The Economics of Bullying
How to read the IMF’s 2nd Quarter World Economic Outlook in a world according to Donald Trump.
- The IMF’s World Economic Outlook July Update sketches a listless picture for the world economy. “Still Sluggish” in the title says it all!
- Trade conflicts lower world trade volumes and hurt the emerging economies most. Risks are predominantly on the downside.
- On the geo-political scene, aggressive shouting matches and bullying seem to have replaced international diplomacy.
- Not that there are major differences in ideologies or beliefs. Compared to the 20th century Cold War (democracy/market economy versus Soviet central planning), all major powers adhere today to the principles of market economics.
- However, current populists blame globalisation as the root cause of inequality and discontent.
- The Economics of Bullying urgently needs attention to better understand the causes and consequences of bullying tactics.
- Economic theory helps to understand the impact of bullying with lessons from Adam Smith and David Ricardo, via Milton Friedman and AW Phillips, to Douglass North and Paul Samuelson and recent insights from Gary Gereffi’s study on global value chains. Very relevant today!
- The Economics of Bullying prove that trade conflicts will negatively impact on world economic growth and break-up value chains creating new inefficiencies.
- Influencing monetary policy and undermining central banks independence could lead to further inequalities and financial market volatility.
- Withdrawing support for multi-lateral cooperation fragilizes world peace and withdrawing from international treaties such as on Climate Change threatens the planet and future generations.
- Mobilising against bullies is vital for victims but also for bystanders (who may otherwise be the victims of tomorrow).
For the complete article by Bart Le Blanc, please see the attachment.
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