OPINION: Globalisation has created wealth - but for whom?

Nothing resonates in the public consciousness unless it chimes with people's felt experience. So it was quite telling a couple of years back when Thomas Piketty's Capital in the 21st Century became the best-selling book ever for Harvard University Press. Why did a nearly 700-page tome by a French academic become a mass market hit? Because it went some way towards explaining why, despite the fact that the global economy has recovered from the 2008 financial crisis and is now larger than it's ever been, many of us feel so uneasy about our economic future. Globalisation has created growth, no doubt. But what kind of growth? And for whom? Is all growth the same?

I would argue no. The key economic issue in many countries, including the US, where it has been the meta-theme of the 2016 election cycle, is the fact that even as the world economy as a whole has boomed over the last 40 years, growth within countries has been less and less equally shared. This is a social issue, of course, but at its core, it's an economic one - there is strong academic evidence to suggest that in this paradigm, economic growth itself - not to mention market stability - is eventually undermined. You need a stable political system and a sense that all boats will eventually rise in order for markets to function properly.

The question is what to do about the current growth paradigm. Much of the conversation on this score has focused on the divide between Wall Street and Main Street, and in particular, how to curb the financiers that the public seems to loathe. Each presidential candidate in the US has their prescription - Bernie Sanders wants to break up the big banks, Donald Trump says tax the hedge funders, Hillary Clinton wants to work within the existing Dodd-Frank financial reform system and take on shadow banking, too.

All of them are missing the point. The problems within our economy go away beyond Too Big To Fail Banks, hedge fund billionaires, or offshore accounts of the sort illuminated by the Panama Papers. In fact, each of these things is a small part of a much, much, deeper problem, which is that the capital markets themselves are broken. They aren't doing their job as Adam Smith envisioned it, and until they do, the economic growth that we create will remain unequally shared, and our economy as a whole will remain fragile.

The job of finance is to take our savings and funnel it into productive new enterprises, which create jobs and wealth and ultimately, economic growth. Without a healthy capital markets system, capitalism itself stops working properly - and the result is slower growth, and higher inequality, which can culminate in the sort of social unrest that we've seen over the last eight years in many parts of the world.

We are at a tipping point right now, as I write in my own book, _ Makers and Takers: The Rise of Finance and the Fall of American Business _(Crown). The killer stat - only around 15 % of all the money washing around the markets these days actually makes it onto Main Street. The rest stays within the closed loop of finance itself, in assets that are traded among the wealthy (be they stocks, bonds, or real estate). Many of these assets are "securitised" multiple times as they are traded - like the exploding CDOs that brought down the financial system in 2008.

And the trading happens faster than you can think, with 80% of it being done by high frequency algorithms designed to take short-term profits for the top 25% of the population that owns the majority of those assets being traded. Thanks to technology and globalisation, which have enriched the markets and made them run ever faster, the spin cycle of wealth moving to the top of society, and away from productive uses on Main Street, goes faster, and faster.

The result is a global economy that gets bigger, but in a virtual way - the capital market system enriches itself far more than anyone or anything else. The financial sector (including everything from banks, to hedge funds to mutual funds to insurance to trading houses) represents 7% of the economy, and creates 4% of all US jobs, but takes 30% of all private sector profits. While a healthy financial system is crucial for growth, research shows that when finance gets that big, it starts to suck the economic air out of the room - and in fact, the slower growth effect starts happening when the sector is half the size it is today in the US.

This is in part a monopoly power effect - in the US, for example, finance and Big Pharma swap places each year as the top corporate donors to Washington - which creates a system in which more and more rules of the game are titled to favour the financial system. For 40 years now, across both Republican and Democratic administrations, the rules of our economic game have been changing in small ways that have resulted in a system of capitalism that is exactly the opposite of what Adam Smith would have wanted - business is serving finance, rather than the other way around. The result is the longest and slowest recovery of the post war era.

What happens now is the question. Fixing the system requires more than easy political solutions like curbing banker pay or breaking up Too Big To Fail banks (though both may be legitimate policy choices). It requires rethinking a tax code that subsidises debt over equity, reforming housing and retirement policy, curbing the money culture rife in our political system, and restructuring corporate incentives and governance so as to better support long term decision making. Good growth is growth that benefits more than just a few. The alternative, increasing social instability and market fragility, could well undermine what growth we have.

Rana Foroohar is assistant managing editor and columnist, Time Magazine.

This piece was first published by the _ World Economic Forum._