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Picture Courtesy:  THE HINDU

Context:

Western democracies face challenges in balancing national sovereignty, economic globalization, and democratic politics.

What is the Political Trilemma?

Economist Dani Rodrik introduced the "political trilemma of the world economy" in his 2000 paper, "How Far Will International Economic Integration Go?" The trilemma suggests that countries face a tough choice: they can only prioritize two out of three goals at any given time. These goals are:

• International Economic Integration (Globalization): This means opening up to free trade, foreign investment, and global markets.
• Nation-State (Sovereignty): This refers to a country’s ability to control its own policies, laws, and decisions without external interference.
• Mass Politics (Popular Democracy): This involves giving people a voice through democratic processes, allowing them to influence government decisions.

Rodrik argues that trying to achieve all three simultaneously is impossible in the long run. Countries must sacrifice one to balance the other two, and this choice shapes their economic and political systems.

Why is the West in Crisis?

Western democracies (like the US, UK, and EU countries) are in crisis because they tried to balance all three goals—globalization, sovereignty, and democracy—for too long. This created tensions that are now exploding.

What Went Wrong?

Globalization’s Uneven Benefits

Globalization raised living standards overall, but it created “winners” (big corporations, urban elites) and “losers” (workers in declining industries like manufacturing). In the US, for example, factory jobs moved to countries like China, leaving industrial towns struggling. 

Economic Insecurity Fuels Anger

People who lost jobs or struggled against global competition (e.g., small businesses) feel abandoned by governments. This erodes trust in democratic institutions like political parties or elections.

Rise of Populism

Populist leaders like Donald Trump (US), Geert Wilders (Netherlands), and Viktor Orbán (Hungary) exploit this anger. They promise:

• Protectionism: Tariffs or trade barriers to protect local jobs.
• Immigration controls: Limiting migration to preserve “national identity.”
• Withdrawal from global cooperation: Rejecting climate agreements or international aid.

These leaders appeal to voters by blaming globalization and elites for economic woes.

Backlash Against Democracy

As trust in democratic institutions falls, people turn to populist or authoritarian figures who promise quick fixes. This weakens democracy itself.

How Can the West Solve This Crisis?

Ensure Broad-Based Economic Gains

Policies should help workers and small businesses, not just corporations. For example, retraining or skilling programs for workers displaced by globalization or tax breaks for local industries.

Strengthen Democratic Institutions

Governments must rebuild trust by addressing people’s concerns, like job losses or immigration, without resorting to populism. Engaging citizens through transparent decision-making can counter distrust.

Avoid Extreme Populism

Populist solutions like protectionism or dismantling global cooperation may offer short-term relief but harm long-term prosperity.

India’s Approach to the Trilemma

India leans toward the Bretton Woods compromise (democracy + sovereignty, limited globalization). Policies like Atmanirbhar Bharat (self-reliant India) and high tariffs on imports protect local industries. However, India also engages in globalization selectively, signing trade deals like the India-UAE FTA (2022) while avoiding over-dependence on global markets.

Source: 

THE HINDU