Governments are reeling. Companies are foundering. People are worrying. The global market economy is stressed to levels not seen in a long time. Des Dearlove has been asking people if the world’s economy is broken. He quickly discovered that it’s not a yes-or-no question.
If one listens to the pundits, experts and international organizations – all the people who deal with the issues surrounding the global market economy – it becomes clear that there is widespread disagreement as to whether the global market economy is broken.
While many see it as very troubled and in need of various types of change for survival, others think it has merely faced a severe downturn but is already on the road to recovery. The reality is that, for almost a decade, the global economy was booming, marked by high growth and such high speed that it was all too easy to ignore the very weak foundations on which it was based. From a purely British perspective, just consider the stark contrast between two commentaries.
First, read Diane Coyle, Economics Editor of The Independent on 20 January 2000:
The British economy is enjoying its longest expansion on record with unemployment falling to a 20-year low, official figures showed yesterday.
As the recovery approached seven and a half years, the headline jobless rate fell to 4 per cent in December. This was the lowest since January 1980 and the first time since that unemployment in Britain has fallen below the US rate.
Now, compare these words in The Observer on 25 January 2009:
“Last week brought dire economic news as Britain officially went into recession, shares were pummelled and banks were bailed out – again.” Martin Wolf, Economics Editor for the Financial Times, commented in June of this year that “virtually no one expected the change we have seen, the deepest recession since the 1930s.”
One can find similar sentiments in newspapers worldwide. Sum them up and a consensus emerges: the global economy is, to a great extent, a mess. Ian Davis, Global Managing Director for McKinsey and Company, recently acknowledged that the world remains in a state of crisis, even if it has (so far) avoided meltdown. “The system is not broken, at least not yet. I see this is as a crisis in the global economy, not a crisis of the global financial economy. There is tremendous stress, but it is not a breakdown.” Whether the global economy is broken – and the general response is that it’s sure not healthy – it’s going to take collective vision, leadership and multilateral efforts to ensure the survival of a long-term, prosperous recovery. And, as Davis notes, there’s a new twist: “Inevitably government will be more of a player.” (FT’s Wolf reports that governments have pumped more than $9 trillion into the global economy already.)
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