The American 20th century ended in 2030. After an imposing and long domination since the post-Second World War, the American economy is developing a significant comparative advantage in technology, mainly in AI and cryptocurrencies.
However, in 2030, the consolidation of the technology sector, the considerable inequalities it caused and its very close ties with the US government led to a loss of efficiency in the sector. The dynamic that had made Tech the most attractive sector, the one that attracted investments, died out. Consolidation made it lose its efficiency and investors realized that justice had a bias to favor the largest companies. Investors’ interest then quickly faded, causing a major stock market crash. The sector that had driven the American economy no longer has the capacity to do so.
The story does not end there because a stock market event is not necessarily enough to generate a permanent regime change. For Daron Acemoglu who tells this story in the weekend FT several other elements mark American society.
The first is a series of economic policy mistakes. High inflation and public debt are Biden’s legacies, marking a change in the way the US economy operates.
Donald Trump, with a tariff policy and the withdrawal from the Paris climate agreement, has taken the US economy out of its historical role, the one that had led to Western prosperity. The permanent balance of power and the rejection of long-term objectives for America have given the United States a different status, weakening the role of the dollar and financial markets.
The second is an institutional dysfunction of America. Political polarization, the perception of a disconnect between everyday concerns and the political choices made, have stretched the institutional framework that had made America for decades. The substance of this America has disintegrated and has lost the trust of American citizens. The common dynamic has lost the power that once carried the world with it.
The combination of the technological crash, the blurred political framework and a loss of confidence in institutions created the conditions for this 2030 rupture.
Acemoglu writes this from the perspective of 2050 and looks as a historian at how the American economy and society broke down in 2030 without having the means to recover afterwards.
In this FT article we find the springs of Acemoglu’s thinking on the essential and vital role of institutions.
I don’t know if this is the scenario that the United States will find itself in over the next 25 years, but its probability does not appear to be zero.
Source Financial Times Daron Acemoglu Lien https://on.ft.com/4gtgVoY