UPDATE: Nouriel weighed in on Twitter to say that this is a hyperbolized summary of his thinking and provided a link to his original article, which is on Project Syndicate. The article is entitled “Is Capitalism Doomed?”.
PREVIOUSLY: NYU Professor Nouriel Roubini has moved beyond predicting catastrophic economic downturns. Now, he’s saying that capitalism itself is threatened.
He also thinks the uprisings that have roiled countries from Asia to the Middle East to Europe will soon spread.
“Recent popular demonstrations, from the Middle East to Israel to the UK, and rising popular anger in China—and soon enough in other advanced economies and emerging markets—are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness… Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities.”
Roubini went on to say that capitalism is undergoing a crisis that Karl Marx predicted a century ago, driven by an ongoing transfer of wealth and power from labour to capital (in other words, from poor and middle-class people to rich people.)
Roubini thinks the answer is:
- More stimulus in the form of infrastructure investment
- Increased taxes on rich people
- Debt reduction
- More regulation of the financial system
- Central bank guarantees
- Breaking up big banks that are “too big to fail”
He observes that this would mean transforming both the U.S./UK “laissez-faire” economies AND the welfare states of central Europe, both of which he says are broken.
Roubini was quoted in Israel’s Globes newspaper. The paper does not say where or when he made the comments.
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