Economics-Watching: From Code to Cash: How Programmable Payments Are Shaping the Future of Finance

[from the Federal Reserve Bank of Atlanta, by Chris Colson, payments expert]

When I was first introduced to computers, programming languages like COBOL, Fortran, and Pascal were standard. None of them were particularly user-friendly, especially for someone like me who isn’t a natural coder. Over time, new languages and tools appeared, making programming more accessible.

Today, we have low-code and no-code platforms [related YouTube video] that allow people with little to no coding experience to build apps. Just as programming has become easier, payments are becoming programmable, offering automation, simplicity, and flexibility.

Programmable payments are automated transactions that occur when specific conditions or events are met. Unlike traditional payment methods, which can rely on manual approvals or fixed schedules (think monthly software transactions), programmable payments offer a more dynamic approach. For instance, a programmable payment might only occur when a product is delivered or a service is completed.

Two key technologies power programmable payments: smart contracts and application programming interfaces (APIs). Smart contracts are self-executing digital agreements that run on blockchain and automatically release payments once specified conditions are met. APIs allow different systems to communicate, which enables the automation of payment processes across platforms. For example, a business might set up an API process that triggers a payment and then marks the invoice as “paid” in its accounting software.

The biggest advantage of programmable payments is automation. By automating transactions, businesses can eliminate repetitive tasks like payroll or vendor payments, reducing the time spent on manual processes while also minimizing the risk of human error. Automation can also help businesses save money, as they may no longer need intermediaries like banks or payment processors to facilitate transactions. Blockchain-based smart contracts can bypass the need for banks to verify payments, resulting in faster, cheaper transactions.

Transparency and security are other significant advantages, particularly when programmable payments are powered by blockchain. Each transaction is recorded on a decentralized ledger, providing a clear, auditable trail of activity. This can help reduce the risk of fraud and create a more secure system for managing payments.

The potential of programmable payments goes beyond automating individual transactions. For supply chain management, payments that are automatically triggered upon delivery of goods can reduce the need for manual verification, and thus improve operational efficiency. In decentralized finance, programmable payments can streamline processes like loan repayments and insurance payouts, improving speed and transparency.

As the Internet of Things expands, integrating programmable payments could allow devices to handle payments autonomously. Imagine a car that automatically pays for tolls or parking, or a smart refrigerator that orders and pays for groceries when supplies run low. The possibilities for real-time, automated payments between connected devices are enormous.

Despite all the potential, programmable payments face challenges. The technology—particularly blockchain-based systems—can be complex and requires specialized expertise, which can increase upfront costs for businesses. In addition, the regulatory environment around programmable payments is still evolving, especially for cross-border transactions. This creates uncertainty for businesses.

Much like low-code and no-code platforms make app development accessible to non-coders, programmable payments are moving toward a future with minimal human intervention. Both are about simplifying complex systems: low-code/no-code platforms hide the complexity of software development, while programmable payments automate financial processes with predefined logic.

Both point to a future where systems execute tasks on their own, based on rules set by users. The goal is simple: Once the conditions are established, the system handles the rest.

Programmable payments are reshaping the future of finance. It’s an exciting future that promises smarter and more streamlined and efficient financial operations.

Economics-Watching: Remittances in Times of Uncertainty: Understanding the Dynamics and Implications

[from the International Monetary Fund, by Patrick A. Imam, Kangni R Kpodar, Djoulassi K. Oloufade, Vigninou Gammadigbe]

This paper delves into the intricate relationship between uncertainty and remittance flows. The prevailing focus has been on tangible risk factors like exchange rate volatility and economic downturn, overshadowing the potential impact of uncertainty on remittance dynamics. Leveraging a new dataset of quarterly remittances combined with uncertainty indicators across 77 developing countries from 1999 Q1 to 2019 Q4, the analysis highlights that uncertainty in remittance-sending countries negatively affects remittance flows. In contrast, uncertainty in remittance receiving-countries has a more complex, dual effect. In countries with high private investment ratios, rising domestic uncertainty leads to a decline in remittances. Conversely, in countries with low public spending on education and health, remittances increase in response to uncertainty, serving as a social safety net. The paper underscores the heterogeneous and non-linear effects of domestic uncertainty on remittance flows.

