Dr. Jason Furman, chairman of US President Barack Obama's Council of Economic Advisers, estimates that Israel will overtake the US in inequality and calls for diversification of the bases of GDP growth in the economy.
Furman told the "Globes" Israel Business Conference that that Israel "needs to open up trade more, particularly in agriculture, which will give greater diversity." Commenting on inequality, Furman said that it was growing, and that although Israel was well behind the US in this respect, the gaps were deepening and that Israel would overtake the US.
Furman presented a graph showing that of 18 advanced economies, ten are in a better position than they were before the global economic crisis. "Israel is of course exceptional, because it had no severe economic crisis, because you listened to Stanley Fischer's advice," he said. Furman added that most of the growing economies had passed their peak output before the crisis, but said that growth in those economies was volatile.
"In most of the advanced economies, the IMF sees no sharp change in growth in the coming years, but in the growing economies there is a significant decline in the growth forecast five years forward," Furman said. He explained that the reason for this was the decline in productivity in those countries.
"Another aspect of productivity is the way in which this is expressed in the global economy. Between 1987 and 2007 there was a significant rise in the volume of world trade. In the crisis, trade contracted more than in the Great Depression." No, Furman said, growth in trade is at a standstill "and that's worrying."
Asked to comment on raising the minimum wage as a means of combatting inequality, Furman said, "It depends what the minimum wage is. In the US, it's lower than in many countries. With a minimum wage like ours, raising it will help in that more people will experience growth, and much economic research shows that it will not the cost the economy a great deal of money."
Published by Globes [online], Israel business news - www.globes-online.com - on December 7, 2014
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