Branko Milanovic on Globalization's End, New Strongmen, and Global Inequality

The End of Globalization and the Rise of New Strongmen

• 🌍 The era of globalization appears to be over, marked by the rise of sanctions and tariffs as tools of economic coercion, and governments intervening in markets.
• 💡 Economist Branko Milanovic argues that figures like Donald Trump, Xi Jinping, and Vladimir Putin represent a backlash against high globalization, acting as "counterrevolutionaries" against the established order.
• 🏛️ Trump is seen as reacting against elites who benefited from globalization and its ideological hegemony, while Xi Jinping aims to make the state autonomous from the rich, and Putin against the Yeltsin-era oligarchy.

The Great Global Transformation

• 🗺️ Milanovic's latest book, "The Great Global Transformation," draws a parallel to Karl Polanyi's work, suggesting a seismic shift in the global economy driven by the rise of Asia, particularly China.
• 📈 China's growth from 2% to 22% of world output (PPP) is an unprecedented economic event, fundamentally altering the global landscape.
• ⚖️ The shift from a period of high globalization to "national market liberalism" involves a domestic push for deregulation and lower taxes, coupled with a rejection of the international component of globalization, leading to quasi-mercantilist policies.

Global Inequality Dynamics

• 📉 China's rise, once a driver of reduced global inequality, is no longer serving that purpose as the median Chinese income has surpassed the global median.
• 🌍 Future reductions in global inequality will depend on the growth of large African countries, India, and Bangladesh, rather than China.
• 📊 US inequality has plateaued over the last decade, with a notable temporary decrease in 2020 due to COVID-19 government transfers, but Milanovic is skeptical that Trump's policies would improve the lot of the average American worker.

AI, Conflict, and the Future

• 🤖 The economic consequences of Artificial Intelligence are expected to increase the capital share of income, potentially leading to greater inequality, though new jobs may emerge.
• ⚠️ Milanovic expresses fear of conflict, drawing parallels to the pre-1914 era, where competition among great powers for resources and dominance could escalate into hot war, with Taiwan or Ukraine as potential triggers.
• 📉 The current geopolitical climate, marked by retrenchment in international cooperation and increased state intervention, suggests a move away from the open global system of the past.