Read the paper [archived PDF].

Economics-Watching: Kuwait’s Banking Sector Posts Solid Credit Growth in October

[from NBK Group’s Economic Research Department, 21 November, 2024]

Kuwait: Solid credit growth in October driven by household credit. Domestic credit increased by a solid 0.4% in October, driving up YTD growth to 2.9% (3.2% y/y). The recovery in household credit continued, with growth in October at a solid 0.5%, resulting in a YTD increase of 2.4%. While y/y growth in household credit remains a limited 2.3%, annualized growth over the past four months is a stronger 4.7%. Business credit inched up by 0.2% in October, pushing YTD growth to 3.6% (2.9% y/y). Industry and trade drove business credit growth in October while construction and trade are the fastest growing YTD at 17% and 8%, respectively. In contrast, the oil/gas sector continued its downtrend, deepening the YTD decrease to 13%. Excluding the oil/gas sector, growth in business credit would increase to a relatively good 5% YTD. Looking ahead, the last couple of months of the year (especially December) are usually the weakest for business credit, likely due to increased repayments and write-offs, but it will not be surprising if the recovery in household credit is generally sustained, especially given the commencement of the interest rate-cutting cycle. Meanwhile, driven by a plunge in the volatile public-institution deposits, resident deposits decreased in October, resulting in YTD growth of 2.4% (4.2% y/y). Private-sector deposits inched up in October driving up YTD growth to 4.5% compared with 10% for government deposits while public-institution deposits are a big drag (-14%). Within private-sector KD deposits, CASA showed further signs of stabilization as there was no decrease for the third straight month while the YTD drawdown is a limited 1%.

Chart 1: Kuwait credit growth

(% y/y)

Source: Central Bank of Kuwait (CBK)
Chart 2: UK inflation

(%)

Source: Haver

Egypt: IMF concludes mission for fourth review, sees external risks. The IMF concluded its visit to Egypt after spending close to 2 weeks, holding several in-person meetings with the Egyptian authorities, private sector, and other stakeholders. The IMF released a statement mentioning that the current ongoing geopolitical tensions in the region in addition to an increasing number of refugees have affected the external sector (Suez Canal receipts down by 70%) and put severe pressure on the fiscal front. The Fund acknowledged the Central Bank of Egypt’s commitment to unify the exchange rate, maintain the flexible exchange rate regime, and keep inflation on a firm downward trend over the medium term by substantially tightening monetary policy. It also highlighted that continued policy discipline was also a key to containing fiscal risks, especially those related to the energy sector. The Fund, as always, re-iterated the need for promoting the private sector mainly through an enhanced tax system and accelerating divestment plans of the state firms. Finally, it also said that the discussions would continue over the coming days to finalize the agreement on the remaining policies and reform plans. However, the release did not provide any clear hints about the conclusion on the government’s earlier request to push the timeline of some of the subsidy moves.

Oman: IMF completes article IV with a strong outlook for the economy in 2025. Oman’s economy continued to expand with growth reaching 1.9% in the first half of 2024 (versus 1.2% in 2023), despite being weighed down by OPEC+ mandated oil production cuts as non-oil GDP grew a stronger 3.8% y/y in H1 (versus 1.8% in 2023). The fiscal and current account balances remain in a comfortable situation evident by a decline in public sector debt and the recent rating upgrade to investment grade. The Fund expects Oman’s economic growth to see a strong rebound in 2025, supported by higher oil production. It also believes that fiscal and current account balances will remain in surplus but at lower levels. Key risks to the outlook stem from oil price volatility and intensifying geopolitical tensions. The IMF also mentioned that further efforts are needed to raise nonhydrocarbon revenues through more tax policy measures and the phasing out of untargeted subsidies which should help in freeing up resources to finance growth under the government’s diversification agenda.

