Branko Milanovic on What Comes After Globalization

Episode Summary

Executive Summary: The episode explores Branko Milanovic’s view that neoliberal globalization is ending and being replaced by “national market liberalism”: countries keep domestic market-friendly policies while turning mercantilist abroad. The discussion centers on China’s rise, Western elite anxiety, inequality, and whether this new order reduces growth-driven gains while increasing geopolitical conflict.

Main Topics: From neoliberal globalization to national market liberalism (Priority: 5/5): Milanovic argues the post-1945 liberal order is ending. States are retaining market-oriented domestic policies but abandoning free trade and open international integration in favor of protection, industrial policy, and strategic nationalism. China as an economic and geopolitical shock (Priority: 5/5): China is discussed as both a rich and still-developing country: technologically advanced, but with low per-capita income and rural poverty. Its rise reshapes global competition, Western policy, and elite perceptions. Global inequality and the “elephant chart” (Priority: 5/5): The conversation revisits how globalization helped large parts of Asia while flattening Western middle-class gains. Milanovic emphasizes that rising Asia changed both country-level power and individual global income rankings. Elite formation and “homo plautia” (Priority: 4/5): Milanovic introduces the idea of a new elite class whose income comes from both labor and capital. This group combines meritocracy, wealth, and private property defense, making it politically resilient. Trade, openness, and conflict (Priority: 4/5): The guests debate whether openness promotes peace or whether great-power competition and economic interdependence can fuel conflict. Milanovic leans toward a more realist, conflict-aware view. Europe’s constrained position (Priority: 3/5): Europe is portrayed as squeezed between expensive energy choices, demographic decline, immigration resistance, and China competition, making it uneasy and somewhat sympathetic to U.S. hardline China policy. Policy responses: redistribution vs external blame (Priority: 4/5): The discussion contrasts domestic redistribution, education, and wealth taxation with the political temptation to blame foreign rivals. Milanovic favors a “pedagogical tax” on extreme wealth to limit elite dominance.

Key Arguments: The world is moving from neoliberal globalization to a new order where domestic liberalism coexists with external mercantilism and strategic protectionism. China’s rise matters on two levels: as a state competing with the West and as a force pushing lower-income Western citizens down the global income distribution. The 1990s neoliberal consensus was so dominant that alternatives seemed unthinkable, which helps explain why backlash came through nationalism rather than social democracy. China is not simply a poor developing country or a fully rich one; it is a hybrid with low household consumption, strong state-directed investment, and world-class technology. Western elites increasingly draw both labor and capital income, creating a self-reinforcing plutocracy that is difficult to dislodge. Openness can produce prosperity, but it also creates strategic vulnerability; large powers cannot ignore industrial capacity and military dependence. Reducing global inequality depends primarily on growth in poorer regions, especially Africa and India; within-country inequality needs redistribution, education, and wealth taxes. Trump, Xi, and Putin are framed as political responses to resentment against globalization, even if their actual domestic policies differ sharply. Europe’s dependence on cheap energy and labor clashes with its policy choices on Russia and immigration, worsening its economic weakness. China’s limited soft power stems partly from its inward-looking intellectual culture and its tendency to focus on itself rather than interpreting the world for others.

Data Points: Top 10% Chinese urban income shift: Two-thirds from state jobs in 1988; two-thirds from private-sector jobs by 2018/2023 - Milanovic describes the transformation of China’s urban elite from state-centered to private-sector-centered income sources. China consumption-to-GDP ratio: About 40-45% - Used to argue China’s household consumption is low relative to its economic size and below the U.S. level. U.S. consumption-to-GDP ratio: About 70% - Serves as a comparison point showing how consumption-heavy the U.S. economy is. India consumption-to-GDP ratio: About 50% - Provided as a middle benchmark between China and the U.S. Bottom decile in Italy global percentile: 70th percentile 30 years ago; 55th percentile now - Illustrates how Western lower-income groups have slipped in relative global standing due to Asia’s rise. Trump votes in 2020: 77 million - Used to underscore the scale of political support for anti-globalization resentment. World Cup affordability example: Bottom-decile Italian could afford to attend 30 years ago, but not now - A vivid illustration of relative global status loss among Western workers. Elite size referenced: Top 10% of Americans, about 30 million people - The group Milanovic uses to study the rise of dual labor-and-capital earners.

Pivotal Quotes: "What applies now is essentially national sort of mercantilist policy. It's a policy of, you know, beggar thy neighbor to some extent, but certainly zero-sum game or even a negative sum game." — Branko Milanovic: He defines the emerging global economic regime as distinct from neoliberal globalization. "The key point now is India's growth and especially Africa." — Branko Milanovic: He explains that future global inequality trends will depend heavily on growth in poorer regions. "Pedagogical tax." — Branko Milanovic: His phrase for a tax on extreme wealth meant to signal that billionaires should not rule society.

Implications: Listeners should expect more economic nationalism, tougher China competition, and renewed debate over redistribution and industrial capacity. The episode suggests the next order will be less open, more conflict-prone, and more defined by who controls capital, technology, and supply chains.