Nov
7th
Mon
7th
I still don’t see how Europe and even the US and the rest of the OECD are going to be able to meet all their financial obligations to a middle class that cannot in the long run compete with a much larger non OECD middle class in a world of free trade. The reason the OECD middle class cannot compete is simple. Both the OECD and the Non OECD middle classes now have the same level of education, access to global communications, global production systems and global trading platforms. Yet in the OECD we pay our middle class five times what the rest of the world middle class is paid. That situation cannot persist. In the short run it has been masked by OECD governments running big deficits to maintain wage differnetials and entitlements and the top 1% have been able to leverage the outsourcing arbitrage, benefit from automation and post 1980 fiscal policies. They have also engaged in global financial manipulation. In the long run we have a generation of income and wealth realignment to experience between the two middle classes and it will be painful and a negotiation with the top 1% worldwide to cushion the consequences. That is really the underlying problem behind these surface phenomena.
— Geoffrey Henry
