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Yellen pins rise of populism, trade skepticism on economic inequality

Yellen pins rise of populism, trade skepticism on economic inequality
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Former Federal Reserve Chair Janet YellenJanet Louise YellenFed formally adopts new approach to balance inflation, unemployment Federal Reserve chief to outline plans for inflation, economy The Hill's Morning Report - Presented by Facebook - First lady casts Trump as fighter for the 'forgotten' MORE said Tuesday that increasing political polarization is driving a rise in populism that could weaken the global economy and hinder marginalized people.

Yellen said Tuesday that an extending decade of steady U.S. job growth is not enough to narrow the growing wealth gap between the richest and poorest citizens, fueling efforts to restrict trade and immigration.

“The structural forces that have caused rising inequality in the United States and other developed countries, they're alive and well,” Yellen said during a Tuesday discussion hosted by the Bipartisan Policy Center, a Washington, D.C. think tank, with World Bank President David Malpass.

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“And I don't think we're on a path to improvement where if we just keep the economy where it is operating with a tight labor market, this problem is going to disappear.”

Yellen, who chaired the Fed between 2014 and 2018, said rising inequality poses a unique risk to unwinding decades of globalizing commerce and loosening trade barriers, two movements fiercely criticized by President TrumpDonald John TrumpJudge rules to not release Russia probe documents over Trump tweets Trump and advisers considering firing FBI director after election: WaPo Obama to campaign for Biden in Florida MORE and a wide swath of his supporters.

Yellen called the combination of globalization and trade liberalization “one of the most important factors” behind “boosting growth all around the world,” but that inequality has been “fueling discontent with trade.”

Yellen, who Trump declined to renominate in 2014, also played down the potential benefit of the president’s recent preliminary “Phase One” trade deal with China signed on Jan. 15.

"If a motive for putting in place tariffs was to make U.S. manufacturers more competitive and to increase job prospects in manufacturing in the United States, I would say we haven't seen that,” Yellen said.

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Yellen’s remarks come on the two-year anniversary of her final day leading the Fed board, which she joined in 2010 on the appointment of former President Obama. Despite praising Yellen throughout his presidency, Trump chose to replace her with current Chairman Jerome Powell in 2018.

Yellen has been praised by economists across the political spectrum for defying calls to raise interest rates for the beginning of her tenure, allowing the U.S. labor market to expand and the economy to recover from the 2008 recession. But several right-leaning analysts say Yellen’s refusal to raise interest rates before the end of 2015 created financial market bubbles and increased economic inequality.

Yellen added that it’s crucial for policymakers to overcome years of squabbling to implement policies to reduce economic inequality and preserve strong global economic ties.

“We're just not doing anything to address these issues,” Yellen said, calling for a “combination of training, education, and improving the safety net for people who are working in an economy where jobs with the traditional supports are disappearing.”