When policymakers gather in Washington for next month’s meetings of the International Monetary Fund and World Bank, one topic will dominate discussions: how to respond to the anger of those who feel they have been left behind by globalisation.
Supporters of open markets and liberal values are acutely aware that they are facing a political backlash that threatens the current international order. This week alone, Christine Lagarde, the IMF head, spoke of the “groundswell of discontent” felt in many countries with growing inequality in income, wealth and opportunity. Donald Tusk, president of the European Council, warned EU leaders meeting in Bratislava of the need to restore control over events and processes that “overwhelm, disorientate and sometimes terrify” voters. While Mario Draghi, president of the European Central Bank, stepped outside his technocratic mandate to warn politicians of the intense anxiety felt in a world that had proved “inattentive” to how the benefits of globalisation were shared.
The political problem — manifest in the vote for Brexit, the appeal of Donald Trump and the rise of xenophobic, protectionist parties across Europe — is incontrovertible. It is underpinned by economic realities: two decades of globalisation have been kind to the world’s very richest, and has brought huge benefits to the growing population of emerging economies. But a distinct set of people, chiefly the lower middle classes of developed economies, has fared far less well.