Harvard Economist Proposes 'Productivist Paradigm' for Post-Trump Global Economy

Harvard economist Dani Rodrik has unveiled an optimistic vision for the global economy beyond the Trump administration, detailed in his new book, "Shared Prosperity in a Fractured World." As highlighted by The New Yorker, Rodrik's work offers a "progressive alternative" to the current economic order, aiming to address critical challenges such as middle-class restoration, poverty reduction, and climate change. His insights come at a time when many economists express despair over the erosion of the open trading system.

Rodrik's optimism stems partly from his belief that Trump's "America First" policies will ultimately fail to deliver on their promises, thereby creating an opening for new approaches. He contends that a return to the pre-Trump global system, characterized by one-size-fits-all trade rules, is neither possible nor desirable. Instead, he advocates for greater domestic flexibility to address pressing economic issues.

Among Rodrik's key recommendations is an "experimental" approach to economic policy, drawing lessons from China's industrial growth and emphasizing the services sector over manufacturing. He also champions the dramatic fall in green energy costs, suggesting governments play a crucial role in upgrading worker skills, boosting low-wage worker bargaining power, and financing strategic, risky investments. He proposes an "ARPA-W" to develop "labor-friendly technologies," including those leveraging artificial intelligence, to empower workers rather than displace them.

The economist's perspective has evolved since his 1997 book, "Has Globalization Gone Too Far?", where he warned of "social disintegration" due to unchecked economic integration. While acknowledging that the populist backlash, exploited by figures like Trump, has validated some of his earlier concerns, Rodrik stated, "I don’t take any comfort from it. What I was saying seemed pretty obvious."

Despite conceding that Trump's actions have tempered his initial optimism, particularly regarding international agreements on climate change, Rodrik remains hopeful. He points to the resilience of green energy initiatives, noting that even with policy setbacks, the economics of solar power, for instance, have fundamentally "flipped." He believes that with appropriate policies and time, progress can be made in other areas, asserting that "it will take more than four years for a coherent alternative to emerge and capture the public imagination."