FLT Seminar – USA & European Economies 2020 and Its Influence on Israeli Economy
The cooperation with our partners are in full swing. We have just conducted a joint seminar with the Forum for Liberal Thinking examining trends in world economy and their influence on Israel.
We tackled questions like how globalization has affected the big economies, who were the winners and who felt left behind. In the US, where in the course of globalization many big companies moved their factories out of the borders of the USA, entire cities and areas in the US were stripped of their local industry and some did never really recover from these structural changes. Like in the case of Detroit, where the loss of industrial and working-class jobs has resulted in high rates of poverty and associated problems. Losing a job in the US has much more far-reaching implications than in other countries where a proper social welfare net is assisting unemployed people. For example for most people in the US, health insurance is closely tied to their jobs, when losing the job one does not only loose the monthly income but also one’s health insurance. Trumps ascent to the Oval Office that surprised and shocked so many around the world, has to be seen in close relation to this disillusioned American working class. Those, who did not manage to adjust to the changes and who blamed the old political elites for not recognizing their plight but rather aligning with the big corporates, often for personal benefits. Trump was the only one of the presidential candidates, who took an anti-globalization stand and with that allied with this disillusioned working class and convinced them that he as a deal-making billionaire would not be bribable for these big corporates, and the right person to restore national economy and revive local industries.
In the EU the economy is meanwhile stable, its growth however lethargic. High unemployment rates is wasting human and (physical) capital resources. European industries in many respects are old-fashioned and not tuned enough to technologies of the future. They fall behind foreign competitors who will be the ones deciding about the new economic and political world order. Already it is obvious that the European Union is lame on the world stage. An effort is needed to reinvigorate the EU economy, which would also be the best foundation for a stronger political structure of the Union.
As it moves into the new century, the Israeli economy has proven to be prosperous, as it continuously introduces and applies economic innovation, and to be capable of dealing with economic fluctuations. However, it faces some serious challenges. Some of these are the same as those faced by most industrial economies: how to reconcile innovation, the switch from traditional activities, which are no longer competitive, to more sophisticated, skill-intensive products, with the dislocation of labor it involves, and the income inequality it intensifies. Like other small economies, Israel has to see how it fits into the new global economy, marked by the two major markets of the EU and the U.S., and the emergence of China as a major economic factor.