New Risks in a New Geopolitcal Framework

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New Risks in a New Geopolitical Framework

Central Banking Series Global Interdependence Center Fundacion Rafael del Pino, Madrid November

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2018

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The Siege of the Liberal Order

1. The Rise of China 2. A Revisionist Russia 3. The Arab Winter

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T h e I m p l o s i o n o f t h e O r d e r f r o m Wi t h i n

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World Population and Social Development over the last Four Thousand Years Source: Morris 2010 & Brynjolfsson et al. 2014

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T h e C a u s e : Te c h n o l o g i c a l A d v a n c e m e n t 12 Disruptive Technologies

Mobile Internet

Automation of knowledge work

The internet of things

Cloud technology

Advanced robotics

Autonomous and nearautonomous vehicles

Next-generation genomics

Advanced oil and gas exploration and recovery

3D printing

Advanced materials

Energy storage

Renewable energy Source: McKinsey Global institute 2013

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The Challenges it Brings

DISRUPTION IN THE JOBS MARKET

WAGE STAGNATION AND INEQUALITY 6

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Sift in the Jobs Market AGRICULTURE

Corn Yield(bushel/acre)

Agricultural Employment (share of labor force)

Source: Goldman Sachs Global Investment Research (2016), US Department of Agriculture, IPUMS-USA, University of Minnesota

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Sift in the Jobs Market Manufacturing Sector Inflation-Adjusted Output and Employment

Source: Metropolitan Policy Program, The Brookings Institution 2016 8

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Challenge I Disruption in the Jobs Market – Services (Projections)

Source: Oxford Martin School 2015

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Challenge I Disruption in the Jobs Market – Aggregate Impact

Decoupling of Productivity and L a b o r Wa g e s Source: US Census Bureau

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Challenge II Wage Stagnation

% of Households with Flat or Falling Real Market Income, 2005-2014 Source: Financial Times & McKinsey Global Institute (“Poorer than their Parents�)

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Challenge II Inequality – Income Distribution After the Crisis

% share of income gains during economic expansion accruing the top 1% and the bottom 99% of earners

Fuente: Techerneva, 2014. Basada en cĂĄculos de Piketty y Emmanuel Saez.

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THE CONSEQUENCES

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PESSIMISM & ANTI SYSTEMIC SENTIMENT

THE BARBARIANS AT THE GATES & THE ANTI LIBERAL ERA

LOSS OF FAITH IN DEMOCRACY AS A FORM OF GOVERNMENT

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Conclusions CAUSE: STRUCTURAL CHANGE IN THE ECONOMY CONSEQUENCE: POLITICAL CONVULSION & COLLAPSE OF THE LIBERAL ORDER SOLUTION: A NEW SOCIAL CONTRACT

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Thank you!

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