Pursued Economy

CHAPTER 9Backlash against Globalization and Conflict between Free Trade and Free Capital Flows

Backlash against Globalization in Pursued Countries

The disappointment and despair felt by many in the Eurozone is due largely to glitches in the Stability and Growth Pact (SGP) and the design of the euro, which have prevented member governments from responding correctly to balance sheet recessions. However, there is also a widespread sense of frustration among those in advanced countries over income inequality and stagnant wages, along with a general feeling of helplessness. Indeed, the establishment figures and “experts” responsible for the Great Recession are losing credibility everywhere. Even in the United States, where the economy is doing better than most, Donald Trump, a complete outsider, was elected president in 2016 because of his opposition to free trade and other establishment policies. In some countries, the social backlash against the establishment has become large enough to threaten not only social cohesion but also those nations' democratic institutions.

One reason for this frustration and social backlash in the advanced economies is that these countries are experiencing the pursued phase for the first time ever. As is noted in Chapter 5, many were caught off guard, having assumed the golden era that they enjoyed into the 1970s would last forever. It is no surprise that those who have seen no improvement in their living standards for many years but still remember ...