Wednesday, August 10, 2011

More Capitalism vs Democracy

I was reading this article in Foreign Policy - a "debate" between two highly respected international economists, Nouriel Roubini and Ian Bremmer when I came acros the two quotes below. What was interesting was just how similar they were to the quote I pulled the other day from the Globe & Mail about how the US political system was dysfunctional. Here's the FP quotes.

Nouriel Roubini:
I think the fundamental problem is that tough choices need to be made -- gradual fiscal austerity, structural reform -- [which] imply [the necessity of] governments that can look beyond electoral cycle. And we don't have a situation in which this is possible, when growth is anemic, unemployment is high, and deleveraging is painful. Governments don't have the leadership to do the right thing, not nationally, and not in terms of international cooperation. So, smart individuals might be here and there, but fundamentally, there is a political economy problem in most advanced economies that remains unresolved.

Later, Ian Bremmer says, in a discussion about the role of China:
China is an issue because it understands better than anyone else that the short-term electoral cycles in the West are going to create inability to make the kind of policy moves that are required to create long-term sustainable economic growth and trajectory. 
These quotes, part of a longer piece on the fact that national governments - in particular western, industrialized countries - are out of policy ammunition to deal with the economic crisis. Of course, what has really run out is business as usual types of policy ammunition. We are now faced with more difficult choices ahead - a point to which I will return with a longer article later this week.  But without even having that deeper analysis, we need to ask ourselves some hard questions: if capitalism can't provide affluence and it can't even manage to function well within the bounds of political democracy, then what the hell good is it for most of us humans?
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