A wide ranging interview of Jeffry Frieden, Professor of Government at Harvard University, in which he discusses the intersection of politics and economics. The meat of the piece starts at 8 minutes 40 seconds in where Frieden argues that a loss of manufacturing jobs is key to the recent rise of populism. Such jobs peaked as a share of employment in the late 1960s and early 1970s and were important for allowing unskilled and semi-skilled workers to enter the middle class. New technology, however, resulted in capital replacing labour. And globalization accelerated this transition as jobs were increasingly offshored. Now, in order to move up the income ladder, workers need computer literacy and higher skills levels.
Freiden then discusses the role of factories within town communities and how their decline and closure negatively impacts employment, housing prices, and the success of neighbouring businesses (around 18 minutes in). Moreover, with more prosperous regions (like the coasts) experiencing increases in house price, people from the underperforming regions can’t afford to move to the areas with better jobs. This partly explains the regional nature of populism. It also reveals a vulnerability for the cohesion of the US, much like the EU has struggled with the diverging fortunes of member states.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
For full access to Macro Hive's insights produced by some of the most experienced researchers in the market today