— and in the United States, they own pretty much all the politicians
There were quite a few disconnects at the recently concluded Annual Meetings of the International Monetary Fund and World Bank. Among the most striking was the disparity between participants’ interest in discussions of inequality and the ongoing lack of a formal action plan for governments to address it. This represents a profound failure of policy imagination – one that must urgently be addressed.
There is good reason for the spike in interest. While inequality has decreased across countries, it has increased within them, in the advanced and developing worlds alike. The process has been driven by a combination of secular and structural issues – including the changing nature of technological advancement, the rise of “winner-take-all” investment characteristics, and political systems favoring the wealthy – and has been turbocharged by cyclical forces.
In the developed world, the problem is rooted in unprecedented political polarization, which has impeded comprehensive responses and placed an excessive policy burden on central banks. Though monetary authorities enjoy more political autonomy than other policymaking bodies, they lack the needed tools to address effectively the challenges that their countries face.
…These are not normal times. With political gridlock blocking an appropriate fiscal response – after 2008, the United States Congress did not pass an annual budget, a basic component of responsible economic governance, for five years – central banks have been forced to bolster economies artificially. To do so, they have relied on near-zero interest rates and unconventional measures like quantitative easing to stimulate growth and job creation…
As a result, most countries face a trio of inequalities – of income, wealth, and opportunity – which, left unchecked, reinforce one another, with far-reaching consequences. Indeed, beyond this trio’s moral, social, and political implications lies a serious economic concern: instead of creating incentives for hard work and innovation, inequality begins to undermine economic dynamism, investment, employment, and prosperity.
So far, Mohamed El-Erian has avoided political office. In the United States as well as Egypt. Understandable when common understanding of officeholders in either nation leaves voters with a choice between the corrupt elected by the ignorant or someone too dumb to comprehend the differences.
Though he easily fits the populist definition of a prince of economics, history and academia both recognize his commitment to common folk, those of us who toil and spin, creating the profits of industry and commerce. I know I needn’t be concerned about most of the wasters in Congress understanding the article. They will not have read it.
Still, around the civilized world, most elected leaders trying to affect the lives of citizens in a positive fashion will read it and at least take his analysis to heart as honest and forthright – whether or not they agree with any logical tough remedies.
I suggest you click the link and read the whole article.