Opinion

In 2020, Americans can set the world back on the right path, vote by vote

Bad economics drives bad politics, creating a vicious circle. US populism is just a manifestation of a trend that includes Brexit and Chinese nationalism. But America has a chance for a course correction this year by electing a new president

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Lawrence H. Summers was chief economist of the World Bank (1991-93), US Treasury secretary (1999-2001), director of the US National Economic Council (2009-10), and president of Harvard University (2001-06), where he is currently University Professor.

Published: 3:00am, 2 Jan 2020Updated: 3:32am, 2 Jan 2020

Domestic politics, geopolitics and economics will be intertwined in 2020 to an extent unmatched in decades. Weak economic performance and problematic governance in much of the world risks setting in motion a vicious circle: adverse economic outcomes lead to populism at home and nationalism abroad, which in turn exacerbate economic problems as protectionism increases, investment declines and consumer confidence falls. Bad economics drives bad politics, leading to worse economics and worse politics.

Both the bad news and the good news is that economics and politics start 2020 in a parlous state. The global economy could fall into recession, and the risk of major political or military confrontation is higher than it has been since the end of the cold war.

From a more optimistic perspective, with expectations very low, it will not take much to generate surprises that could lead to a virtuous circle of economic improvement and less toxic politics.

Start with the economics. The International Monetary Fund has coined the term “synchronised slowdown” to refer to our current predicament: growth is decelerating in 90 per cent of the world economy and expected to be slower than at any time since the financial crisis.