Colgate University’s Lampert Institute for Civic and Global Affairs hosted Rana Foroohar, business columnist and associate editor at the Financial Times and global economic analyst at CNN, on Tuesday, Feb. 6. Organized by Director of the Lampert Institute and Associate Professor of Political Science Illan Nam, Foroohar’s lecture analyzed the changing tides of the United States economy.
The discussion touched on the U.S.’s economic relations with China, the successes and drawbacks of “Bidenomics,” the vanishing middle class and the steps the U.S. is taking towards a more localized, environmentally sustainable economy.
Nam was enthusiastic about bringing Forhoohar to campus and anticipated students taking a lot away from the talk.
“I hope her insights about how the global economy is changing — the shortening of supply chains as companies reshore production and rethink the risks of producing in China, which poses a strategic threat to the U.S. and governments invest in creating more local hubs — help students better understand the important debates about industrial policy and national security,” Nam said.
Foroohar’s lecture was aptly named “The Earth is Not Flat,” a nod to American political commentator and author Thomas Friedman’s “The Earth is Flat,” a book arguing that the U.S. economy will indefinitely be characterized by unchastened globalization. The columnist spoke in-depth about the U.S. on the precipice of an era of greater localization.
Foroohar began by discussing the history of globalization and the globalization paradigm. With capital moving fast and goods moving slower while people don’t move at all, the world incurred more wealth than ever, hitting its apex of global GDP in 2006-2007. As global wealth grew, however, so did intra-country income inequality and the subsequent middle-class battle with inflation.
Foroohar asserted that this dependence on cheap capital — perpetuated by a dysfunctional relationship with China that dampened wages for Chinese workers and increased debt in the U.S. — has caused inflation to soar and given rise to an economy that has turned its back on middle-class families. From this dynamic, Foroohar argued, emerged a widespread disaffection amongst the voting population.
“There was never a national conversation in this country about what was being gained and what was being lost in these policy decisions. Yes, there was a decrease in the cost of many goods […], but the fact that you’re getting cheaper flat-screen TVs or phones doesn’t make up for the fact that all things that make you middle class — housing, education, health care — all these things are rising at triple the core inflation rate,” Foroohar said.
The lecturer explained how the shared frustration among voters affects the political landscape.
“So, the world is not flat, and many people working in the industrial commons felt very sold out,” Foroohar said. “A felt experience amongst many people in the voting public disappointed with mainstream politicians not voting in their interest, exasperation against a meritocratic globalized elite making policies that serve the market but don’t serve the voter in the nation-state.”
However, according to Foroohar, the system is changing. The cash flow that drove globalization is slowing down as it becomes more balkanized. The cheap capital story is ending. As United States laborers push for higher income and Biden’s “Work Not Wealth” campaign surges forward, as energy security becomes more important across the globe and countries worldwide reindustrialize, the international economy shifts from one based on rising asset prices to one based on income-led growth and localized manufacturing.
“We have a lot of debt and easy money propping up a main street story where productivity has been sort of stagnant. But now, cheap money? Those days are gone. The next generations are going to be about saving, about balancing,” Foroohar said. “This is part of a larger value shift from shareholder capitalism to stakeholder capitalism.”
Senior and Lampert Scholar Angela Mangione certainly found Foroohar’s wisdom on the ripple effect of economics illuminating.
“It was fascinating how Foroohar described a future with an income-led growth model instead of the asset-led model we are experiencing now, which has caused the economic consequence of a dominating middle class and the political consequence of populist movements developing around the world,” Mangione said. “A resilient — rather than efficient — economy will do more to benefit consumers rather than banks and will avoid supply chain issues that we have been experiencing since [the COVID-19 pandemic].”
Foroohar spoke enthusiastically about technological innovations and their implications for a greener, more localized economy.
“Especially with new technological innovation, when you’re making low margin goods, it stops making sense to transport them through long, costly south China or Eastern European supply chains and starts making more sense to start doing things at home […]. I believe we are at a change point with all the world’s regions incentivizing the green transition,” Foroohar said. “If we can get to the other side, that historically causes big births of shared growth —growing incomes, growing jobs and creating a middle class. My hope is that that’s where we are.”
Foroohar closed with a reaffirmation of this economic juncture the world is currently sitting at.
“If you look back through economic history, you get political economies that are purpose-built for their time, and then they stop and that’s when you get the shift. We had 1800s mercantilism, then laissez-faire economics, later the Reagan-Thatcher Revolution, then Bidenomics. We are now at the beginning of a very, very rich pivot point to the new system,” Foroohar said.
Mangione found renewed hope in Foroohar’s words about this turning point in the U.S. economy.
“I felt optimistic about the future of the economy, which will greatly impact my adult life. I am proud to come from a middle-class family, and I think that building up that middle group again will only benefit the real experience of people in the United States. Hopefully, this will also have a positive impact on our domestic political climate,” Mangione said.
All attendees received a copy of Foroohar’s latest book, “Homecoming: The Path to Prosperity in a Post-Global World,” which, much like her lecture, underscores the effects globalization has had upon inequality, economic structure and political polarization in the United States.
