Chapter 9: Economic policy in the time of reactionary populism
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This chapter is an attempt to address some of the problems which have surfaced in the political reaction which produced Brexit in Europe and Donald Trump’s surprise victory in the 2016 presidential elections in the United States. It argues that the prevailing policy has been conceived and understood in terms of a series of policy paradigms which are in many ways limited and misleading. Those policies include the Silicon Valley consensus, the Washington consensus and globalization. These paradigms have promoted major structural changes in the economy, the costs of which have been concentrated in the old industrial heartland of the Midwest US, and undermined the employment opportunities which sustain the communities in which the identities and self-conception of the people who lived there were embedded. The chapter argues that the paradigms offered a limited and incomplete view of the nature of productive knowledge, the way it is acquired and the way it evolves over time. They have also led to a focus on the potential welfare gains of the processes of technological changes and of globalization, while ignoring the processes through which we adjust to these changes and the way in which the costs of adjustment are distributed across different groups and communities. The chapter does not offer a fully developed alternative set of public policies; but it does identify a series of ways which public policy might moderate the pace of change and promote a more even distribution of the costs and benefits.

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