Shades of Davos in TT?

Perhaps the changing times saw China’s President, in an ironic twist, become a strong advocate of free trade, condemning those set on protectionism. He was articulate in stating that no one, notwithstanding the opposite view by some on President Trump’s team, would win in a trade war. It is clear if trade difficulties arise there will be a realignment, with China trying to court the Europeans, Asians or Latin Americans. Certainly, the Europeans can be very big winners if China is pushed, because of the new policies by the incoming US administration, to look for new trading partners.

Is the middle class globally in crisis? This was a question tackled by a panel in which Christine Lagarde, the managing director of the IMF, was part. She indicated that the middle class has grown globally as China and India in particular have added tens of millions of people to that category.

However, the so called developed world has seen their middle class shrink.

People feel that their governments and elected officials do not represent them. There is also, in all this, a wave of nationalism. The Italian Minister of the Economy and Finance suggested that there is a crisis in the middle class in the developed world. This middle class in his view is disappointed in the future and the prospect of opportunity for their children.

There is also a wealth gap that is the highest since the 1930s and this has given rise to grave disenchantment by the middle class, with the manner in which they have been treated and the way their concerns in their opinion have been addressed by the political directorate.

In fact, the view is there are lower levels of growth that have been experienced by the developed world, coupled with higher levels of poverty and inequality. This has contributed to anger which is expressing itself by the lower and middle classes as an upsurge of populism. Populism, the fight against globalisation and immigration, and the turning inwards by nations, ethnic groups and communities are the main political phenomena of the last 12 months.

Populism is the most important issue in some people’s view. A corollary is the emergence of protectionism. Some feel key institutions like Central Banks no longer matter as much. The panel is of the view that the future is dependent on how populism manifests itself.

How to stop the middle class from been disillusioned? Is productivity and populism linked? This raised an interesting perspective. Median wages are lower now than they were 20 years ago - this has caused anger.

Davos was also very interested in Theresa May’s announcement about the exit of United Kingdom from the European Union. It is felt that large multinational firms are going to move their offices to other European cities or reposition to New York.

Davos has thrown up questions we need to ask ourselves. Is there disenchantment with how our representatives treat with us and issues meaningful to us? Is poverty and inequality on the rise in this country? What is happening to purchasing power, disposable income, quality of life, security and hope in the future? Where is the report on poverty and inequality based on the Household Budgetary Survey? Perhaps our leaders need to learn lessons from Brexit and the Trump phenomenon that people want their issues dealt with and are prepared to do something about it.