UK: Inflation rises more than forecast, reinforcing BoE’s caution on rate cuts. UK CPI inflation increased to 2.3% y/y in October from 1.7% the previous month, slightly above the market and the Bank of England’s forecast of 2.2%. On a monthly basis too, inflation rose to 0.6%, a seven-month high, from September’s no change. The steep rise was mainly driven by an almost 10% rise in the household energy price cap effective from October. Core inflation also accelerated to 3.3% y/y (0.4% m/m) from 3.2% (0.1% m/m). While goods prices continued to fall (-0.3% y/y), service prices rose at a faster rate of 5% from 4.9%. Recently, the Bank of England had cautioned about inflation quickening next year (projecting a peak rate of 2.8% in Q3 2025), citing the impact of higher insurance contributions and rising minimum wages as outlined in the latest government budget. Therefore, with inflation rising above forecast, the bank will likely slow the pace of monetary easing after delivering two interest rate cuts of 25 bps earlier, with markets now seeing only two additional cuts by the end of 2025.

Eurozone: ECB warns of fiscal and growth risks in its latest Financial Stability Review [archived PDF]. In its most recent Financial Stability Review (November) [archived PDF], the European Central Bank warned that elevated debt and fiscal deficit levels and anemic long-term growth could expose sovereign debt vulnerabilities in the region, stoking concerns of a repeat of the 2011 sovereign debt crisis. Maturing debt being rolled over at much higher borrowing rates raising debt service costs poses risks to countries with little fiscal space and leaves certain governments exposed to market fluctuations. The bank also emphasized the risks of high equity valuations, low liquidity and a greater concentration of exposure among non-banks. Moreover, it sees current geopolitical uncertainties and the possibility of more trade tensions as heightening risks. The Eurozone’s current government debt-to-GDP ratio stands at 88%, but the underlying data suggest a much more precarious situation with Greece, Italy, and France’s ratios at 164%, 137% and 112%. Recently, concerns about France’s high fiscal deficit (around 5.9% of GDP) and elevated debt levels saw yields on the country’s bonds rise steeply, widening the spread gap with German bonds to the highest level in over a decade.

Stock marketsIndexDaily Change (%)YTD Change (%)
Regional
Abu Dhabi (ADI)9,405-0.23-1.80
Bahrain (ASI)2,043-0.373.62
Dubai (DFMGI)4,7610.6117.26
Egypt (EGX 30)30,588-0.33 23.18
GCC (S&P GCC 40)7090.09-0.52
Kuwait (All Share)7,353-0.087.86
KSA (TASI)11,868-0.07-0.83
Oman (MSM 30)4,6090.002.10
Qatar (QE Index)10,4380.12-3.62
International
CSI 3003,9860.2216.17
DAX19,005-0.2913.45
DJIA43,4080.3215.17
Eurostoxx 504,730-0.454.60
FTSE 1008,085-0.174.55
Nikkei 22538,352-0.1614.61
S&P 5005,9170.0024.05
3m interbank rates%Daily Change (bps)YTD Change (bps)
Bahrain5.86-1.29-66.34
Kuwait3.940.00-37.50
Qatar6.000.00-25.00
UAE4.433.81-89.96
Saudi5.50-4.75-73.14
SOFR4.52-0.09-81.13
Bond yields%Daily Change (bps)YTD Change (bps)
Regional
Abu Dhabi 20274.665.0033.9
Oman 20275.496.0033.0
Qatar 20264.686.0016.1
Kuwait 20274.693.0035.0
Saudi 20284.961.0043.9
International 10-year
US Treasury4.411.7755.3
German Bund2.340.3531.2
UK Gilt4.472.6093.0
Japanese Gov’t Bond1.071.045.4
Exchange ratesRateDaily Change (%)YTD Change (%)
KWD per USD0.310.04-0.05
KWD per EUR0.32-0.46-1.98
USD per EUR1.05-0.49-4.47
JPY per USD155.430.5010.19
USD per GBP1.27-0.25-0.62
EGP per USD49.670.3461.00
Commodities$/unitDaily Change (%)YTD Change (%)
Brent crude72.81-0.68-5.49
KEC73.780.74-7.26
WTI68.87-0.75-3.88
Gold2,648.20.8028.40

Disclaimer: While every care has been taken in preparing this publication, National Bank of Kuwait accepts no liability whatsoever for any direct or consequential losses arising from its use. Daily Economic Update is distributed on a complimentary and discretionary basis to NBK clients and associates. This report and previous issues can be found in the “News & Insight / Economic Reports” section of the National Bank of Kuwait’s web site. Please visit their web site, nbk.com, for other bank publications.

