Podcast Summary: How to Stop a Global Economic “Doom Loop”

Podcast: Solutions with Henry Blodget
Host: Henry Blodget
Guest: Ishwar Prasad, Professor of Trade Policy and Economics, Cornell University
Date: January 19, 2026

Episode Overview

In this episode, Henry Blodget talks with economist Ishwar Prasad about his new book, The Doom Loop: Why the World Economic Order Is Spiraling Into Disorder. The conversation explores how the world’s economic and political systems are entangled in a negative feedback loop that threatens global stability, fueled by rising inequality, political resentment, and fraying international institutions. Prasad argues that abandoning globalization is not the solution; instead, we need thoughtful policies to better share its benefits and renew our commitment to international cooperation.

Main Discussion Themes

1. What Is the “Doom Loop”?

Definition & Origin

• Prasad explains that the original idea for his book was a positive one—describing the transition from a unipolar (US-dominated) world to a more balanced, multipolar world.
• However, as he examined the shift, he realized these forces were leading to greater instability, not less.

  “We are stuck in what I view as a negative feedback loop between economics, domestic politics, and geopolitics… All of these forces are now stuck in this adverse loop where they're bringing out the worst in each other rather than the best.” (Ishwar Prasad, 04:29)

How the Loop Works

• Globalization created potential for shared prosperity, but benefits were unevenly distributed.
• Perceptions that elites and certain countries reaped disproportionate rewards gave rise to the “politics of resentment.”
• This resentment fuels populist politics and protectionist policies, undermining both domestic and global institutions, which then worsens economic outcomes, feeding the loop anew.

2. Globalization: Boon or Bane?

Globalization’s Promise and Pitfalls

• Theoretically, globalization can lift prosperity by connecting markets and promoting competition.
• In practice, large segments of national populations—in the US and elsewhere—were left behind, particularly those whose jobs were lost to foreign competition or automation.

  “It is not just a lack of economic resources, but of opportunity... Many people felt so left out that they had no chance to clamber back on the economic ladder.” (Ishwar Prasad, 12:30)

Is Globalization Bad?

• Prasad is unequivocal: “Globalization is clearly good. The problem, however… it's not necessarily good for everybody.” (Ishwar Prasad, 11:27)
• The failure of political systems to help “losers” of globalization is the root problem, not globalization itself.

3. The Limits and Dangers of Tariffs

Questioning Tariffs as a Solution

• Tariffs, championed by some US politicians, are not an effective long-term solution.

  “Tariffs do not necessarily accomplish what the Trump administration would like to accomplish… It's not obvious that foreign exporters are paying… these tariffs are probably being paid by American households, American consumers.” (Ishwar Prasad, 14:00)

• Tariffs hurt consumers, increase prices, and invite retaliation, harming economic growth.

China: Rule Breaker or Smart Player?

• China has leveraged global trade rules while protecting its own industry, sometimes unfairly.
• Still, the suggested response is not to disengage, but to reinforce rules and work with international partners.

4. Rebuilding and Reforming Institutions

Why Institutions Matter

• Effective institutions—like the WTO, IMF, and various alliances—are weakening as countries withdraw or set up parallel systems (e.g., China’s Asian Infrastructure Investment Bank, BRICS bank).
• Without credible, shared rules, the global system risks fragmentation.

  “What we're seeing right now is that the existing institutions are losing their legitimacy from both sides: U.S. disengagement and emerging markets feeling that they're losing their legitimacy.” (Ishwar Prasad, 26:40)

What Needs to Change?

• Existing rules and structures haven’t adapted to new powers’ realities (e.g., China’s GDP vs. IMF voting rights).
• The US and allies must either reform existing institutions or help create new, more representative ones.
• International cooperation—though in short supply today—is essential for a stable world.

5. Policy Solutions: At Home and Abroad

Domestic Responses

• Policy must focus on offsetting economic dislocation through a stronger safety net and retraining.
• Reduce money’s influence in politics to rebuild trust and engagement.

