If the 1990’s was the era of economic shock therapy, the present decade may be remembered for economic reform paralysis. Although the reasons for gridlock differ across countries, the bottom line is that few politicians anywhere are having much success in limbering up their economies.

The problem is not just in emerging markets such as Indonesia, Mexico, and Brazil, where an ascendant left has failed to find a viable alternative to the much reviled “Washington Consensus” of economic liberalization. One sees the same phenomenon across many rich countries as well.

In a remarkable coincidence of timing, Japanese Prime Minister Junichiro Koizumi and German Chancellor Gerhard Schroeder called for early elections in the hope of energizing reform. In Germany, the most urgent needs are for tax and labor-market reform. In Japan, the Koizumi government wants to privatize the behemoth postal service, whose giant financial arm is wrapped like a python around the country’s banking system.

Even in the United States, one of the few places where economic liberalization is not a dirty word, President George W. Bush has his own frustrations. Despite a huge investment of time and energy, he has failed to marshal even his own troops in support of a relatively modest proposal to stave off collapse of the nation’s old-age insurance program. Indeed, Bush’s popularity has taken a beating over pension reform.

Some people ascribe the global collapse of reform efforts to a peculiarly ineffective collection of leaders. This view is nonsense, and besides, if the public is so unhappy with its leaders’ performance, why does it keep electing and re-electing them? 

No, the problems run deeper. The fact is that people everywhere are having trouble coming to terms with the rapid changes resulting from technology and globalization. For, although globalization spins off a lot more winners than losers, many people are worried, and worried people press their leaders to slow things down.

You can tell Americans and Europeans that they should rejoice over the boundless cheap goods and cheap credit that trade with Asia has supplied. But all their politicians seem to worry about is how some farmer or textile worker may lose their job. You can tell Latin Americans or Africans that Asia’s unquenchable thirst for natural resources will keep pushing up the prices of their commodity and agricultural exports in perpetuity, turning wheat fields into gold mines. But all their politicians seem to want to worry about is protecting doomed domestic manufacturers against low-wage Asian competition.

Outgoing US Federal Reserve chairman Alan Greenspan preaches flexibility as a way of dealing with globalization. At some level, of course, he is right. Today’s world is one of fast-changing currents, where a region flourishes one day, and the next its factories collapse economically as if hit by hurricane Katrina.

If change is inevitable, we must make our economies more flexible and prepare to live with the consequences. There is no other way. So why doesn’t the public accept this need for flexibility, which, in the end, is what market-based economic liberalization is all about?

The problem is that most people are not thrilled to live in a world of blindingly fast change. Most people are creatures of habit; they crave predictability. German workers who make high-end machine tools are proud of their craft, and they don’t want to be told that the same work can be done for much less in Poland and Slovakia. Clothing makers in Italy have long been the envy of the world. These craftsmen don’t want to be told that they should start retraining as tour guides to service the inevitable horde of middle-income Chinese tourists, as that country takes over high-end light manufacturing like tailoring.

With such resistance to change, it is no wonder that so many political leaders try to lull their subjects to sleep, hoping that when everyone wakes up, it will all have proven a dream.

Asia, of course, is different. China is developing at a dizzying pace. Whole cities are rising out of desert sands overnight. China is building more roads, airports, and bridges every five years than Europe and the US combined build in 20.

With a long history of cataclysmic, often violent change, Chinese society is perhaps more adaptable than most. In India, which is said to have “a strong consensus for weak reform,” things are moving far more slowly – but always forward. Whereas India is not yet nearly the factor in global trade that China has become, its 1.2 billion people are pushing inexorably onto the scene.

Will today’s reform paralysis outside Asia continue? Will the political winds shift to reinvigorate economic liberalization, with politicians reminiscent of Britain’s Margaret Thatcher or the US’s Ronald Reagan coming to the fore, breathing the fire of change? Will politicians finally tell their citizens that if their economies continue to sleep, they may not wake up?

I believe that in most countries, the era of sleep therapy will come to an early end. But I fear that change might cause a global economic crisis resulting from, say, an ugly unwinding of extravagant US borrowing trends. Only then may people start waking up and voting for politicians who insist on re-energizing economic reform.