Today we are still toiling to survive after a financial crisis. There have been many analyses and suggested solutions, but I believe most of them are based on outdated notions and are not sophisticated enough to really deal with the current reality. Daniel Alpert opened my eyes to see the world in a different way, although the facts he uncovers are known to many.
Daniel Alpert has identified oversupply of labour and capital as the key ingredients of our current dilemma. Never before have we had developing nations as creditors to so called developed nations. One of the key causes is that huge companies in developed nations have increasingly been able to use cheap labour to produce their goods. Developing nations such as China, India and Indonesia find themselves with more money than ever and still maintain a high savings rate.
The Keynes prescription for a lack of business activity and high unemployment is for the government to step in to help generate consumption. A current problem is that if American (or Canadian) workers have money to spend much of it will go to foreign countries. China and others are developing huge surpluses that end up being borrowed by developed nations. This translates to cheap borrowing, lower wages and low inflation.
The conservative ideology on one hand preaches austerity and the liberals tend to favour pumping more money into workers hands. In the United States extremist conservatives think the problem comes from the government being far too involved in the economy. The author points out that in the past many government actions around the world have resulted in the economy moving forward for the benefit of all. This crisis requires governments to co-ordinate around the globe for their long term mutual benefit. It would be easy to over simplify his solutions, but most of them seem like common sense once you accept his basic premise.
Old ideologies aren't working and the pressures will make it more difficult. Those who feel markets will work to rectify the situation might be partially right, but there are a few problems. It will take too long and incur much suffering, some of which could lead to a revolution. Daniel Alpert has one of the best explanations I have encountered. Get more information at http://www.economonitor.com/danalperts2cents/
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