By day, Marc Chandler is the global head of currency strategy at BBH, where he and his team publish an impressive volume of daily research on foreign exchange markets around the world.1 Chandler is also a prolific writer and speaker and with his most recent book, Political Economy of Tomorrow, Chandler is now a two-time author, his previous book Making Sense of the Dollar having been published in 2009.
Political Economy of Tomorrow focuses on a controversial subject – the large disparities in wealth and income that Western capitalism has produced and what it means for the future of democratic capitalist societies. Chandler asserts that the resounding success of capitalism has led to a surplus of capital (an abundance of investable funds looking for new opportunities) and that many of today’s social problems are a result of these surplus funds. The draw of the book is that Chandler’s thesis provides an explanation for events we are seeing play out in real time – financial markets around the world that regularly set new highs, rising wealth and income inequality, political populism and businesses that are buying back shares instead of reinvesting.
Interestingly, one of the social structures that was crucial to understanding the U.S. economic experience of 1980 to present, and that will be just as relevant going forward, is the economic roles of women and men. One of the biggest changes in our economy over the past 50 years has been the increasing number of women in the workforce. Starting in the late 1960s, the U.S. labor force participation rate climbed from 59% to a high of 67% in 2001. This had a broad impact on the economy as the rise of two-income households led to a decrease in the savings rate and an increase in consumption, among many other changes. Chandler also points out it was not surprising that while men’s wages began stagnating in the early 1970s, women increasingly sought out work outside the home. That plus the explosion of household debt is responsible for the rapid growth of consumption that has helped fuel our economy. Also interesting is that recent research has pointed out that a large part of income inequality comes from a practice called “assortative mating,” in which educated, career-driven individuals have increasingly formed dual-high-income households and have both kept working after the birth of children.
Some highlights of the book’s main arguments are that women have rapidly overtaken men with regard to education level and 40% of mothers are now the primary breadwinner in their house. Another is that many of the workplace traits that women score comparatively better on are in vogue today , partly due to the gradual decline in companies that use a pure command- and- control leadership structure, and also because the nature of work today places great emphasis on cognitive and social skills.
If Chandler is right, and the success of capitalism requires big U.S. political and economic reform, Political Economy of Tomorrow will not be the last book penned on these topics. The book does a strong job exposing readers to the many important arguments in this debate, and because of its logical approach to the subject, it is a highly worthwhile read.
Find this article and more in the full issue of Women & Wealth Magazine.
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1Readers can find BBH’s FX research at https://mindonthemarkets.com