Liberal democracy and free market capitalism are under threat unless governments do more to tackle inequality, the US Treasury secretary has warned on a visit to the UK.
Jack Lew called for Britain and the EU to ensure their economies remain “highly integrated” when Britain leaves the bloc. He linked the vote for Brexit to a more general rise in anxiety among people over how economies have evolved and the “lopsided” nature of gains.
With just over a week to go to the US presidential election and against the backdrop of a tight race between Hillary Clinton and Donald Trump, Lew told an audience in Oxford that populism was on the rise in many countries, calling it “a challenge in so many parts of the world right now”.
Lew told the Oxford Union debating society: “Clearly it was an issue during the vote here and the decision whether or not to remain part of the European Union. It’s clearly a part of the elections taking place in the United States this year. And if you look around in Europe, it’s part of elections in so many countries in Europe.”
He said people’s worries about their economic situation and economic prospects stemmed from many sources, including technological changes and globalisation.
“In the United States – and I would hazard to say that this is true here in the vote for Brexit – there is some anxiety that flows from the way that the modern economy has evolved that is looking for a solution,” he said.
“Why don’t people feel good? They are looking at an economy that increasingly seems lopsided,” he added, saying many workers who paid tax felt wronged by what they saw as a business tax system where “on the international side you see a whole lot of international firms organising themselves to avoid paying in some cases any taxes”.
The onus was on government to reform the tax system, to increase investment in people so that they have the right education and skills for the modern workplace and to spend on infrastructure, according to Lew, who has served as Treasury secretary under the US president, Barack Obama, since 2013 after a stint as White House chief of staff.