globalization's beneficiaries.
Op-ed: The Payoff from Globalization June 7, 2005
Paper: The Payoff to America from Global Integration January 2005
Book: Has Globalization Gone Too Far? March 1997
Policy Brief 01-2: A Prescription to Relieve Worker Anxiety March 2001