A recent report from the McKinsey Global Institute – “Poorer than Their Parents?” – suggests that greater instability may be on the horizon for the First World. The report outlines a broad stagnation in incomes across the industrialized world, which has strained government finances and could unsettle existing political consensuses. By raising doubts about the fiscal and political sustainability of current policies, it augurs increasing disruption in political systems across the world.
The good news is that conservatives can meet the challenges of this economic sclerosis – and help secure themselves a governing coalition in the process.
McKinsey finds that, in much of the industrialized world, between 65 percent and 70 percent of households saw their market incomes (earnings from labor and capital) decline or stay flat between 2005 and 2014. Increased government transfers counteracted much of the decline, but about a quarter of all households still saw no income growth during this period – a marked departure from previous decades, when most households across the income spectrum saw at least some market-income growth.Read the rest here.