Debt and Unemployment: Is Global Capitalism Responsible? – Part I
Politicians propose reforms but it’s the global market that disposes
Jeffrey E. Garten / Yale School of Management
YaleGlobal , 23 April 2010
Global capital markets have been footloose and fancy free since the 1980s, boosted by rapid globalization in transportation, communication and technology industries. Prowling for profits, investors leap boundaries in an instant, manipulating growth, jobs and industries. In this series, two economists explore global capitalism’s growing reach that defies even the world’s greatest economic power. In the first article, management professor Jeffrey E.Garten argues that the Obama administration’s attempt to reform the financial system misses an essential ingredient – global structure and cooperation. Markets wield more influence than politicians do, acting as arbiters that evaluate every public policy move. Any nation with heavy debt, including the US, is vulnerable, because foreign investors could refuse to lend funds, hiking interest rates and forcing reduced expenditures in services. Some lenders chase short-term profits, while others are wary of excess, demanding sustainable programs. Lacking global tools, nations can only tinker with reform. – YaleGlobal
Debt and Unemployment: Is Global Capitalism Responsible? – Part II
Lingering high joblessness in US threatens global prosperity
David Dapice / Tufts & Harvard University
YaleGlobal , 26 April 2010
In declaring an end to recession, economists fall into two camps: One side, including economists with the Obama administration, maintains high rates of unemployment are cyclical and jobs will return soon; others contend that the US economy confronts fundamental restructuring, with massive unemployment lingering for years. This two-part YaleGlobal series examines economic debates over debt and unemployment. Long-term unemployment is alarming, notes economist David Dapice in the second article, with record numbers of Americans out of work for 27 weeks or more. Long-term domestic and foreign trends contributed to unemployment – foreign trade, outsourcing, technology replacing workers, as well excess capacity in real estate and financial industries. Whether long-term unemployment is temporary or lasting, US leaders must reduce deficits and spend wisely. Lingering US joblessness would require many families to adjust to a one-income way of life and means global producers cannot depend on US consumers as an engine of growth. – YaleGlobal
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