Countries are dismantling international free trade rules and adopting protectionist, zero-sum policies. Domestically, however, they are largely continuing with liberal, market-based economic policies, creating a new hybrid world order.
A new elite class has emerged in the top 10% of Americans who are wealthy from both high-paying jobs and capital investments. This fusion of labor and capital income is a modern phenomenon, creating a self-perpetuating and meritocratically justified upper class.
China's cultural and intellectual focus remains overwhelmingly on itself. This "Middle Kingdom" mindset prevents it from developing the deep understanding of other nations necessary to build genuine soft power and influence how others see the world.
Faced with a stagnant middle class, Western governments had two options: redistribute wealth from their own top earners or blame external forces. They chose the politically easier path of scapegoating China, leading to protectionism instead of domestic social democratic reforms.
The rise of Asia has pushed the Western middle class down the global income ladder. Even if their absolute income is stable, this decline in relative global status—losing the ability to afford internationally priced goods like World Cup tickets—fuels economic anxiety.
China's government isn't failing to boost consumption; it's a deliberate strategy. By compressing wages and retaining profits in state firms, it accumulates capital to fund massive strategic initiatives like AI and global infrastructure projects, maintaining state control.
For decades, China's rapid growth reduced global inequality. Now that it is an upper-middle-income nation, its high growth widens the gap with poorer countries in Africa and Asia, making it a net contributor to global inequality.
Unlike historical aristocracies that displayed their wealth, modern American elites often adopt a "folksy" persona. They emphasize hard work and public education credentials to appear relatable and downplay their privileged status, even while subtly signaling it.
Populist leaders capitalize on public anger towards the "money elites" who benefited from globalization. However, their rise to power is distinct from their governance. Once in office, leaders like Trump often enact orthodox economic policies, such as tax cuts, that favor those same elites.