PRINCETON – If there is a bright side to the turmoil that has roiled the global economy since 2008, it is that not every part of the world has erupted simultaneously. The first blow was the subprime mortgage crisis in the United States, to which Europeans responded with self-satisfied reflections on the superior resilience of their social model. Then, in 2010, with the outbreak of the European debt crises, it was America’s turn for schadenfreude, while Asian countries pointed to the over-extended welfare state as the root of the problem.
Today, the world is obsessed with the slowdown in China and the woes of its stock market. Indeed, to some, what is happening in China may be a modern version of the American stock-market crash in 1929 – a shock that shakes the world. And it is not only the Chinese economy that has hit turbulence; Russia and Brazil are in much worse shape.
As globalization connects far-flung people and economies, the consequences are not always what was expected – or welcome. And, with the economic crisis becoming ever more global in nature, the next challenge for policymakers will be to try to mitigate its effects at home – and to contain their constituents’ impulse to reduce engagement with the rest of the world.
By now, it has become clear that every success story has its dark side, and that no economy is likely to continue to rocket upward indefinitely. But, to paraphrase Leo Tolstoy, it is important to remember that every unhappy economy is unhappy in its own way, and that a fix for one country’s problems might not work for another’s.