In a recent Eurizon SLJ Capital research note, Stephen Jen reflects on the long-term consequences of policy overreach across trade globalisation, immigration, energy policy and institutional governance.
The note argues that many of today’s political and economic tensions are rooted in policies that may have had clear objectives, but whose side effects were either underestimated or poorly managed. Stephen focuses particularly on the consequences of unfettered trade globalisation, which he argues helped reduce disparities between countries while contributing to rising disparities within them.
As Stephen writes:
“The point was very simple and intuitive: global labour arbitrage would help reduce income disparities between countries at the expense of increasing them within countries.”
The note also broadens the discussion to other areas where Stephen believes policy has moved too far in one direction, including immigration and net zero. In each case, the central issue is not necessarily the objective itself, but the risks created when policy design, calibration and implementation fail to keep pace with real-world consequences.
Stephen also raises concerns about the ability of governments to execute complex programmes effectively:
“While some countries continue to be models for emulation (Singapore and Switzerland) in terms of the competence of their bureaucrats and how rules and laws are implemented, most developed countries (the UK and some Western European countries) are clearly suffering from a serious degradation in the ability of their bureaucrats to design and implement programs.”
The broader message is that policy choices need to be judged not only by their intentions, but also by their side effects and the capacity of institutions to implement them well.
As Stephen concludes:
“In my view, much of the chaos we are witnessing in the developed world is a pretty direct result of bad policies and poor implementation of good policies.”
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