It is said that you can line up all the world's economists end to end and still never reach a conclusion. However, one crucial consensus seems to be emerging in recent years among market watchers: the Reagan era of deregulation is coming to an end.
This enduring push for deregulation among the world's advanced economies, triggered initially by Ronald Reagan and Britain's Margaret Thatcher in the early 1980s, has fueled globalization's rapid advance around our planet ever since. Globalization is - first and foremost - the worldwide flow of investment capital.
When there's lots of private money on the table, historically the global economy expands in both size and reach. Cheaper money means more risk tolerance, so investors are willing to enter more dicey, somewhat off-grid environments. When money gets taken off the table, especially through higher taxes, everybody gets more conservative.
The West's willingness to engage in higher-risk overseas investments these past three decades is a major reason so many emerging markets were able to emerge. Sure, cheaper labor always beckons, but breaking up production chains and spreading their components around the world invites complexity's many invisible dangers.
The upside is that new consumers are created through rising incomes, triggering the rise of a global middle class of unprecedented size and purchasing power. The downside? Now the economic health of all involved requires more stability in more places of the world, meaning we need to police a wider universe of nefarious actors - both purposeful and accidental - capable of triggering unwanted turbulence.
A good historical analogy to this era is found in America's post-Civil War experience in rapidly integrating its trans-Mississippi West. You have to remember, these United States had started as a mere 13, then saw their numbers double in the early decades of the union, only to roughly double again in the years leading up to our Civil War and the half-century that followed.
Compare that expansion to the growth of the U.S.-engineered international liberal trade order following World War II: starting with a mere quarter of the world's population, the West remained essentially closed until the late 1970s-early 1980s, when modern globalization began to emerge. Now, most experts recognize a "bottom billion" that's poorly connected to the global economy, meaning more than four-fifths of the planet finds itself deeply or increasingly connected to our "interdependent" economic fate.
If these "states uniting" served as source code for modern globalization, superseding the unjust version set-up by Eurasia's many colonial powers, it only makes sense to remember what came after our own extensive period of frontier integration. The historical experience of first shaming and then taming America's rapacious capitalism, known as the Progressive Era, extended for several decades and brought with it a vast array of new rules and regulatory bodies.
Two challenges were being addressed simultaneously.
First, there was the process of integrating high-trust environments with low-trust environments - i.e., the already built-up and high-performing East with the still-being-built-out and far more rough-and-ready West. So in one loosely knitted-together country, you had years like 1876, when the first transcontinental express train arrived in San Francisco from New York and Gen. George Custer's cavalry regiment was wiped out by a Native American insurgency led by Crazy Horse. Some way to mark our centennial!
Second, there was the process of simply getting our collective arms around the rising complexity created from knitting together a series of regional economies into a truly integrated continental economy - in essence the world's first true superstate and logical forerunner of today's globalization.
Similar challenges confront us today in our ongoing attempts to administer our increasingly tumultuous global economy, only this time it's the more stable West absorbing the wild East. And yes, there's no shortage of imperious robber barons or radical insurgents to manage.
But remember that we've been down this path before - and thrived magnificently.