Economic-Watching: County Employment & Wages – Second Quarter 2024

[from the U.S. Bureau of Labor Statistics, 20 November, 2024]

From June 2023 to June 2024, employment increased in 259 of the 369 largest U.S. counties, the U.S. Bureau of Labor Statistics reported today. In June 2024, national employment increased to 155.7 million, a 0.8-percent increase over the year, as measured by the Quarterly Census of Employment and Wages (QCEW) program. Kings, NY, had the largest over-the-year increase in employment, with a gain of 4.0 percent. Employment data in this release are presented for June 2024, and average weekly wage data are presented for second quarter 2024.

Among the 369 largest counties, 348 had over-the-year increases in average weekly wages. In the second quarter of 2024, average weekly wages for the nation increased to $1,390, a 4.4-percent increase over the year. Hamilton, IN, had the largest second quarter over-the-year wage gain at 33.4 percent. (See table 1 [archived PDF].)

Large County Employment in June 2024

Kings, NY, had the largest over-the-year percentage increase in employment (+4.0 percent). Within Kings, the largest employment increase occurred in education and health services, which rose by 37,473 (+10.3 percent).

Elkhart, IN, had the largest over-the-year percentage decrease in employment (-3.0 percent). Within Elkhart, the largest employment decrease occurred in manufacturing, which fell by 3,243 (-5.0 percent).

Large County Average Weekly Wage in Second Quarter 2024

Hamilton, IN, had the largest over-the-year percentage increase in average weekly wages (+33.4 percent). Within Hamilton, an average weekly wage gain of $2,161 (+139.6 percent) in professional and business services made the largest contribution to the county’s increase in average weekly wages.

Essex, MA, had the largest over-the-year percentage decrease in average weekly wages (-2.1 percent). Within Essex, an average weekly wage loss of $644 (-25.7 percent) in professional and business services made the largest contribution to the county’s decrease in average weekly wages.

Ten Largest Counties

Nine of the 10 largest counties had over-the-year percentage increases in employment. In June 2024, Miami-Dade, FL, had the largest over-the-year employment percentage gain (+1.5 percent). Within Miami-Dade, leisure and hospitality had the largest employment increase and rose by 3,530 (+2.4 percent). (See table 2 [archived PDF].)

All of the 10 largest counties had over-the-year percentage increases in average weekly wages. In the second quarter of 2024, King, WA, experienced the largest over-the-year percentage gain in average weekly wages (+10.4 percent). Within King, professional and business services had the largest impact, with an average weekly wage increase of $774 (+24.5 percent).

For More Information

The tables included in this release contain data for the nation and for the 369 U.S. counties with annual average employment levels of 75,000 or more in 2023. June 2024 employment and second quarter 2024 average weekly wages for all states are provided in table 3 [archived PDF] of this release.

Over-the-year changes of employment and wages presented in this news release are adjusted and may differ from unadjusted data used in BLS data tools and interactive charts. More information is available in the QCEW Technical Note.

QCEW reporting rates tables are available here.

The most current news release on quarterly measures of gross job flows is available from QCEW Business Employment Dynamics.

Several BLS regional offices issue QCEW news releases targeted to local data users. Links to these releases are available here.

QCEW data are available in the Census Business Builder suite of web tools, assisting business owners and regional analysts in data-driven decision making.

The QCEW news release schedule is available here.


The County Employment and Wages full data update for second quarter 2024 is scheduled to be released on Thursday, December 5, 2024, at 10:00 a.m. (ET).

