11 Supply Politics
Tooze
Martin Sandbu on how to think of the medium-term future:
I would like to focus on three overarching characteristics of the direction of economic change. The first is fragmentation — the raising of new economic barriers between countries and the end of the globalising impulse that has defined the world economy for nigh-on 40 years. The second is increased volatility — whether from intensifying climate events, more frequent and hereto unthought-of geopolitical shocks, or built-in instabilities in financial markets that we are discovering as interest rates go up. The third characteristic is more of a catch-all category: I think of it as the rise of the supply side. The increased volatility and shocks we face seem increasingly likely to affect the supply side and the structural make-up of the economy. The supply side is also the main site of the return of state activism in economic management. From largely focusing on demand management (through independent central banks) and redistribution of the fruits of growth (through tax and benefit policies), governments have now embraced a responsibility for shaping the structure of the economy and the direction of growth. This new activism applies to huge policy areas ranging from geopolitical resilience (building domestic microchip supply chains), decarbonising the energy system, and managing the digital transition of our lives and livelihoods.