The rising popularity of sanctions, tariffs and subsidies will make the world less stable and more dangerous.
Democrats and Republicans may have very different ideas about taxes and spending, but at least they’re pretty much agreed on economic growth: It is no longer something to strive for. Instead, it is a benefit to be offered as a reward or withheld as a punishment.
Gone are the days, not so long ago and not only in the US, when shared growth and prosperity were understood to be a worthy goal. I am an economist, so I mourn this loss, unfashionable as that may be. And I predict that the rest of the world will eventually look back wistfully on the late 20th and early 21st century. The new era of economic statecraft will result in lower growth and less stability.
Economic statecraft, also called geoeconomics, is the use of trade policy — sanctions, industrial subsidies, tariffs and so on — to achieve foreign policy goals. A geoeconomic policy might be objectively bad from an economic perspective, but still be considered worth doing because it furthers some foreign policy objective. The US’s tariffs on Chinese electric cars are one example.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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