In 1945 the United States was the sole nation to emerge from the devastation of World War Two with its economy and population intact. Indeed, the USA was master of the world – a booming industrial economy, a dominating military capability and a population eager to take advantage of both.
As the world slowly recovered, it became a captive market for the USA. America produced everything and no other economy even came close. No longer allowed to engage in direct colonization, we mastered economic imperialism, manipulating developing nations to use their resources and manpower to benefit our economic domination, all the while rationalizing our role in the spirit of free market capitalism and a rising tide that lifts all boats.
We grew comfortable in our exalted position. Even though we failed to lift up our own bottom 15-20% out of poverty and despair, the 50’s and 60’s were times of heady economic optimism for most of the country.
By the time the 70’s and 80’ came along, Europe had begun to compete effectively with us in many markets, and the Japanese industrial juggernaut caught us by surprise. An economic malaise took hold in the late 70’s due to multiple factors, so we tightened our belts, reduced taxes for the wealthy and began to look for ways to maintain the high earnings that wall street had come to expect.
Globalization took hold in the 80’s, as other nations began to cultivate industrial capabilities and provide less expensive labor. A legion of freshly minted MBAs spread out across industrial America with the gospel of offshore factories and production, and corporate profits began to soar again as American manufacturing fled overseas.
American dominance in the technology revolution masked the insidious changes afoot throughout the 90’s. So-called knowledge jobs became the mantra and we convinced ourselves that the disappearing industrial base would be easily transformed into an even more lucrative knowledge economy.
Economics is perhaps not truly a zero-sum game, but as other nations developed and began to claim their share of the world’s riches, it was not hard to predict that average wages and employment opportunities would be affected in previously dominant economies as the global economy became ever more inter-connected. Even knowledge jobs can be outsourced with the Internet and gigabit networks.
Slowing population growth in established economies resulted in increased immigration to augment the labor market. In good times and at a measured pace, immigration can be tolerated and even embraced by a native population. But as economies began to stagnate and the middle class to languish, the immigration waves of the 2000’s and 2010’s created a tsunami of resentment that foretold a rise in populism.
Sharing the world’s resources was never going to be easy. When you have a part of the world that was accustomed to being in the catbird seat and is now struggling to find its equilibrium in a changing world, there was bound to be a very difficult transition.
But now, with increasingly rampant populism and the rise to power of authoritarian figures like Trump, Putin, Xi, Modi, Orban and Netanyahu, the prospects for global cooperation on the thorny issues facing this world seem increasingly dim. Unilateralism, clownishly personified in Trump, appears to be the watchword for the superpowers.
There was a period in the 90’s when we all felt optimistic about the future. Democracy seemed to be flourishing, economies were growing, global conflict was minimal, hundreds of millions across the globe were rising into the middle class. But the seeds of discontent were already there. Did we squander the momentum we had at that time? Could we have changed the arc of history to a more harmonious path by making some adjustments? Who knows? Human nature does not easily tolerate decreased expectations, and sharing is not easy.
I see hard times ahead, but I have faith in our basic humanity. Unfortunately, we may have to endure some very difficult moments before that really kicks in.
