Michael O’Sullivan is an economist, lecturer, and author. He worked as an investment strategist at UBS and was CIO (Chief Investment Officer) at Credit Suisse. He was professor at Princeton University and wrote “The Levelling. What’s Next after Globalization,” in which he analyzes the transition in world economics, finance, and power as the era of globalization comes to an end and gives way to new power centers and institutions.

Michael grew up in Ireland in the 1990s and experienced the dramatic change of that society as the Irish economy opened up and received massive foreign investment. That spurred his fascination about the effects of globalization on small open economies, and he has kept track of this topic ever since.

His thesis is that globalization is over and that the world order in the next 10 to 15 years is passing from this era of extraordinary peace and prosperity into a multi-polar world, in which old institutions have to be replaced by new ones.

“The positive factors associated with globalization – low inflation, low interest rates, and peace – have been violently reversed. In the course of 2022, we have had record-high inflation in countries from Germany to Sri Lanka across to the US, interest rates are rising, and we have the tragic invasion of Ukraine by Russia,” he says.

Being an “Anglo-Saxon phenomenon,” globalization was hard-tested by Brexit in the UK and Donald Trump’s election in the US. “The two big Anglo-Saxon countries that were the engines of globalization in the 19th and 20th century have actually done little to spread its benefits across societies,” O’Sullivan points out.

While Ireland and other small, advanced economies such as Switzerland, Sweden, Singapore, and New Zealand used their taxes and social welfare systems, in both the US and the UK, wealth and income inequalities are egregious. And “there’s been other tests, like the snuffing out of democracy in Hong Kong. And then Covid, which produced positives in terms of technological and medical advances. But its great failing has been the lack of collaboration between major countries. And then we saw the US, China, and Europe squabbling over masks and vaccines.”

According to O’Sullivan, we are at an interregnum, a period in which the old order is beginning to break down and the new order has not been constructed.

“Many of the institutions of the 20th Century: the WTO (World Trade Organization), WHO (World Health Organization), IMF (International Monetary Fund), and World Bank, haven’t done what they were supposed to do, and many of them have a leadership crisis. (…) We need new institutions for the 21st century: a new World Climate Institution, Cyber Security, and a new World Debt Conference,” he explains.

“The next 10 years will be driven by the reduction of imbalances, such as indebtedness (world debt level to GDP is as high now as after the World War Two) and Climate Change. I don’t think it’s a challenge of science or innovation, but a challenge of collaboration and getting the big cities, big governments, and big polluters to come together and agree on a really credible way to pare back climate damage.

“The new order is going to be based around three regions: the US, Europe, and China. And it’s not a simple question of these regions being big and powerful. But they have increasingly different values and ways of doing things. Globalization has come to an end. This period of interconnectedness and interdependence is beginning to unravel. Accepting that helps us to look forward to the next 10 to 15 years of this interregnum, during which imbalances need to be resolved and our attention needs to be directed away from old institutions and focused on building the new ones.”