The economy, if you hadn't noticed, is slowing -- and not just in the U.S. China and India, two of the world's major economic engines in recent years, are slowing dramatically. Other emerging markets are in trouble. Some blame property bubbles and corruption in China and India; others blame the impending end of the Fed's easy money; others think the trouble started with austerity in Europe; others blame global finance, still prone to speculative excesses; others, point to the quagmire of the Middle East.
But I want to suggest a more basic problem:
Inadequate global demand for all the goods and services the world economy is now capable of creating.
A technological revolution has increased productivity while also displacing millions of workers in developed nations, whose jobs have disappeared or whose wages have stagnated and declined.
Their incomes are dropping. (The median household income in the U.S. is now 4.4 percent below what it was at the start of the so-called recovery.)
Meanwhile, inequality is widening all over the world, as global elites amass fortunes but poor populations continue to grow. (The much-vaunted global middle class hasn't turned out to be as large or as important a source of demand as was predicted.) And governments are unwilling or unable to pick up the slack.
The result: growing unemployment, especially among the young, tipsy stock and bond markets, and economic fragility. The United States -- the world's largest economy -- exemplifies all of this. If the fall brings a government shutdown and a too-abrupt end to the Fed's bond-buying, we're all in deep trouble.
--Robert Reich, American political economist, professor, author, and political commentator
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