WHAT I WROTE FOR AN ARTICLE IN 2011 STANDS GOOD EVEN TODAY
Capitalism is
floundering
By
Balbir K Punj
Editorial
The Pioneer
Monday, August 15, 2011
Editorial
The Pioneer
Monday, August 15, 2011
Despite
reposing its faith in unbridled capitalism, the US is now
facing major financial turmoil. Across the Atlantic, the situation is
no better in Eurozone.
facing major financial turmoil. Across the Atlantic, the situation is
no better in Eurozone.
The
global stock markets are in a tizzy and the world seems to be
heading for another depression. Standard & Poor's has downgraded its
long-term credit outlook on sovereign US debt to ‘AA+' from ‘AAA' and
the flames of anarchy, fuelled by economic discontent and disparity,
have ravaged London and several other cities in England. In short,
capitalism, touted as the ultimate answer to all economic problems,
is under siege.
heading for another depression. Standard & Poor's has downgraded its
long-term credit outlook on sovereign US debt to ‘AA+' from ‘AAA' and
the flames of anarchy, fuelled by economic discontent and disparity,
have ravaged London and several other cities in England. In short,
capitalism, touted as the ultimate answer to all economic problems,
is under siege.
In the early-1990s communism
collapsed in the land of its most
significant and powerful flowering, the then Soviet Union. It went
without even a whimper. Capitalism or free enterprise and a certain
form of democracy was back in Russia with a vengeance, spawning
billionaires within a few years. It also bred corruption on a massive
scale -- one such billionaire is in jail. Communist economy remains
only in peripheral countries like North Korea and Cuba. China has a
capitalist economy under a Communist dictatorship. That's a
contradiction in terms, but it is working for now.
significant and powerful flowering, the then Soviet Union. It went
without even a whimper. Capitalism or free enterprise and a certain
form of democracy was back in Russia with a vengeance, spawning
billionaires within a few years. It also bred corruption on a massive
scale -- one such billionaire is in jail. Communist economy remains
only in peripheral countries like North Korea and Cuba. China has a
capitalist economy under a Communist dictatorship. That's a
contradiction in terms, but it is working for now.
My comments : Do not bother
about western labels of capitalism or communism .Do what is good for you and
what works for your economic growth both in the short term and in the long
run.
Twenty
years after the fall of communism, it seems to be the turn of
capitalism to flounder. The USA, an icon of capitalism so far, has a
national debt that is 101 per cent of its enormous GDP of $ 14
trillion. Even before the American system began floundering, the
Eurozone, heralded with great fanfare in the 1990s, began slipping
deeper into debt with Greece, Spain, Ireland, Portugal and even Italy
virtually running out of money.
capitalism to flounder. The USA, an icon of capitalism so far, has a
national debt that is 101 per cent of its enormous GDP of $ 14
trillion. Even before the American system began floundering, the
Eurozone, heralded with great fanfare in the 1990s, began slipping
deeper into debt with Greece, Spain, Ireland, Portugal and even Italy
virtually running out of money.
Greece and Ireland have debts
amounting to 157 and 129 per cent of
their respective GDP. Japan has the highest debt at 213 per cent of
its GDP. But despite its economic stagnation, Japan has an economy
with inherent strength. The core factor is that Greece, Ireland and
other Eurozone countries have a currency that allows their people a
living standard far higher than they can afford. Hence the huge debt
of these countries. When it's time for the Governments of these
countries to pay the bills, they try to squeeze the people and impose
their respective GDP. Japan has the highest debt at 213 per cent of
its GDP. But despite its economic stagnation, Japan has an economy
with inherent strength. The core factor is that Greece, Ireland and
other Eurozone countries have a currency that allows their people a
living standard far higher than they can afford. Hence the huge debt
of these countries. When it's time for the Governments of these
countries to pay the bills, they try to squeeze the people and impose
[My comments : Inherent
strength is a must that is there in India,China ,Japan, Germany and Brazil]
spending cuts. People resent these measures, which in turn leads to
economic and political crises that feed on each other.
