Lawrence Summers, the former US Treasury Secretary, said the US has just elected “the world’s biggest example of conspicuous consumption.”
Speaking on a panel at the World Economic Forum in Davos, Mr Summer described US President-elect Donald Trump, who is due to be inaugurated on Friday, as a “bizarre manifestation” of the world’s growing concern about wealth inequality.
Mr Summers, who was director of the National Economic Council for US President Barack Obama until November 2011 and has also served as chief economist of the World Bank, warned that history has taught us that when populist policies are enacted, the people who will be the victims are the lower-income and middle class individuals “in whose name the policy was offered”.
Massive tax cuts are also unlikely to benefits the poorest, he said, adding that those like hedge fund guru Ray Dalio, also speaking on the panel, "will be fine".
Wednesday's panel, which also featured International Monetary Fund director, Christine Lagarde, discussed the poor employment prospects and low-income growth in many developed economies and the rise in of populism seen in the US and several EU nations.
Mr Summers said that the President-elect’s “rhetoric and announced policies” over Mexico, which have led to a big fall in the value of the Mexican peso against the dollar, are already threatening jobs in the US.
A weaker peso, he reasoned, would make it more attractive for companies to relocate to Mexico, potentially putting US jobs—particularly in production—at risk.
Mr Summers, who was director of the National Economic Council for US President Barack Obama until November 2011 and has also served as chief economist of the World Bank, warned that history has taught us that when populist policies are enacted, the people who will be the victims are the lower-income and middle class individuals “in whose name the policy was offered”.
Massive tax cuts are also unlikely to benefits the poorest, he said, adding that those like hedge fund guru Ray Dalio, also speaking on the panel, “will be fine”.