The County Employment and Wages news release for third quarter 2024 is scheduled to be released on Wednesday, February 19, 2025, at 10:00 a.m. (ET).

The full report with tables [archived PDF].

Japanese Ministry of Finance Info, July 2024

[from the Ministry of Finance, Japan]

Interest Rates (July 17, 2024)

Date1Y2Y3Y4Y5Y6Y7Y8Y9Y10Y15Y20Y25Y3oY40Y
7/10.1750.360.390.4920.6150.6620.7620.8620.9621.0831.5491.8732.0582.1632.351
7/20.1760.3650.4010.5080.630.6790.7860.890.9851.1041.5731.8942.0752.1742.352
7/30.1660.350.3910.4930.6130.6640.7780.8860.9841.11.5791.9082.0882.1852.364
7/40.1480.340.3820.4820.5990.6450.7540.8630.9671.0861.5711.9082.0922.1882.364
7/50.1480.3460.3820.4830.5980.6350.7450.850.9581.0721.5661.9022.0982.22.379
7/80.150.3620.3980.4990.6160.6550.7640.8690.9741.0921.5761.9072.0992.22.385
7/90.140.3530.3910.4840.610.640.7480.8560.961.0791.5731.9112.1032.2052.398
7/100.1310.3430.3870.480.6050.6490.7560.8650.9691.0931.5861.9242.1152.222.415
7/110.1310.3430.3920.4850.6110.6540.7560.8640.9691.0891.5851.9122.1122.2212.419
7/120.1220.3330.3780.470.5860.6240.7230.8310.9361.0551.5391.8732.0732.1772.387
7/160.1110.320.3630.4560.5660.6060.7050.8090.9141.0321.5241.862.0612.1682.375
7/170.1150.330.3740.4670.5770.620.720.8240.9241.0421.5281.8612.0552.1732.376
[download CSV]

Announcement of 40-year Japanese Government Bonds to Be Issued in July 2024

[Provisional Translation]

July 17, 2024

Ministry of Finance

  1. Auction Date: July 24, 2024
  2. Issue Date: July 25, 2024
  3. Maturity Date: March 20, 2064
  4. Offering Amount: About 700 billion yen

* 40-year Japanese Government Bonds to be issued in July will be a reopening issue of the May 2024 issue. The auction method is Dutch-style-yield-competitive auction at intervals of 0.5bp.

JGB Monthly Newsletter (July 2024)

Read the full newsletter (in English) [archived PDF]

Movies as a Part of Remedial Education

It’s almost “un-American” to be honest about the nightmare side of life when you cannot “walk on the sunny side of the street” and operate under all those facile Americanisms about “I’ve got the world on a string…” in all the songs and movie lines.

Film noir is supposed to be an antidote to this “false sunniness” and there’s one classic example that exemplifies this undiscussable nightmare side of life, namely, Detour (1945), directed by Edgar Ulmer.

Edgar Georg Ulmer was a JewishMoravian, AustrianAmerican film director who mainly worked on Hollywood B movies and other low-budget productions, eventually earning the epithet “The King of PRC,” due to his extremely prolific output on the said Poverty Row studio.

Wikipedia

As a refugee/expat, he understood that life isn’t always “a bowl of cherries” and set out to show this in his films.

In this underrated Ulmer masterpiece, Tom Neal plays a musician, Al Roberts, who gets into a labyrinthian mess via bad luck and some mindless impulsiveness combined. Detour is a kind of “road movie” in hell. With life and the world a kind of hellish school, the protagonist Al Roberts captures the enforced money-madness in everything:

Money. You know what that is, the stuff you never have enough of. Little green things with George Washington’s picture that men slave for, commit crimes for, die for. It’s the stuff that has caused more trouble in the world than anything else we ever invented, simply because there’s too little of it.”

To this nightmarishness, there’s to be added the irrationality of fate or destiny or karma or luck:

“That’s life. Whichever way you turn, Fate sticks out a foot to trip you.”

