The Corporate Top 1% Control Over 50% of International Trade (Pt 1/2)
Richard Kozul-Wright, who is the lead author of this year's annual Trade and Development Report (TDR) and Director of the Division on Globalization and Development Strategies at UNCTAD (United Nations Conference on Trade and Development):
We talk a lot in the report about what the Chicago economist Luigi Zingales calls this “Medici vicious circle,” of this growing interaction between increased economic power and increased political power, and the way in which that has become a self-reinforcing part of a very vicious circle. I think most people recognize that feature increasingly as part of the trend in advanced economies. In one way or another, people associate the rise of what is referred to, probably inappropriately as populist politicians, the “Brexit experience” as somehow linked to the removal of trust from the political system, which is increasingly seen as favoring a smaller and smaller part of the population.
So we know that’s the case in the advanced economies and we’re seeing that now extended into the international realm. And so, the squeezing of government revenues and the squeezing of wages is a part of that story, not only in the advanced economies, but also in the in the developing economies too. And of course, one of the responses of that is for governments and people to at least try and maintain what has become their sense of an acceptable living standard has been to borrow. And as financial markets have become more deregulated, the ability to borrow has become easier. And we know from the predatory practices of financial institutions that that has its own very significant downside risks and consequences.
And so, you get these vicious circles evolving around growing market concentration, rent-seeking behavior, increasing indebtedness, increasing inequality, which have become now, as far as our analysis is concerned, hardwired into the workings of the global economy with consequences we’re seeing not only in advanced economies but also in developing economies too. And the recent bout of financial vulnerability that has emerged in countries like Argentina and Turkey and other economies is a further reflection of that kind of vicious circle that we think is intrinsic to the workings of hyper-globalization.