"Recent popular demonstrations, from the Middle East to Israel to the UK, and rising popular anger in China - and soon enough in other advanced economies and emerging markets - are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness," says Dr. Nouriel Roubini. "Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities."
Roubini, a professor of economics at New York University's School of Business, was one of the few economists to predict the 2008 global financial crisis, and he insists that recent social unrest sweeping the world, will strengthen and spread.
Roubini says that the current global economic system - capitalism - will remain in a crisis - a crisis economist Karl Marx predicted more than a century ago - until major systemic reforms are implemented. He says that social unrest and demonstrations are all being driven by the same thing, capitalism's most serious crisis since the Great Depression of the 1930s. It stems from globalization, financial intermediation run amok, and a destructive redistribution of income and wealth from labor to capital.
Roubini's answer is to strike the correct balance by creating work partly through more stimulus whose goal is "productive" infrastructure investment, progressive taxation, debt reduction, "lender of last resort" support from central banks, greater supervision of the financial system, and breaking up banks deemed too big to fail. "That means moving away from both the Anglo-Saxon model of laissez-faire and voodoo economics and the continental European model of deficit-driven welfare states. Both are broken," he says.
Published by Globes [online], Israel business news - www.globes-online.com - on August 21, 2011
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