— Al Roberts, Detour

He adds:

“But one thing I don’t have to wonder about, I know. Someday a car will stop to pick me up that I never thumbed. Yes. Fate, or some mysterious force, can put the finger on you or me for no good reason at all.”

[as narrator] “Until then I had done things my way, but from then on something stepped in and shunted me off to a different destination than the one I’d picked for myself.”

Vera comments:

“Life’s like a ball game. You gotta take a swing at whatever comes along before you find it’s the ninth inning.”

Hitchhiking, say, is often hellish and not romantic and usually not a Jack Kerouac On the Road poetic or rhapsodic adventure at all, as Al Roberts explains:

“Ever done any hitchhiking? It’s not much fun, believe me. Oh yeah, I know all about how it’s an education, and how you get to meet a lot of people, and all that. But me, from now on I’ll take my education in college, or in PS-62, or I’ll send $1.98 in stamps for ten easy lessons.”

Nightclubs too are not always heavenly escapes:

[voiceover] “It wasn’t much of a club, really. You know the kind. A joint where you could have a sandwich and a few drinks and run interference for your girl on the dance floor.”

— Al Roberts, Detour

Women might not be the salvation you were told to expect in songs like “Some Enchanted Evening” from South Pacific.

“Vera was just as rotten in the morning as she’d been the night before.”

— Al Roberts, Detour

There’s a genre of American films called “lowlife stories” such as The Hustler with Paul Newman.

Ulmer’s Detour is not exactly a “lowlife movie” but rather an undiscussed dark side to life movie, nor is it “stylishly pessimistic” (like the French “poetical pessimism” movies) but rather a truth-telling exercise that shows stability and permanence and happiness as “living” on thin ice. American “cock-eyed optimism” isn’t always appropriate.

In that sense, Detour is a part of remedial education.

Education and the Triple Helix underneath It

We want to restate the basic instinct and intuitions of this education or re-education project.

To get at the “schema” it will help you if you digress for a second and absorb this writeup of Professor Richard Lewontin’s (Harvard biology) 2002 masterpiece, The Triple Helix: Gene, Organism and Environment.

The blurb from Harvard University Press tells us:

“One of our most brilliant evolutionary biologists, Richard Lewontin has also been a leading critic of those—scientists and non-scientists alike—who would misuse the science to which he has contributed so much. In The Triple Helix, Lewontin the scientist and Lewontin the critic come together to provide a concise, accessible account of what his work has taught him about biology and about its relevance to human affairs. In the process, he exposes some of the common and troubling misconceptions that misdirect and stall our understanding of biology and evolution.

The central message of this book is that we will never fully understand living things if we continue to think of genes, organisms, and environments as separate entities, each with its distinct role to play in the history and operation of organic processes. Here Lewontin shows that an organism is a unique consequence of both genes and environment, of both internal and external features. Rejecting the notion that genes determine the organism, which then adapts to the environment, he explains that organisms, influenced in their development by their circumstances, in turn create, modify, and choose the environment in which they live.

The Triple Helix is vintage Lewontin: brilliant, eloquent, passionate and deeply critical. But it is neither a manifesto for a radical new methodology nor a brief for a new theory. It is instead a primer on the complexity of biological processes, a reminder to all of us that living things are never as simple as they may seem.”

Borrow from Lewontin the idea of a “triple helix” and apply it to the ultimate wide-angle view of this process of understanding. The educational triple helix includes and always tries to coordinate:

  1. The student and their life (i.e., every student is first of all a person who is playing the role of a student). Every person is born, lives, and dies.
  2. The student and their field are related to the rest of the campus. (William James: all knowledge is relational.)
  3. The student and the world. (Container ships from Kaohsiung, Taiwan are bringing Lenovo and Acer computers to Bakersfield, California in a world of techno-commerce, exchange rates, insurance, customs, contractual arrangements, etc. In other words, always with some sense of the global political economy.)

The student keeps the triple helix “running” in the back of the mind and tries to create a “notebook of composite sketches” of the world and its workings and oneself and this develops through a life as a kind of portable “homemade” university which stays alive and current and vibrant long after one has forgotten the mean value theorem and the names and sequence for the six wives of Henry VIII).

