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The Failure Of The Liberal Political And Economic Elite

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By John Richardson on 20-Jan-2017

InaugurationmugBy John Richardson

ONE of the research papers produced ahead of this year’s World Economic Forum (WEF) meeting in Davos highlighted demographics as one of the key reasons for rising working and middle class discontent in the West.

In an exact echo of the arguments that Paul Hodges and I have been putting forward since 2011, the WEF’s The Inclusive Development and Growth Report 2017 said:

Population growth is highest in the world’s least-developed countries, but is decelerating in the more advanced developing countries. Indeed, in more and more developing and developed countries, fertility levels have fallen below replacement level, and in several of these countries populations are projected to shrink in the years to come.

The world’s least-developed countries already confront a major employment challenge that will be multiplied as the number of young people entering the labour market grows.  By contrast, the more advanced economies are experiencing rapid ageing and are projected to see a shrinking of the working-age population.

What is also encouraging that the report goes onto identify the same solutions that we have been advocating for the last six years. These solutions fall under the headline of “Basic Needs”.

In the ageing West, Basic Needs that are not being meet even include adequate fresh water – along with retraining to prepare young and old people for a very different employment environment.

And the WEF agrees with us that in the developing world, far too many people lack access to even the most basic education, healthcare, food, water, sanitation and shelter.

Fantastic, but then the study rather depressingly hit the nail on the head when it found that:

  • Median income had fallen by an average of 2.4% between 2008 and 2013 across 26 advanced nations.
  • Norway, Luxembourg, Switzerland, Iceland and Denmark filled the top five places in the WEF’s Inclusive Development Index, with Britain 21st and the US 23rd.
  • Developing countries have made progress, but many still lack sufficient provision of Basic Needs. Take India, for example, which ranks 60 out of 79 in the Inclusive Development Sub-Index for developing economies.  The report concluded on India: Educational enrolment rates are relatively low and quality varies greatly, leading to notable differences in performance amongst students from different socioeconomic backgrounds.  

This sentence from the report was also very apposite: Inclusive growth remains more a discussion topic than an action agenda.

On the other side of the Atlantic from Davos we are of course about to see the most important result so far of the failure by the liberal global elite to produce an action agenda: Today’s inauguration of Donald Trump as the 45th president of the US.

With populist approaches come enormous risks. This again is not a comment on the rights or wrongs of Donald Trump, Geert Wilders or Marine Le Pen. It is instead meant to point out that because their policies are unproven, they carry big economic and geopolitical risks.

The danger is that discussions at this year’s Davos will once again remain only that, just discussions. Nature abhors a vacuum, and into the vacuum of the right policy initiatives will step more populist politicians.