It is quite
interesting to highlight the limits of industrialisation in today’s economic
environment and how this may hamper future growth prospects but more
importantly I feel is to address the possible economic model which may form the
foundation for the workings of the world’s economies.
It is
evident that the growth model which was based on the short sighted vision of maximisation
of profits through the corporate identity as represented by its shareholders
and its executive arm is no longer able to provide the basis for the creation
of wealth in an equitable and collective way. It became progressively more reliant
on the extension of the business cycle both through the furtherance of the globalisation
process and increased merchanting of trade but equally through the enormous
leveraging of corporates and households based on unfounded expectations of
endless growth and fuelled of course by the ever decreasing long term and short
term interest rates with the blessing of the ever supportive central banks. The
resultant inevitable collapse of this house of cards left US households with
negative equity and an inability to drive final demand, sovereigns constrained
by fiscal overextension either in an attempt to keep their economies from
falling over the cliff or because they have been undertaking fiscal austerity
as a precondition for good housekeeping and created record wealth and income
inequality the result of a miscued process of distribution amidst an
unfavourable tax system.
So what has been the catalyst for this current
state of affairs and how could we put an end to this pessimism and the
inability of both fiscal and monetary policy to affect current economic
activity and ultimately growth and employment. Joe Stiglitz has been fervently
pointing out how income & wealth inequality is exacerbating the situation
and how an equitable redistribution process in some form or another can rescue
the economy. I couldn’t agree more but I would suggest that the most efficient
way to do this is to alter the corporate model.
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