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Learning to Love Stagnation

Growth Isn’t Everything—Just Ask Japan

The price is right: shopping before Black Friday in Ohio, November 2014. BLOOMBERG VIA GETTY IMAGES / DANIEL ACKER

From Wall Street to K Street to Main Street, pessimism about the global economy has become commonplace. The world economy may have finally emerged from the financial crisis of 2008, but according to conventional wisdom, it remains fragile and unsteady, just one disruption away from yet another perilous downturn.

In October, the International Monetary Fund warned that a return to robust global growth remained “elusive.” Others are gloomier. Former U.S. Treasury Secretary Larry Summers has said that the world faces looming “secular stagnation”—a persistent period of low growth, low inflation, and low interest rates—as the developed countries remain caught in a deflationary trap, China struggles with an uncertain transition to a consumer economy, and the developing world reels from the collapse of commodity prices and the contraction of global credit. A rising chorus of voices is also warning of the dangers of income inequality, and no wonder: middle-class

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