The reader should think of Emerson’s point from his Journals of Ralph Waldo Emerson: 1824–1832—“The things taught in schools and colleges are not an education, but the means to an education.”

“De-Globalization?”

The classic study of the “swirl of processes and events” that ended previous globalization episodes is the theme of Princeton Professor Harold James’ 2002 book, The End of Globalization: Lessons from the Great Depression.

Globalization” is here. Signified by an increasingly close economic interconnection that has led to profound political and social change worldwide, the process seems irreversible. In this book, however, Harold James provides a sobering historical perspective, exploring the circumstances in which the globally integrated world of an earlier era broke down under the pressure of unexpected events.

James examines one of the great historical nightmares of the twentieth century: the collapse of globalism in the Great Depression. Analyzing this collapse in terms of three main components of global economicscapital flows, trade and international migrationJames argues that it was not simply a consequence of the strains of World War I, but resulted from the interplay of resentments against all these elements of mobility, as well as from the policies and institutions designed to assuage the threats of globalism.

Could it happen again? There are significant parallels today: highly integrated systems are inherently vulnerable to collapse, and world financial markets are vulnerable and unstable.

While James does not foresee another Great Depression, his book provides a cautionary tale in which institutions meant to save the world from the consequences of globalization—think WTO and IMF, in our own time—ended by destroying both prosperity and peace.

Legitimate fears about “globalization reversal” have been well put by Zakaria:

Davos, Switzerland

President Trump’s speech here at the World Economic Forum went over relatively well. That’s partly because Davos is a conclave of business executives, and they like Trump’s pro-business message. But mostly, the president’s reception was a testament to the fact that he and what he represents are no longer unusual or exceptional. Look around the world and you will see: Trump and Trumpism have become normalized.

Davos was once the place where countries clamored to demonstrate their commitment to opening up their economies and societies. After all, these forces were producing global growth and lifting hundreds of millions out of poverty. Every year, a different nation would become the star of the forum, usually with a celebrated finance minister who was seen as the architect of a boom. The United States was the most energetic promoter of these twin ideas of economic openness and political freedom.

Today, Davos feels very different. Despite the fact that, throughout the world, growth remains solid and countries are moving ahead, the tenor of the times has changed. Where globalization was once the main topic, today it is the populist backlash to it. Where once there was a firm conviction about the way of the future, today there is uncertainty and unease.

This is not simply atmospherics and rhetoric. Ruchir Sharma of Morgan Stanley Investment Management points out that since 2008, we have entered a phase of “deglobalization.” Global trade, which rose almost uninterruptedly since the 1970s, has stagnated, while capital flows have fallen. Net migration flows from poor countries to rich ones have also dropped. In 2018, net migration to the United States hit its lowest point in a decade.

The shift in approach can best be seen in the case of India. In 2018, Prime Minister Narendra Modi came to Davos to decry the fact that “many countries are becoming inward focused and globalization is shrinking.” Since then, his government has increased tariffs on hundreds of items and taken steps to shield India’s farmers, shopkeepers, digital companies and many others from the dangers of international competition. The Office of the U.S. Trade Representative recently called out India for having the highest tariffs of any major economy in the world.

Indian officials used to aggressively court foreign investment, which was much needed to spur growth. Last week, with India’s economy slowing badly, Jeff Bezos announced a $1 billion investment in the country. (Bezos owns The Post.) But the minister of commerce and industry scoffed at the move, saying Amazon wasn’t “doing a great favor to India” and besides was probably engaging in anti-competitive, “predatory” practices. Often, protectionist policies help favored local producers. Malaysian Prime Minister Mahathir Mohamad recently criticized some of Modi’s policies toward Muslims. The Indian government effectively cut off imports of Malaysian palm oil. In a familiar pattern, one of the chief beneficiaries was a local billionaire long associated with Modi.

