What is quite possible though is that we will panic and react in the wrong way at the level of policy in a way that means future historians will be able to speak of how an era of globalisation and world growth was brought to an end except that this time it would not be the illness itself but an ill-judged response to it.
Given all this, I predictably deny that “ultimately America will need to move towards a socialist system.” Full-blown socialist systems make social democracy look great by comparison. Indeed, once you draw the distinction between social democracy and socialism, it’s very hard to find to find any socialist regime that isn’t a tragic, despotic disaster. If Sweden is the jewel of social democracy, what’s the jewel of socialism? Cuba? Nor is there any sign that socialism somehow becomes “more necessary” as countries progress. The main reason governments have gotten bigger over the last thirty years is just the aging of the population.
Finally, let me underscore what I’m not saying. I’m not saying that life in the U.S. or Sweden is terrible. In fact, human beings in both countries enjoy close to the highest quality of life than human beings have ever achieved. My claim, rather, is that even the most successful countries in history could do far better. I know that social democratic policies are emotionally appealing. That’s why they’ve won. Yet objectively speaking, market capitalism should have won because market capitalism offers much better results.