There is a connection between the rising optimism in the developing world and the rising pessimism in the west. In his speech last week, Mr Obama remarked that “starting in the late 1970s, the social contract began to unravel”. Perhaps not coincidentally, it was also in the late 1970s that China began to open up.
Even defenders of globalisation now usually acknowledge that the emergence of a global labour force has helped hold down wages in the west. Some European friends of mine daydream that protectionism – or even a war in Asia – could send more well-paid jobs back to the west. But in reality, globalisation seems unlikely ever really to go into reverse, given the technological, economic and political forces pushing it forwards. It would certainly be morally dubious to attempt to bolster western living standards by undermining an economic trend that has dragged hundreds of millions of people out of poverty in the developing world.
Even if the western nations did close their markets, western employees – including white-collar workers – would increasingly find that many jobs could be done cheaper by computers or robots. Indeed the march of the robots will also soon pose a threat to assembly-line workers in China.
If the erosion of living standards continues, how will western voters react? There are already signs of political radicalisation – with the populist right on the rise in both the US and Europe. But, as yet, there is no real sign that the Tea Party in America or nationalist movements in Europe have a realistic shot at controlling the central government in a large nation. The consensus around globalisation also seems to be holding. Indeed this weekend the World Trade Organisation apparently made a breakthrough in the search for a new global trade deal .
But while new political movements are not yet ready to smash the established parties in the west, mainstream politicians are having to react to the new economic climate. Rising inequality is increasing the pressure for more redistributive taxes and higher minimum wages on both sides of the Atlantic. Another decade of western economic malaise – or, God forbid, another financial crisis – is likely to see more radical solutions and politicians emerging.