Number of words: 525

Rajan’s new book explains the anger of a generation that feels denied and deprived of what was rightfully theirs – a middle-class American life. The class has, with vengeance, attacked what it sees as the perils of Globalization. In such a scenario its easy for a demagogue to emerge and point fingers at the others as the source of one’s problems. Anger promotes exclusion and a ticket to power.

While Rajan tries to write from a layman’s  perspective, he still comes with an academic approach. He first traces the origins of the pillars. Community was the all powerful and only pillar to begin with. To accommodate the changes wrought by industrialization it led to the emergence of State as an alternate pillar. The State’s excesses need to be kept in bounds and still drive resources to productive purpose. The answer was Markets. USA became the hallmark of demarcation of powers and accountability between the State and Markets. It promoted entrepreneurship and free markets. New paradigms emerged whereby the State and Markets connived to forge partnerships at the cost of local communities.

The gravy train was munificent and lulled the communities from protesting too much at the diarchy. But rapid globalization and unfettering of Capital created behemoths that took apart the community. The enemy was invisible and unknown, but the community felt deprived and robbed of their fair share. They worried even more about the future of the children. Those who could, moved away from poorer communities to something better and did it at double-speed. This impoverished the community further and added more to their despair. The negative spiral simply sapped the community’s ability to respond to the challenge. The schism widened and provide an easy handle for politicians to exploit for their own narrow interests.

Rajan’s diagnosis supported by anecdotes and empirical evidence is quite convincing. Most of us can relate to the dislocation being experienced by the masses and the rage it produces. However no easy solutions are around though Rajan rightfully suggests that the Community needs to regain its rightful place in the scheme of things and a reset of ‘balance-of-power’ between the three pillars is the only way to ensure a prosperous future for most of us.

The trouble remains with the fact that the prescription is not easy to implement. Rajan’s suggests a few piece-meal strategies but how much they would work at a mass scale is always an issue. The delicate balance in becoming a welfarist and inefficient society is counterpoised by the ‘winners-take-all’ approach that free markets have driven to the extreme. ‘Occupy Wall Street’ and ‘Brexit’ are credible examples of how widespread and deep is the anger of those who are left behind in the race to the top.

Every decision becomes a Pandora’s box. In the garb of promoting local communities are we resorting to protectionism? What happened to the theory of Adam Smith’s invisible hand? What happened to the story of leveraging your comparative advantage to maximize the output for the world at large? Can we worry too much about slicing the cake for everyone instead of growing the cake to meet the needs of more people?