The Global Economy Is Fracturing. What Comes Next?

The world economy has experienced many shocks over the past few years: A pandemic. Russia’s invasion of Ukraine. Skyrocketing inflation. These are the stories that have dominated headlines — and for good reason.But they’ve also overshadowed a set of deeper, more fundamental shifts — the rise of China as an economic superpower, the fracturing of trade relations, the realities of the climate crisis — that are transforming the global economic order and prompting ambitious policy responses from leaders across the world.Martin Wolf is the chief economics commentator at The Financial Times, a former senior economist at the World Bank and the author, most recently, of “The Crisis of Democratic Capitalism. In his writings, Wolf has developed some of the clearest frameworks for thinking about how the global economy is changing and some of the sharpest critiques of how policymakers are responding to those changes.We discuss how China’s meteoric economic rise has shaken the foundations of the global economy, why globalization has remained far more resilient than so many predicted, why Wolf is skeptical that President Biden’s industrial policy agenda will succeed, the debate between “onshoring” and “friendshoring” that is dividing the Democratic Party, why a recession in the United States is looking far less likely than it did six months ago, the virtues and vices of Biden’s “foreign policy for the middle class,” why China’s recent economic troubles could signal a more foundational decline, why the U.S. economy has remained so much more stronger than most economists anticipated, and more.Mentioned:National Security Adviser Jake Sullivan’s speech“The I.R.A. Passed a Year Ago. Here’s a Progress Check” by The Ezra Klein Show, with Robinson Meyer“The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade” by David H. Autor, David Dorn and Gordon H. Hanson“Is the Global Economy Deglobalizing?” by Pinelopi Goldberg and Tristan Reed“Climate Progress and the 117th Congress: The Impacts of the Inflation Reduction Act and Infrastructure Investment and Jobs Act” by REPEAT ProjectBook Recommendations:The Narrow Corridor by Daron Acemoglu and James A. RobinsonPower and Progress by Daron Acemoglu and Simon JohnsonThe Rise and Fall of American Growth by Robert J. GordonThis episode is guest-hosted by Rogé Karma, the senior editor for “The Ezra Klein Show.” Rogé has been with the show since July 2019, when it was based at Vox. He works closely with Ezra on everything related to the show, from editing to interview prep to guest selection. At Vox, he also wrote and conducted interviews on topics ranging from policing and racial justice to democracy reform and the coronavirus pandemic.