It’s been a remarkable year in economics. Here are my personal picks for the top ten economic trends of this year and next.
1. The Chinese model of political economy is under pressure. Two years ago, there was a growing consensus that China had it right: free enterprise with totalitarian political control. Matters of changed. The protests in Hong Kong, the cruel treatment of political dissidents, the massive industrial subsidies, and the implacable rule of the communists have raised serious doubts that the mix is sustainable. Even AIER’s Mises/Marx video went viral in China, despite every ban.
2. The socialist left gets pummelled. The US Democrats swung far to the left, and electoral betting odds turned fiercely against them. In Britain, the Labour Party has been devastated. The contradictions, the anomalies, and the trust in government inherent in progressivism seem no longer to have compelling power.
3. The nationalist right is unable to rule either. Public protests have turned against the new nationalist wave in Europe and, to some extent, in the US too. It turns out that big government under any label is not popular.
4. The failure of protectionism is palpably obvious. For the first time in human history, 60% of global productivity is attributable to international trade. Trump did his best to turn back that tide. The result was domestically disastrous: loss of markets for agriculture products, decline in manufacturing, decline in investment, universal retaliation, no new impressive trade deals, and protests from both producers and consumers. We are lucky to have narrowly avoided recession.
5. People are getting fed up with regulations wrecking their quality of life. It’s glorious that Trump gets cheers when denouncing government-mandated lightbulbs, toilets, faucets, and dishwashers. Finally people are making the connection between government and their bad plumbing and lighting in their very own houses.
6. Media power in the past depending on near-monopoly conditions. No more. It’s been completely shattered. Through startups and mergers, the rise of competitive media is one of the most astonishing trends of our time. We no longer even know what the “news” is, and while that can sometimes feel alarming, it is the reality. Now and in the future, everyone is in a position to curate his or her own understanding of the world.
7. Across the world, whole peoples have shifted their own view of government from trust to disgust. This has profound implications for the status of any ideology that longs for central control and command. It also raises the question: if not government, then what? Eventually we have to revisit the philosophical outlook of liberalism as the only real viable way of managing society – which is to say, we need to admit that society does not need exogenous managers.
8. Exhaustion has set in on the war on drugs and the war on alcohol. Some states in the US have nearly gone full laissez faire, such as New York state where in some areas it seems like every third house has been turned into a distillery, winery, cidery, or brewery. The taboos have broken down over cannabis too and we can only hope that this eventually turns into fewer arrests and jailings for the non-crime of consuming plants.
9. The price of cryptos has softened. So much for “to the moon.” The use case of the top performer Bitcoin (Core) continued to decline and the claim that it can be a “store of value” without consumer use is not viable. In addition, the underlying technology is being widely adopted by mainstream financial markets. We are waiting for the next generation of private currencies.
10. The dollar can be unseated as a world-reserve currency. That process might already have begun. Since the Second World War, the status of the dollar has been unquestioned, but that is due in part to the US commitment to ever freer trade around the world and for generally being a trusted partner in trade. But Trump has pulled out of trade agreements, battered supply chains, tossed around tariffs in tweets, and undermined world confidence in regime stability. To top it off, we now know how to make private currencies that manage themselves. That competition could eventually unseat the dollar.