Friday, September 30, 2016

El-Erian on Our Economic Malise

"The longer the economic malaise endures, the greater the influence of anger politics," so said Mohamed El-Erian, former head of bond giant PIMCO.

Here's a quote from El-Erian, who is a big government lefty by the way:

"Such disappointing economics acts as fuel for political polarization and dysfunction.  It feeds mistrust about 'expert opinion' and, when combined with the worsening inequality of income, wealth and opportunity, accentuates suspicion of the ruling elites and the establishment...."

The strong economic growth of earlier generations provided opportunity and hope for the average citizen.  That is over.  Now the move to slice up a pie that no longer grows inevitably leads to social discord and political craziness.  These trends will accelerate.

El-Erian, of course, is mainly disappointed that the so-called 'experts' and 'ruling elites' like himself are not getting their way in their advocacy of increasing the size and scope of government. 

The El-Erian/Clinton path leads to what I call the "new feudalism" -- rule by a small elite with limited scope for free markets and free enterprises.  The lower orders will be kept in check by political promises, doles, and the heavy hand of political repression.  This is the dream of El-Erian.

A different path would be to return to free markets.  There would be some instability from time to time, no doubt, but the average citizen would welcome the return of the doubling of their income and wealth that occurred every fourteen years before the big government gang took over and put an end to western prosperity.

The whole point of capitalism is that you don't need 'experts' and 'ruling elites' like El-Erian.  The simple actions of average citizens in an effort to improve their lot provide all the necessary energy to fuel a system of constantly rising living standards and improved opportunity for the least advantaged among us.  El-Erian is not too hip to this idea, but he recognizes the true source of today's social and political unrest -- the end of economic growth in the developed world.




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