The current trade regime is not just a matter of the U.S. exporting manufacturing jobs to China and importing cheaper consumer goods. We are also dramatically increasing the volume of pollution associated with our consumption, so much that a significant part of U.S. pollution is now generated in China in the production of goods for U.S. consumers.
FRANKFURT -- The central weakness of democratic systems also contributes to the problem: The quest for votes favors the extension of social benefits and discourages unpopular measures that would put the economy on a more sustainable footing. As the German economist Herbert Giersch once put it, what is politically expedient is rarely economically beneficial.
Wobbly nationalistic middle classes are not to be underestimated as political forces. They tend to have a stronger sense of their own importance than lower social classes, which explains why the spectacular global growth in incomes of the bottom 50 percent seems to have so little direct political valence, however huge it is in terms of how well humanity lives. Middle classes in more authoritarian states like China might indeed make even stronger demands, as a class, than in democracies, since their ascendance under "state capitalism" could lead to greater expectations of the state. One can imagine income inequality becoming a genuinely strategic question.