Investing in Inclusive Growth
An inclusive labor market is a prerequisite for inclusive growth. That's why policymakers should be making education and skills development for all workers a top priority, rather than embracing protectionism or excessive social-welfare spending.
SEOUL – Inequality has skyrocketed in recent decades, and those who have not shared in the fruits of economic growth and development are becoming increasingly frustrated. Some political leaders have responded to rising public discontent with massive social-welfare programs or beggar-thy-neighbor protectionism. That is the wrong prescription.
Populists on the right and the left have led the charge in implementing such counterproductive policies. The former often embrace protectionism, and the latter advocate unproductive social-welfare spending. Even if they provide short-term benefits to some groups, these policies will fail to bring about inclusive growth – and they may do serious harm to the economy in the long run.
The most prominent proponent of protectionism today is US President Donald Trump, who has aggressively pursued his “America first” agenda since his inauguration in 2017. Trump blames free trade for job losses and real-wage depression in the United States’ manufacturing sector, and argues that measures like higher import tariffs will bring back manufacturing jobs, raising many American workers’ wages and improving their welfare.