The Economist notes that Europe, once one of the chief motors for openness in economics and politics, is also rediscovering state intervention to prop up domestic industries. And if you think the Internet is exempt from these tendencies, think again. The European Center for International Political Economy tracks the number of protectionist measures put in place to “localize” the digital economy in 64 countries. It has been surging for years, especially since 2008.

It’s important not to exaggerate the backlash to globalization.

As a 2019 report by DHL demonstrates, globalization is still strong and, by some measures, continues to expand. People still want to trade, travel and transact across the world. But in government policy, where economic logic once trumped politics, today it is often the reverse. Economist Nouriel Roubini argues that the cumulative result of all these measures — protecting local industries, subsidizing national champions, restricting immigration — is to sap growth. “It means slower growth, fewer jobs, less efficient economies,” he told me recently. We’ve seen it happen many times in the past, not least in India, which suffered decades of stagnation as a result of protectionist policies, and we will see the impact in years to come.

Nevertheless, today, nationalism and protectionism prevail.

This phase of deglobalization is being steered from the top. The world’s leading nations are, as always, the agenda-setters. The example of China, which has shielded some of its markets and still grown rapidly, has made a deep impression on much of the world. Probably deeper still is the example of the planet’s greatest champion of liberty and openness, the United States, which now has a president who calls for managed trade, more limited immigration and protectionist measures. At Davos, Trump invited every nation to follow his example. More and more are complying.

The world is de-globalizing. Trump set the example.The Washington Post, Fareed Zakaria

Students should sense that while history does not repeat itself, it sometimes rhymes and this is a major danger. It also might imply that coping with climate change will be all the harder because American-led unilateralism everywhere would mean world policy paralysis.

Navigating through Sources

Consciousness and the Novel: Connected Essays by the famous British novelist David Lodge is a classic work published by Harvard in 2004.

In this Lodge book, the author mentions a famous British society-watcher, Charles Masterman. In 1909, Masterman published his best-known study, The Condition of England, which tells us that England at that time experienced a greater inflow of migrants into London than in previous centuries taken together.

[Charles Frederick Gurney Masterman PC MP (24 October 1873 – 17 November 1927) was a British radical Liberal Party politician, intellectual and man of letters. He worked closely with such Liberal leaders as David Lloyd George and Winston Churchill in designing social welfare projects, including the National Insurance Act 1911. During the First World War, he played a central role in the main government propaganda agency.]

We then notice that one recurrent topic in various movie versions of the E. M. Forster novel Howards End (1910, set in those years) is the “horrifying” trend where great mansions and stately estates (Howards End and Wickham Place, say, in the novel) are all being demolished and replaced by ugly “flats.”

There must be, one thinks, a direct link between all the massive migrations into London at the time and all the proliferating flats at the “expense” of beautiful and historical villas. (This “demolish” trend is also part of the story of the classic novel A Handful of Dust by Evelyn Waugh, 1934)

In the predecessor to Downton Abbey called Upstairs, Downstairs, the story ends in 1930 with a sign outside the great “house” at Eaton Place offering flats coming soon, as the demand for housing (think of San Francisco today) is so massive that sellers can make a fortune selling out to developers, move into one of the flats being created, and live off the sale for the rest of their lives and “duck” the higher “Lloyd George taxes.” (In Downton Abbey, the dowager played by Maggie Smith repeatedly lashes out at Prime Minister Lloyd George as a kind of financial traitor.)

We see from this simple example how students should learn to “jump” between books and movies and TV miniseries to get a stronger focus on what’s being depicted on screens and pages and not just “swim along” at the surface level without any “drilling down.”

Education is largely the struggle or habit where students learn to bring pattern and structure out of “chaos,” thus giving narratives some overall shape.

This reminds one of the opening lines of Beryl Markham’s 1942 Africa memoir:

“How is it possible to bring order out of memory? I should like to begin at the beginning, patiently, like a weaver at his loom. I should like to say, ‘This is the place to start; there can be no other.’ ”

from West with the Night by Beryl Markham

This is a similar impetus: to bring order out of memory or others’ memories in books and movies from various times and places.