Sophisticated private-equity and hedge-fund investors may be able to find their way around some regulations, and have access to the kinds of assets that appreciate comfortably; they’re seeing the benefits of global growth. The vast mass of savers aren’t. In effect, Western countries’ aging populations are being impoverished — punished for the failures of regulation and supervision that were hardly their fault. Is it any wonder that they’re turning to populists and anti-capitalists in droves?
Meanwhile, developing countries facing the demands of climate change and anxious young populations face great pressure to invest in new, green infrastructure. Since funds are no longer available, however, they’re forced to rely on their own resources or on dangerous new benefactors, such as the People’s Republic of China. If you want to know why the Belt and Road Initiative is upending geopolitics across the world, look no further than the botched response to the crisis of 2008.
Had it not been for the clampdown on risk-taking after the crisis, global finance would have gone out and done its real job — finding and financing remunerative projects in the developing world. Instead, it’s been dissuaded from breaking open the black box of risk, including in distant geographies, and turned into a zombie sector that depends only on central bank action or the occasional unicorn for its returns. Yes, 2008 was not good. But a world without competent finance, and thus growth, is worse.