Opinion: (Nouriel Roubini, Chairman of Roubini Global Economics, Professor of Economics at the Stern School of Business, NYU): “This year has witnessed a global wave of social and political turmoil and instability, with masses of people pouring into the real and virtual streets…
“While these protests have no unified theme, they express in different ways the serious concerns of the world’s working and middle classes about their prospects in the face of the growing concentration of power among economic, financial, and political elites. The causes of their concern are clear enough: high unemployment and underemployment in advanced and emerging economies; inadequate skills and education for young people and workers to compete in a globalized world; resentment against corruption, including legalized forms like lobbying; and a sharp rise in income and wealth inequality in advanced and fast-growing emerging-market economies.
“The increase in private – and public-sector leverage and the related asset and credit bubbles are partly the result of inequality. …In Anglo-Saxon countries, the response was to democratize credit – via financial liberalization – thereby fueling a rise in private debt as households borrowed to make up the difference. In Europe, the gap was filled by public services – free education, health care, etc. – that were not fully financed by taxes, fueling public deficits and debt. In both cases, debt levels eventually became unsustainable.
“Firms in advanced economies are now cutting jobs, owing to inadequate final demand, which has led to excess capacity, and to uncertainty about future demand. But cutting jobs weakens final demand further because it reduces labor income and increases inequality.
“Karl Marx oversold socialism, but he was right in claiming that globalization, unfettered financial capitalism, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct. As he argued, unregulated capitalism can lead to regular bouts of over-capacity, under-consumption, and the recurrence of destructive financial crises, fueled by credit bubbles and asset-price booms and busts.
“Any economic model that does not properly address inequality will eventually face a crisis of legitimacy.”
My Comment: Equality can only be achieved as a result of upbringing people in the spirit of equality, that is, integral upbringing. Any other decision is a temporary break that only exacerbates the problem.