Why Good Economics Isn’t Enough: The Need for Political Imagination in a Fractured Global Economy.

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The last decade has taught us that good economics alone cannot fix bad politics. Markets can be efficient, but if people feel excluded or voiceless, efficiency becomes irrelevant. Dani Rodrik’s Straight Talk on Trade argues that “good economics is not enough; we need good political imagination.” That idea resonates with me more than any trade statistic or policy chart because it mirrors what I have seen firsthand in global supply chains, where data proves growth but stories reveal discontent. Economic logic can justify a factory’s efficiency, but it takes political imagination to make that factory a fair workplace.

Rodrik defines policy innovation as “learning by doing.” The world’s most successful reforms, China’s dual-track reform, South Africa’s democratic transition, America’s trade-adjustment policies- all relied on creativity, compromise, and adaptation rather than textbook formulas. Having worked in South Asian manufacturing, I’ve seen how often reform fails not because people resist change, but because policies ignore culture, emotion, and power. Technical solutions fall flat when they lack social legitimacy. Real innovation happens when leaders reimagine what citizens can agree on, when they treat policy as design, not doctrine.

Rodrik’s warning that “compensating the losers” is not enough feels especially urgent. Redistribution after damage is like giving a bandage after an amputation. People don’t want sympathy; they want agency. Globalization’s winners, multinational firms, investors, urban consumers- have thrived, while workers and small producers feel disempowered. Telling them they’ll be “compensated” does not rebuild trust. In my view, what citizens crave most today is “voice”, the feeling that their pain shapes policy, not that policy explains their pain away.

Rodrik’s analogy between “capital flows and gun control” is both sharp and humane. Just as guns require regulation to prevent harm, so does global finance. After years of preaching free-market orthodoxy, even the IMF admits that some control is necessary. The 2008 crisis proved that unregulated capital can destabilize entire societies faster than any trade war. Yet, instead of reimagining the rules, many governments swung between extremes, total liberalization or total isolation. Political imagination means designing the in-between: “light global rules” that preserve space for national choice. It means understanding that sovereignty and cooperation aren’t opposites; they’re two sides of responsible interdependence.

Rodrik’s vision of “global governance light”, shared principles with local flexibility, could redefine multilateralism for our century. The Paris Climate Agreement, for instance, worked not because it imposed one-size-fits-all targets, but because it respected diversity. Each nation pledged differently, yet together they moved the dial. In trade too, this philosophy could heal the divide between North and South. Instead of viewing fair trade as anti-trade, we could view it as ethical trade, a compact that respects labor, safety, and environment while allowing developing nations to grow at their own pace. As someone who has seen “Made in Bangladesh” labels carry both pride and pain, I believe fair trade begins not in customs policies but in consciousness.

Rodrik also challenges economists to act as political engineers, blending empathy with design. That framing transforms economics from a science of numbers into a practice of nation-building. It reminds me that progress is not automatic; it must be imagined. Economists, policymakers, and even business leaders must ask not only what works but for whom it works. Without that question, progress risks becoming privilege.

Public investment is another area where imagination matters. Ethiopia’s growth story, as Rodrik notes, defied the era’s obsession with privatization by betting on infrastructure. Roads, power, and agriculture became engines of mobility. In contrast, advanced economies like the U.S. now struggle with decaying public goods and widening digital divides. The answer lies not in nostalgia but in reinvention, what Rodrik calls an “innovation state.” Governments should not retreat from markets; they should collaborate intelligently with them. Every private breakthrough , from Apple’s iPhone to the Internet, grew from public research. Yet, the state rarely shares in the reward. Imagine if citizens earned a “social innovation dividend” from public-funded discoveries. That is what political imagination looks like, rewriting ownership, not just reforming policy.

Rodrik’s broader message is that democracy must govern globalization, not the other way around. People should never feel that markets decide their fate more than their votes do. When citizens lose faith that democracy can deliver fairness, they turn to populism or authoritarian shortcuts. We see this in the rise of leaders who promise control rather than inclusion. Populism feeds on moral exhaustion, the sense that rational politics has run out of imagination. Reversing it requires not stronger ideology, but deeper empathy. The left must rediscover moral clarity; the center must rediscover courage; and economists must rediscover humanity.

In my own journey, from South Asia’s factory floors to FIT’s classrooms, I’ve realized that economics isn’t about efficiency alone; it’s about belonging. Every chart about trade balance hides a story of someone balancing survival. Policy imagination begins there, with empathy translated into design. Rodrik’s “sane world economy” isn’t a dream; it’s a challenge: to see economics not as a contest of models, but as an art of coexistence. Good economics can build wealth. But only good imagination can build trust. And without trust, even the most efficient economy will eventually collapse under its own indifference.