DAVOS • International Monetary Fund managing director Christine Lagarde called for greater wealth distribution to respond to populist advances across the world, while hedge fund billionaire Ray Dalio predicted the possible end of globalisation.
Policymakers "really have to think it through and see what can be done", given the feedback from voters who say "no", Ms Lagarde told a panel chaired by Bloomberg Television anchor Francine Lacqua at the World Economic Forum in Davos yesterday.
Among measures that could be implemented are fiscal and structural reforms, she said. "But it needs to be granular, it needs to be regional, it needs to be focused on what will people get out of it, and it probably means more redistribution than we have in place at the moment," Ms Lagarde told the panel titled Squeezed And Angry: How To Fix The Middle-Class Crisis.
Excessive inequalities were a brake on sustainable growth, she said.
How to address the economic and political fallout from the anti- establishment forces that manifested themselves in the United States election and Brexit has been a key theme of the Davos gathering.
...it needs to be granular, it needs to be regional, it needs to be focused on what will people get out of it, and it probably means more redistribution than we have in place at the moment.
INTERNATIONAL MONETARY FUND CHIEF CHRISTINE LAGARDE, on reforms that could be implemented for wealth distribution.
In Europe, elections are due this year in the Netherlands, France and Germany, with a possible early poll in Italy following a constitutional referendum in the country where voters rallied against the government.
The panel saw former US treasury secretary Lawrence Summers attacking Mr Donald Trump, while Mr Dalio, founder of Bridgewater Associates, struck a more pessimistic tone than Ms Lagarde.
"I want to be loud and clear: populism scares me," Mr Dalio said. "We may be at a point where globalisation is ending, and provincialisation and nationalisation are taking hold. The No. 1 issue economically as a market participant is how populism manifests itself over the next year or two."
Now at Harvard University, Mr Summers said populism is "invariably counterproductive" for those it claims to help. "Our President-elect has made four or five phone calls to four or five companies, largely suspending the rule of law, and extorting them into relocating dozens or perhaps even a few hundred jobs into plants in the United States," he said.