Economic Impossibilities for Our Grandchildren?

The reason lower- and middle-class people are suffering economically is not immigration or trade, but rather the steady march of technology. As jobs are replaced by machines or off-shored to emerging economies, global GDP is expanding, but the benefits are accruing only to the top earners.


NEW YORK – Austria’s close-call presidential election on December 4, which almost brought a far-right nationalist to power, was a telling coda to a sad year. The uncertainty and fear that many people feel today is reminiscent of W.H. Auden’s poem “September 1, 1939”: “As the clever hopes expire/Of a low dishonest decade.”

2016 was a year when many countries lurched rightward, toward leaders and political parties that serve partisan interests and narrow identities. And this is no fleeting aberration: the trend toward vicious politics is partly rooted in ongoing economic changes that have now reached an inflection point.

The poor and the middle class have seen their jobs disappear and their incomes erode, and they are now flailing against the status quo, desperately ignoring the fact that they are choosing leaders who will only make matters worse.

The root cause of the problem is not immigration or trade, as the populists argue, but rather the steady march of technology. And, as with off-shoring to emerging economies, global GDP is expanding as jobs are replaced by machines, but the gains are not being distributed evenly, and some groups are losing out altogether. Many countries are experiencing higher inequality amid negative GDP growth – now at -3.3% in Brazil, for example, -10% in Venezuela, -1.8% in Argentina, and -0.8% in Russia. Others, like Japan and Italy, are growing, but just barely.