Thursday, April 1, 2021

Dani Rodrik Says We're Not Out of the Woods Yet

And when Dani Rodrik talks, I listen. From an excellent interview of Rodrik by Martin Sandbu in the Financial Times:
"Martin Sandbu: Joe Biden has been in office for a few weeks now. I wanted to start by asking you for your reflections about the change of power in the US.
Dani Rodrik: I don’t think we’re necessarily done with the problems which Trump has leveraged politically.
I see him very much as being the result of significant economic dislocations and economic polarisation taking place, not just in the United States but among the advanced countries more generally, which the rightwing populists have used to catalyse and mobilise along nativist, ethno-nationalist lines.
I think the left has been very much, until recently, missing in action.
What we’re seeing with Biden is that the economic programme of the Democratic party has very much moved to the left . . . in a direction which the centre-left should have moved [towards] much more urgently and much sooner in the aftermath of the global financial crisis, for example.
MS: These dislocations are 30 years in the making and maybe even longer. Why did the Democrats and similar forces elsewhere not respond more adequately to these changes earlier on?
DR: I think that the Clinton Democrats, New Labour in [the UK], the Social Democrats in Germany, and the French Socialists as of the 90s had become enthralled to essentially adopting the neoliberal model and simply sweetening it, maybe with a little bit more help for the poor.
They did not have the kind of ideas and policy vision to fundamentally change the system and I think we saw that very clearly in the aftermath of the financial crisis.
In fact, they did as much if not more than the traditional conservative parties to push for globalisation, for the single market in Europe and for the liberalisation of financial and capital flows. That was very much pushed by the French Socialists in Europe.
MS: There is a debate around whether economics or culture are driving these shifts? People who resist economic explanations say it’s not the poorest or those who suffer the most who support populist rightwing movements.
DR: There certainly have been slow moving cultural trends: deepening division between social conservatives and social liberals or, in the US context, issues about racial politics [that] run very deep.
Without question, those are background conditions but . . . whether it is trade with China or austerity shocks in Europe . . . we can actually empirically trace how these economic shocks, especially in particular regions, have led to increases in support for parties of the extreme right and far-right populism. I think the kind of explanation we need is one that has to be more global.....
MS: What’s your best bet in terms of the debate about a new social contract domestically?
DR: Clearly, it’s an opportune time for a big change.
But that doesn’t mean that necessarily we’re going to get that change, so I think muddling through is as likely if not more likely. I am not sure Biden, in his heart, is really the person who is going to take big risks and is really going to be very courageous in contemplating the kind of structural change that we need.
If the pandemic disappears and we go back to normal, and economies start to grow because they’re simply catching up with their previous trend, will the pressure for systemic change dissipate? Quite possibly, frankly."

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