Surfing the waves of globalization and liberalized markets over the last 20-30 years, many developed and emerging economies have had a tremendous uplift in wealth as measured by performance at the national level. It’s in the distribution of that wealth within societies that the problems lie.

Nevertheless over the period, populations in the emerging economies have made great strides in improving living standards, taking millions out of abject poverty. Given they still retain a relatively low starting point even today, one can also conclude they are more likely to experience greater increases in living standards than populations in developed markets from hereon in.

We’ve seen that further globalization and commercial integration is likely to drive greater inequality within countries. For heavily exposed western democracies in particular, such as the UK and US, this means more risk, with known “evident costs” arising from more volatile economic performance (Source: IMF), and possibly with less of the reward.

So for this and a whole host of related reasons, it looks like now could be a good time for populations in developed economies quite rationally to clip the globalization premium, bag the benefits achieved so far and avoid the increased risks and costs of further inequality.

So it could, quite rationally, be a good time for developed markets / countries to build more boundaries to our economies, for example if we want:

• capital access to be rebalanced towards local, national or smaller companies as opposed to multinationals;
• upwards pressure on labour costs, improvement in wages, sustainable wage pressures and thus higher long term inflation expectations. (In this regard the UK’s minimum wage legislation and earned income tax credits are a decent start down this road.)