Li Yang

 

 

In an op-ed "The Real Threat to American Prosperity", published by the UK newspaper Financial Times on Saturday, Nobel-winning economist Daron Acemoglu analyzed the influence of the United States' trade wars and tech industry hubris on the country, and how loss of faith in US institutions could spiral further.

With the Donald Trump administration's domestic and foreign policies aggravating the risks and uncertainties faced by the world in an unpredictable way, the US included, the professor of economics of the Massachusetts Institute of Technology called on the US people to think of the possible consequences of such a situation, and reflect on how they should respond to it.

Reviewing the US' development since early last century, Acemoglu observed that a key pillar of what is regarded as the American Century has been the country's ability to shape the world order in a way that benefits its own economy, including its financial and technology sectors.

He argues that the series of "America first" policies the incumbent US administration has adopted over the three weeks since its inauguration — including weaponizing tariffs, withdrawing from international pacts and organizations and coveting other countries' territories — indicate the US is trying to benefit its own economy by undermining the world order it established. Instead of making America great again, that will only aggravate the cracks in the pillars that held the US aloft.

While the world is asking why that could be allowed to happen, the MIT economist correctly pointed out that the root cause lies in the growing dysfunction of US institutions, which he attributes to the partisan dogfight between the Democrats and the Republicans over the past years, which, as he said, has "shattered people's trust in these institutions".

The institutional dysfunction has resulted in the US political system losing its self-correction ability and the concentration of power in the hands of the uber-rich.

The rapid rise in the number of billionaires in the US means they not only flaunt their wealth but also exert increasing influence over politics and people's lives. The US economy has generally grown rapidly since 1980, but about half of Americans have not benefited accordingly, causing them to feel betrayed.

So people choose not to compromise, a crucial factor that makes American democracy work, aggravating the polarization of the US society. Partially thanks to the strong influence of tycoon-controlled new media and the tech giants, voters have become more willing to support people with little political experience precisely because they are deeply dissatisfied with the status quo and believe that the current system needs to be radically changed. But this has only turned the situation from bad to worse.

Before the US addresses its own structural and institutional problems, which is becoming increasingly difficult to do as the disordering of the US institutions has fallen into a self-reinforcing vicious cycle, the world will continually suffer from its failings.