Prepared by the Secretary’s Department
Contributor: Fei Liu
Noting the growing popular discontent with trade, openness, interconnectedness, and globalization, panelists felt that the case for discussing political economy is compelling. They noted that politics and economics are interlinked and economic policy makers have to deal with political constraints. Panelists offered their perspectives on a series of emerging issues, including whether the benefits of globalization been oversold, the challenges posed to the existing international structure, and potential solutions to these difficult challenges.
Key Points:
- Labor market disruption. Panelist agreed that the fundamental shift in the nature of employment—driving by technology, automation, and artificial intelligence—is displacing workers and causing labor market disruption. Bremmer thought that the process of globalization has created an extraordinary backlash among the middle class and that the profound labor market disruption would be the largest challenge in the next decade. Lipton pointed out that the displacement would happen regardless of the progress of globalization and what is actually needed is to analyze the problem, find solutions, and protect those who lose from labor market disruption.
- Non-state actors. Lipton noted that there is still much countries can gain through integration, interconnectedness, and globalization, especially emerging market and developing countries that are still on the growth trajectory. However, some non-state actors, such as global corporations and the high-tech companies that exist in the ‘cloud’ are legitimate but disruptive, and create new challenges for how policymakers deal with corporations that, for example, have more data than any country. Rudd said that national political leaders have fewer policy instruments available as some of the non-state actors are beyond their direct control exactly because of globalization.
- International institutions and the G20. Panelists agreed that international institutions and the G20 are helpful in dealing with these emerging political-economic problems. However, these organizations need to be more transparent and efficient, engage better with local communities and stakeholders, and help people better understand the benefits of integration and globalization. Röller and Rudd stressed that the G20 complements global institutions and pushes them to do a better job. Bremmer and Lipton noted that the way to address the trust gap between elite and ordinary people on globalization is to do it much more at the local level and engage a wider range of actors.
Quotes:
“What is lacking in global politics at this moment is an effective intermediation mechanism, which brings together the three great silos—that is not Washington, Moscow, and Being, but international security, international economics, and politics. The only intermediation mechanism that could do this is forming much broader and more effective mandates across the silos, and then articulate the mandates through reforms of the institutions and new approaches to social contracts at home and across the world, so people remain part of the globalization project.” The Hon. Kevin Rudd, President, Asia Society Policy Institute and 26th Prime Minister of Australia
“All the institutions around the globe have great mandates and have done good things. But why do we keep going back to the G20 and G7? We need to politically reenergize international institutions with effective mandates, effective funding, and effective policy direction awareness, and to take them from theoretical constructions to dealing with challenges in the 21st century.” The Hon. Kevin Rudd, President, Asia Society Policy Institute and 26th Prime Minister of Australia
“There are enormous problems globally, such as the refugee crisis and climate change. But at the same time, there is a backlash where people do not trust intentional organizations, including the G20. How can we show that globalization can improve everyone’s life? How can we improve transparency of international organizations and make them more efficient? These questions concern the G20, too.” Lars-Hendrik Röller, Chief Economic Advisor to the German Chancellor
“It is a conundrum that in a globalized, interconnected world, national leaders cannot really fulfill all the aspirations of its people using domestic policies because there are spillovers abroad. If national leadership is weak because of a lack of international cooperation, then perhaps international cooperation is actually the answer.” David Lipton, First Deputy Managing Director, IMF
“For the IMF to be successful, we need our members to act, to overcome some of their problems, and engage with non-elite populations.” David Lipton, First Deputy Managing Director, IMF
“The way one resolves the trust gap between elite and ordinary people is, number one, to do it at a much more local level, and with much more hybrid actors, who aren’t just states.” Ian Bremmer, Global Research Professor, New York University, and President, Eurasia Group
