Reply #93: Backtracking on Globilization ..."took world to brink of WWI!" [View All]

[KoKo]

The biggest risk of all is that the new global macro could well give rise to a backlash against globalization. Mounting trade tensions are a very visible manifestation of how the body politic has lost confidence in the gospel of free trade and comparative advantage long espoused by most economists, including yours truly. Persistently subpar employment and real wage growth in the world’s most powerful economy fuel that confidence loss. In effect, workers have lost patience with the promises of classic free-trade economics, and opportunistic politicians have seized on that angst. Globalization has met its demise in the past -- and the circumstance of that backtracking took the world right to the brink of World War I. Yes, history rhymes, rather than repeats. But the downside of a backlash against globalization is something we can’t afford to take lightly. It would be the ultimate comeuppance for ever-blasé financial markets.