The World's Scariest Emerging Market: Welcome to America.

Author:Lachman, Desmond

According to a Wall Street joke, the longest river in the emerging market countries is De Nile. However, looking at the U.S. economy today, especially after the September 2008 Lehman bankruptcy crisis and the November 2016 election of Donald Trump as president, one has to wonder whether it is instead we in America who are in denial about the troubling direction of our country's economy.

Might we now not be choosing to turn a blind eye to the fact that the United States is increasingly coming to resemble those major emerging market economies such as Brazil, Russia, Turkey, and Ukraine in terms of its poor economic governance, its dysfunctional politics, and the general direction of its economic policies? Might we also now be choosing to ignore the strong possibility that our increasingly sclerotic economy could be an underlying cause of the disturbing slowdown in the country's productivity growth over the past couple of decades?

In the 1980s and 1990s, during my long career at the International Monetary Fund, I visited many emerging market economies throughout Asia, Eastern Europe, and Latin America. By the time I visited Moscow in 1998, I thought that I had seen it all. Yet I still recall the shock that I felt at a meeting in Russia's dingy Ministry of Finance, where it dawned on me how a handful of young oligarchs was bringing Russia's economy to ruin in the pursuit of their own selfish interest.

My Russian experience reinforced my view that at the heart of all too many emerging market countries' repeated bouts of poor economic performance was their weak economic governance. All too often in those countries, a handful of powerful oligarchs managed to capture the reins of government while economic policy came to be made mainly in the interest of the favored few at the expense of the many. This sapped those economies of their vitality and made it very difficult for their governments to implement much-needed economic reforms.

Looking now at President Trump's cabinet of billionaires and at his predilection for promoting regressive policies in the areas of health care and tax reform, can we really say that we are qualitatively different from the Brazils, Russias, and Ukraines of the world?

Looking at Goldman Sachs' disproportionate share of high-level government economic positions over the last twenty years, can we really say that Wall Street does not have excessive power in U.S. economic policymaking?

Considering the special interest groups'...

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