Here is an overarching theory of what we might have missed in the march toward a hyper-efficient global economy: Economic efficiency isn’t all it’s cracked up to be.
.. Against that backdrop, support for Mr. Trump and for the British withdrawal known as Brexit are just imperfect vehicles through which someone can yell, “Stop.”
.. But what if those gaps between the economic elite and the general public are created not by differences in expertise but in priorities?
.. In other words, the more evenly the pie was divided, the less pie there was to go around. There was a trade-off between equality and maximizing income, a version of economic efficiency.
Among the general American public, about half of those who played the game favored equality over efficiency.
.. Among the Yale students who played the game, 80 percent preferred efficiency to equality. They were more worried about the size of the pie, apparently, than making sure everyone got a slice.
.. “The people who are destined to fill these elite positions tend to have a strong efficiency orientation,” said Raymond Fisman, a Boston University economist and lead author of the study. “One underlying explanation may be that, if the system has been kind to you, and you find yourself at Yale Law School, you know you’re going to make out O.K. in the end, and so you don’t worry about widening the distribution of outcomes.”
.. But maybe it is really important for people who live in a place to be able to stay there indefinitely. Maybe the idea that things should stay the way they are, without new people moving in and new buildings going up, is not as inherently irrational as Economics 101 would suggest. Yes, rent control is a bad idea if you’re worried about the long-term prospects for economic efficiency. But maybe the people who advocate these policies know exactly what they’re rooting for, and that’s not it.
The rent control debate can be viewed as a microcosm of the debate about globalization and international trade.
.. It projects that the deal will add $131 billion a year to Americans’ incomes by 2030, or 0.5 percent of G.D.P. It will neither create nor destroy jobs, but is projected to add to churn — job changes — in the economy as work moves into higher-paying, more export-centric industries. The authors predict that the trade deal will mean an extra 53,700 job changes a year, but they note that 55.5 million people a year in the United States change jobs for all sorts of reasons, and that this extra churn will barely change those overall numbers.
.. If there is one crucial lesson from the success of Mr. Trump and Brexit, it is that dynamism and efficiency sound a lot better to people who are confident they’ll always end up being winners.
Brexit Right
The U.K.’s vote to leave the European Union betrays a failure of empathy and imagination among its leaders. Will America’s political establishment fare any better?
Instead, they deploy slogans of the status quo: Remain, Stronger Together. These are intended as dark warnings of the costs of change, and intimations that those who vote for it are motivated solely by prejudice and ignorance.
And here is where the failure of imagination proved catastrophic for the established elites. They failed to paint a vision of a better, brighter future.
.. They audaciously gambled that by presenting a stark choice, an all-or-nothing vision of globalization, they could persuade their voters to go all in.
.. “Good on you for ignoring all the fear mongering from special interest globalists who tend to aim for that apocalyptic One World Government that dissolves a nation’s self-determination and sovereignty,” cheered Sarah Palin.
.. Will they display enough empathy to convince angry, hurting voters they understand their pain is real? Will they exercise enough imagination to offer a positive vision of the future, one that promises them that America’s greatness lies ahead, and not behind?
Britain just killed globalization as we know it
Native-born workers without college degrees are venting their frustrations with immigrants, with factory jobs outsourced abroad and with a growing sense of political helplessness — the idea that their leaders no longer respond to concerns of people like them.
.. University-educated voters in Britain overwhelmingly sided with the “remain” campaign in Thursday’s vote; those without college degrees powered the victory for “leave.” The top issue among those voting to go was Britain’s right to act independently. The second highest was immigration.
.. we can have any two of these three things, but never all three: democracy, national sovereignty and global economic integration.
We’ve Seen the Trump Phenomenon Before
Mr. Trump perhaps can be best understood as the face of a broader global dynamic: the resistance to policies that encourage global competition and open borders to people who have lived too long on the losing side.
.. Expanded trade and immigration put pressure on the jobs and wages of the working class, yet they also served to deliver enormous wealth and enhanced power into the hands of a tiny elite. In the absence of actions to mitigate the damage and more broadly share the bounty of globalization, it’s no surprise that righteous anger against the establishment has opened the door to unorthodox political entrepreneurs.
.. “The middle class allows for both democracy and stability,” he writes. Middle-class people “tend to eschew extremism of both the left and the right.” Workers who feel themselves losing their perch in the middle class may be the most vulnerable of all to a populist appeal.
.. Mr. Trump may seem unusual to Americans because the United States did not produce the kind of autocratic populist leaders Europe offered the 20th century, men who built power bases blaming others for their ills: immigrants, Jews, foreigners in general.
.. rising inequality in the United States led not to populism but to what he calls a “plutocratic” equilibrium, where elites purchase political power while the poor are systematically excluded and the working class is encouraged to support the status quo based on issues like gun control and gay marriage.
.. It’s possible the United States will soon by governed by a president who rode into office partly by appealing to popular resentment against China, a country where overt nationalism is a central plank of the government’s claim to authority. What would happen if an incident in the South China Sea ended with 200 dead American sailors?