The world economy isn’t doing very well. Free trade and expanded markets have not delivered the wealth and progress promised by the experts. We survived the “Great Recession,” and a few sectors of our society have even done quite well since then. However, most of us are worse off, not better. Dissatisfaction with the current situation is reflected in the support that millions have given to “outsider” presidential candidates Bernie Sanders and Donald Trump.
Most of the world is still mired in slow or “no-growth” circumstances. Unemployment in most nations is still at very high levels. Youth unemployment levels around the world routinely run in excess of 25%. The “middle class” is declining in numbers, percentages and wealth, year by year. At the same time wealth inequality is increasing to unprecedented levels. In 2001 the top 1% of Americans held 10% of the nation’s wealth. Today the top .01% holds 10% of the nation’s wealth, while the top 1% holds more than 20%. Our government and economic system are failing the majority of Americans. That is fueling frustration, anger and hopelessness.
As a loyal and patriotic American I am deeply troubled by this situation. I look back at the first decade of the twenty-first century and see a banking system that was out of control. The reckless and irresponsible financial markets nearly destroyed America. The “Great Recession” happened during a Republican presidential administration. To help get past the consequences of that recession the Federal Reserve Bank took unprecedented steps to jump-start the economy. Ironically, the programs that were intended to eliminate the “too big to fail” banks has resulted in the creation of bigger and bigger banks. To bolster the economies of major industrialized nations, their central banks including the Federal Reserve, Bank of England, and European Central Bank, have intervened in economic affairs with innovative, untested and experimental tools and policies. Most economists think that such intervention was necessary and appropriate.
A Democratic presidential administration took office in 2009, and it pursued different policies, that have created different, but equally troubling results. While the Obama Administration has publicly declared its intention to help the poor of America, it has pursued policies that have only exacerbated the wealth inequality. The Federal Reserve’s “Quantitative Easing” (“QE”)programs have flooded the financial markets and banking system with trillions of dollars of liquidity. As a result the stock markets have been booming. Unfortunately those same economic policies have caused the general economy to stagnate. Numerous articles and speeches have identified the QE programs as the main culprits in the concentration of wealth. Paradoxically our first African-American President has presided over our economy during a period that has hurt the African-American community more than any other since the nineteenth century.
There is more than enough blame to go around. Both the Republicans and Democrats have failed the American people, especially minorities, the poor and the middle class. It is almost criminal that “Wall Street” is prospering while “Main Street” is languishing. My reading and research indicate that many economists agree on what needs to be done to promote sound across the board economic growth in America and around the world. Unfortunately, the leadership of both parties are unable or unwilling to go against the special interest groups that pay for their expensive media campaigns.
I recently read a fascinating, but troubling book, entitled “The Only Game in Town” by Mohamed A. El-Erian. He is a well-respected financial adviser who chairs President Obama’s “Global Development Council” and serves as chief economic adviser at Allianz, the corporate parent of PIMCO. He believes the world economy is at a crossroads. There is still time for us to correct the current problems. However, there is no guarantee that our leaders have the backbone to make the necessary hard choices. We need to understand these challenges. This November’s election could be critical to our nation’s future.