Next year is not going to be better, and one might just stop there. Whatever temporary fixes are applied to the eurozone, American deficits and joblessness, the overheated Chinese real estate market, petering Indian reforms or stalling Brazilian growth, they are all symptoms of a structural global economic dislocation which is becoming increasingly disorderly. Yet politics may be deceptively calm in 2012 – calm until later.
As to the economics, two shifts are underway. One is between the old western economies and the formerly emerging economies, notably those in Asia. The second is that the globalisation of markets has created two new classes of winners: a global super-rich of innovators, traders and bankers; and a class made up of the Asian and other emerging market manufacturing and service sector workers, who have undercut western labour costs.
The big losers are western middle class and blue collar workers, who have lost out dramatically. The source of this crisis is their decades-long loss of competitiveness and income, which politicians have tried to cover with unserviceable levels of sovereign and household debt. Now the bill is due and nobody will be unscathed.
Yet politics, at least for 2012, will be driven by tactics and electoral timing. The great revolt will come later. Next year, tactically adept incumbents may survive by offering stability at a time of chaos. Their chances are particularly high if they can identify with the pain of their citizens more effectively than weak challengers. Read more