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The Curse of Falling Expectations

Summary:
When a society goes from broadly shared growth to a state of malaise or decline, the ensuing pain is not just economic but psychological. Now that tens of millions of people in developing countries are suffering precisely such a reversal of fortune, the political fallout is sure to be tumultuous. WASHINGTON, DC – Until COVID-19, many people in the developing world felt good about their futures. Overall, developing countries had recovered quickly from the 2009-10 Great Recession, and many – especially in Africa and Latin America – were enjoying the benefits of China’s ever-growing demand for oil, minerals, and agricultural commodities. Expectations were rising. The Heart of the New Cold War

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When a society goes from broadly shared growth to a state of malaise or decline, the ensuing pain is not just economic but psychological. Now that tens of millions of people in developing countries are suffering precisely such a reversal of fortune, the political fallout is sure to be tumultuous.

WASHINGTON, DC – Until COVID-19, many people in the developing world felt good about their futures. Overall, developing countries had recovered quickly from the 2009-10 Great Recession, and many – especially in Africa and Latin America – were enjoying the benefits of China’s ever-growing demand for oil, minerals, and agricultural commodities. Expectations were rising.

Not so in the US, where the benefits of economic growth since the 1980s have been funneled to the already rich, with the middle class and the poor increasingly falling behind. Many analysts attribute the rise of the populist right and US President Donald Trump’s election in 2016 to these trends. While the middle class has shrunk, a growing cohort of working-class white people has fallen into despair. Many are angry and frustrated over globalization-induced job loss, government neglect in the face of an opioid epidemic, underfunded social programs, and even profit-driven capitalism itself. (The interesting exception to working-class malaise is among black and Hispanic people, who have become more optimistic about the future as they close the gap with working-class whites.)

The end of rising expectations in America came slowly, over the course of many decades following the post-war boom, during which longstanding political institutions and established norms made the US liberal-democratic system relatively resilient. But in the current century, social cohesion (at least for whites) and a shared sense of moral progress began to decay, leaving the body politic increasingly vulnerable to the appeal of illiberal populism (and worse).

This experience holds lessons for developing countries. Dashed expectations are bad not only for individuals’ health...

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