(Reuters) – The crises at the heart of the international financial and political system go beyond the debt woes currently gripping the Western world and to the heart of the way the global economy has been run for over two decades.
After relying on it to deliver years of growth, lift millions from poverty, keep living standards rising and citizens happy, nation states look to have lost control of globalization.
In the short term, that leaves policymakers looking impotent in the face of fast-moving markets and other uncontrolled and perhaps uncontrollable systems — undermining their authority and potentially helping fuel a wider backlash and social unrest.
In the longer run, there are already signs the world could repeat the mistakes of the 1930s and retreat into protectionism and political polarization. There are few obvious solutions, and some of the underlying problems have been building for a long time.
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