International Responses

• Instead of tariffs, the US should lead coalition-building (e.g., reviving or replacing the Trans Pacific Partnership) and set standards with allies, compelling rivals to follow.
• Strategic and targeted “industrial policy” can foster innovation, with government as a seeder of research rather than a picker of winners.

“We have to think about ways to ensure that people feel that they have opportunities to succeed… And we also need better rules of the game.” (Ishwar Prasad, 25:21)

6. Multipolarity: Promise or Instability?

Multipolar World: Not Necessarily Safer

• A world with several big economic and military powers (US, China, possibly India, Brazil, etc.) doesn’t automatically mean stability.
• “Middle powers” like India often side-shift for advantage, sometimes increasing instability.

Fundamental Clash of Visions

• The US and China’s rivalry is especially unstable because their underlying philosophies and institutions differ profoundly, not just their economic strength.

  “China sees things completely differently... There is no easy way to mesh these two visions and meet them in the middle.” (Ishwar Prasad, 36:02)

7. Do Individual Citizens Really Feel the Effects?

• Average citizens may be much less affected by global GDP shifts than by quality-of-life issues.
• Many citizens are willing to trade away some rights for safety and a good standard of living, challenging the inevitability of “liberal democracy.”

  “GDP is a useful measure because it allows us to make cross-country comparisons... But ultimately it is standards of living and quality of life that really matter.” (Ishwar Prasad, 38:18)

Notable Quotes & Moments

• On the origins of “doom loop”:

  “It's a negative feedback loop between economics, domestic politics, and geopolitics... bringing out the worst in each other rather than the best.”
  — Ishwar Prasad (04:29)

• On the politics of resentment:

  “Politicians found it much easier to latch onto people’s grievances... which in turn affects the economic policies of the new government.”
  — Ishwar Prasad (04:05)

• On the illusion of filtering-down benefits:

  “That proved to be an illusion… We created a large disenfranchised class, and that has come back to bite us.”
  — Ishwar Prasad (12:40)

• On tariffs:

  “It is not in America’s interest to wall itself off from the rest of the world. America cannot really be an island and prosper and thrive.”
  — Ishwar Prasad (23:15)

• Call for personal engagement:

  “Ultimately... it’s going to take each of us... to see ourselves as citizens not just of our countries, but of our communities and of the broader humanity.”
  — Ishwar Prasad (44:45)

• On the future:

  “I wanted an optimistic conclusion… But my head was pulling in a gloomy direction.”
  — Ishwar Prasad (34:20)

Key Timestamps

• 03:03 – Ishwar Prasad defines the “doom loop”
• 06:36 – Multipolarity’s problems versus the theory
• 11:26 – Is globalization bad? Why the backlash?
• 13:48 – Why tariffs don’t work and the real problems with China
• 19:54 – Alternative policies: coalitions and updated institutions
• 22:44 – Why closing the US economy isn’t a real solution
• 25:21 – Solutions: rethink distribution, strengthen institutions
• 29:14 – How to restore (or rebuild) international legitimacy
• 32:14 – What does a multipolar world really mean for stability?
• 37:18 – Does global power matter to ordinary people?
• 41:58 – The Venezuela incident as a sign of global instability
• 44:28 – Can the doom loop be escaped with better leadership and citizenship?

Conclusion & Tone

Henry and Ishwar’s discussion is thoughtful, nuanced, and, despite the book’s title, ultimately measured in tone. Both bring a clear-eyed realism, but Ishwar closes with a call to individual and collective action: the doom loop is powerful, but not inevitable. Better policies—domestically and internationally—plus reengaged citizenship can help us break the cycle.

For listeners:
This episode provides vital context for current economic and political trends, especially the ongoing challenges to globalization, the risks of protectionism, and the urgent need to renew international institutions and domestic safety nets.

End of summary.