China is the only country in
the world with a huge credit running
into $2 trillion, most of it invested in US treasury bonds. China is
a communist dictatorship and can impose low wages on its workers and
flood the market with cheap goods. The US opted for low priced
Chinese goods and ignored the damage to its domestic industry and the
consequent loss of jobs. China went on supplying the US with low
priced goods and the latter went on buying them, running up a huge
trade deficit of as much as $400 billion at one time. As the US's
debt grew, so did China's surplus. [
into $2 trillion, most of it invested in US treasury bonds. China is
a communist dictatorship and can impose low wages on its workers and
flood the market with cheap goods. The US opted for low priced
Chinese goods and ignored the damage to its domestic industry and the
consequent loss of jobs. China went on supplying the US with low
priced goods and the latter went on buying them, running up a huge
trade deficit of as much as $400 billion at one time. As the US's
debt grew, so did China's surplus. [
My comments : While you were busy meddling in other
countries militarily and entertaining the citizens with war games China
cleverly waged a economic game where by they have deservedly usurped the super
power status, India too could have done much earlier if only its rulers had
economic development and national interest at heart but they were busy with
party politics and irrelevant issues that has been the difference, but this
very difference itself can be a blessing in disguise as well because in China the whole economic development is because of
the government ,if anything happens to
the strongly controlled structure of communist government then the economy will
go haywire whereas in
India the whole economic development is despite the government it is people driven economy ,so it may not get
affected by any political change
The
US, with its $14 trillion dollar economy and a national debt of
one per cent more than its GDP, was able to hold on despite its
Government running up huge Budget deficits for 30 years. In fiscal
2010, the Budget deficit climbed further skywards. But the Americans
could afford to ignore their creditors, knowing well that they would
not bother the US as it had huge technological, manufacturing and
services sectors that churned out goods and services of high order.
one per cent more than its GDP, was able to hold on despite its
Government running up huge Budget deficits for 30 years. In fiscal
2010, the Budget deficit climbed further skywards. But the Americans
could afford to ignore their creditors, knowing well that they would
not bother the US as it had huge technological, manufacturing and
services sectors that churned out goods and services of high order.
However,
the US's economic crisis, building up over the years,
reached a point of no return recently. A Democratic President
committed to an expanded medicare and creation of 20 million jobs
over 10 years was up against a Republican-controlled Congress which
was none too pleased with the Administration for jobs not growing,
the economy crawling and Budget deficits yawning. The President was
forced to strike a compromise deal. Under pressure from the Congress,
Mr Barack Obama has agreed to cut deficit by $2.2 trillion over 10
years, reduce taxes and cut public expenditure.
reached a point of no return recently. A Democratic President
committed to an expanded medicare and creation of 20 million jobs
over 10 years was up against a Republican-controlled Congress which
was none too pleased with the Administration for jobs not growing,
the economy crawling and Budget deficits yawning. The President was
forced to strike a compromise deal. Under pressure from the Congress,
Mr Barack Obama has agreed to cut deficit by $2.2 trillion over 10
years, reduce taxes and cut public expenditure.
The compromise has shattered
the global trust in the American
economy. The world now realises that the US spends more than it
earns; worse, the world also realises that the US Administration is
becoming increasingly dysfunctional
economy. The world now realises that the US spends more than it
earns; worse, the world also realises that the US Administration is
becoming increasingly dysfunctional
with a strong-willed
Democratic
President and a confused Congress insisting that taxes should be
reduced and people allowed to spend more in order to create new jobs.
However, higher spending by consumers has not resulted in the
creation of new jobs since manufacturers have opted for non-labour
intensive technologies.
President and a confused Congress insisting that taxes should be
reduced and people allowed to spend more in order to create new jobs.
However, higher spending by consumers has not resulted in the
creation of new jobs since manufacturers have opted for non-labour
intensive technologies.
[My comments : How can you change
all of a sudden a society where the majority of people are used to only
bullying , buying and only consuming without contributing either through brain
or sweat
Nobel
Prize winning economist Andrew Michael Spence has neatly summed
up the situation: "Growth and employment are set to diverge." And
there are bound to be logical consequences of such an economic
paradigm. The Adam Smith school of economics has reduced human beings
to just economic units -- families have become irrelevant and society
has been replaced by market.
up the situation: "Growth and employment are set to diverge." And
there are bound to be logical consequences of such an economic
paradigm. The Adam Smith school of economics has reduced human beings
to just economic units -- families have become irrelevant and society
has been replaced by market.
It is now just a two-tier society. Social
structures which had
evolved over centuries have been relegated to the background by
market. The concept of what's right and wrong has been replaced by
what's legal and illegal. The consumerist culture, an integral part
of the profit-driven market, whets the appetite for consumer products
made alluring by advertising. This sets in a chain reaction, some
times with ugly results, as we have seen in recent days in England.
evolved over centuries have been relegated to the background by
market. The concept of what's right and wrong has been replaced by
what's legal and illegal. The consumerist culture, an integral part
of the profit-driven market, whets the appetite for consumer products
made alluring by advertising. This sets in a chain reaction, some
times with ugly results, as we have seen in recent days in England.
[My comments both Britain and USA
have inherited not only poor culture promoted by bossy insolence but also the
wrath of others across the world because of their exporting bad culture,
military messing around and sponsoring missionary mania..
The
failure of communism should not be construed as the success of
the West's capitalist model as we know it.
the West's capitalist model as we know it.
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