SINGAPORE (Mar 4): The post-war economic success of liberal democracies was not simply the result of letting markets flourish. The US and European countries also embedded markets in a structure that allowed people to take the fullest advantage of them. That structure is breaking down, energising populist leaders of both the left and the right. While they pose the right questions, they rarely have the right answers. Perhaps, instead, they should make it easier for people to devise their own solutions.

Why is the post-war structure breaking down? In the immediate post-war era, a formidable system of secondary education in the US prepared students for work or further study at the world’s best universities. Students entered the workforce with the skills to land good jobs. Rapid economic growth and relatively light regulation encouraged many to start their own enterprises. Flexible labour-market policies allowed laid-off workers to find a job quickly somewhere else. Recessions, when they came, were shallow and brief.

The superior “pre-market” preparation of Americans via the education system, and the many economic opportunities available to them, allowed the US to function with relatively limited social protections against market volatility. Unemployment insurance was modest, while many people had no healthcare coverage — even after the introduction of federally backed insurance schemes for the elderly and the very poor in the 1960s.

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