It's politics (not economics), stupid!
Washington Consensus is dead. At its peak, no one would have guessed its demise would be presided over by the political right in the country of its origin. But when J D Vance uses 'stupid' to describe a 'consensus' that governed the global order for over four decades, there's the sense of an ending.
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The term, coined by John Williamson in 1989, encompassed a set of pro- free market, pro-globalisation policies like free trade, open FDI, privatisation, low taxes, fiscal discipline and deregulation. Is its demise a good or bad thing?
By and large, individual elements of the consensus are good economics. It's Economics 101. And if you look at the four decades of its supremacy between 1980 and 2020, the world achieved unprecedented prosperity with a record number of people, largely in China and India, lifted out of poverty. There's no other period in history with such an impressive record of GDP growth and poverty alleviation. So, why is the world abandoning a successful track?
Any set of economic policies creates winners and losers. In the US and some other advanced economies, there has been a deindustrialisation over the past four decades. Many industries, particularly labour-intensive ones, moved to low-wage destinations, mainly in Asia, but also South America.
Free trade was good for both sides. US consumers got access to cheaper goods. Emerging
