There’s no question that the “Washington Consensus”—with its 20 years of globalization, private innovation and state restraint—survived the great recession. Mainstream politics in the west is dominated by arguments about how much faith to put in markets and how to make big government affordable. The breadth of support for capitalist global economic development is unprecedented and may have contributed significantly to the swiftness of the global recovery.
Nevertheless, that broad support will only be sustained if the benefits are broadly shared.
We live in mass democracies; the unenlightened, the less adventurous, and those less able to enjoy vicariously the good fortune and exceptional talent of the few—have the vote. We know that anxiety about food and shelter and the future trump flag waving and slick advertising. Consequently, the cascading evidence that globalism, on its own, isn’t sharing the benefits as broadly as the nation-based industrial capitalism of the mid 20th century must soon receive more public attention by mainstream conservatives as well as liberals.
In America, the fact that nearly 70% of the people don’t believe their country is heading in the right direction is narrowly and naively seen as a good omen by Republican tacticians. However, this lack of confidence in the workings of the most powerful market economy in the world is based in real disappointment not just in exploitable shortcomings by and misconceptions about big government.
Recently, OECD reported that over the last two decades the gap in incomes between the most affluent and the rest has widened across the developed world. In the US, this trend has included chronic unemployment and wage stagnation along with gaudy displays of wealth in a handful of coastal cities. Most important, the evidence is accumulating that this isn’t simply the result of one wrong-headed tax cutting Republican president. Good old free enterprise—at its most Harvard MBA best—isn’t sharing the riches the way it used to.
Nobel Laureate Michael Spence and Sandile Hlatshwayo of New York University carefully document how America’s most dynamic global corporations are successfully restoring America’s global economic credibility by creating high paying jobs for the most highly skilled while offing little domestic employment for others. In their article, “Jobs and Structure in the Global Economy” they conclude:
“If a relatively open global system is to survive in a world where nation states are the principle decision makers, it will have to be managed and guided not just to achieve efficiency and stability (important as these goals are), but also to ensure that its benefits are distributed equitably between and within countries.”
It may not be politically possible to use significantly more government intervention to directly encourage business and “strategic” sectors, in particular, to hire more people and invest differently. It might be wiser to take a more hands off approach and explicitly share more broadly the benefits of free markets and global trade through tax reform and universal programs that most benefit middle and low income Americans.
Liberals and conservatives pragmatists can argue about means. Market conservatives, however, can’t for long maintain there is no problem. Conservatism’s most banal virtue ought to discipline conservatives first: when the glass is half empty, you can only insist that it’s half full—and accept that much is missing.