The backlash against globalization, the slow death of the Washington Consensus, and the rapid rise of AI are fueling volatility that, if left unchecked, will lead to lower growth, higher inflation, and greater inequality. To move the economy onto a better path requires, first and foremost, abandoning our faith in outdated ideas.
NEW YORK—An uncomfortable reality is becoming increasingly difficult to ignore. The global economy is in a period of “more frequent and violent shocks,” as Nobel laureate Michael Spence puts it. Instead of facing isolated and temporary disruptions, we are confronting a structural shift toward unsettling volatility, deepening fragmentation, and a wider dispersion of outcomes for countries, companies, and households. The old world is gone, and virtually everyone risks losing out in the new one. The question is by how much and what to do about it.