Ruchir Sharma
Widespread disaffection with the current capitalist systems has led many countries, rich and poor, to look for new economic models. Defenders of the status quo continue to hold up the United States as a shining star, its economy outpacing Europe and Japan, its financial markets as dominant as ever. Yet its citizens are as pessimistic as any in the West. Barely more than a third of Americans believe that they will ever be richer than their parents. The share that trusts the government keeps trending downward, even as the state builds an ever more generous safety net. Seventy percent of Americans now say that the system “needs major changes or to be torn down entirely,” and the younger generations are the most frustrated. More Americans under 30 have a more positive view of socialism than of capitalism.
In countries with emerging economies, it has been a shock to see “the land of the free” abandon its traditional skepticism of centralized power and planning and instead promote big government solutions. Many of these countries, from India to Poland, have not forgotten their own failed trysts with socialism. They were surprised when U.S. President Donald Trump led a revolt against free trade and open borders, and when his successor, Joe Biden, began promoting what National Security Adviser Jake Sullivan called an “economic mentality that champions building.”
And they can no longer look for inspiration to China. The “economic miracle” that began after the Communist Party started ceding power to the private sector in the late 1970s is faltering under leader Xi Jinping. China has returned to its old command-and-control ways, punishing businesses who grow too powerful in the eyes of the ruling party. Weighed down by heavy debts, an aging population, and an overreaching state, China’s economy has fallen off the miracle path.
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