Spring Break
Saving Capitalism from Itself
Qahir Dhanani (OH), Contributing Writer
Issue date: 10/20/08 Section: News
|
The final plenary session of the Centennial Business Summit surfaced ideas that many of the participants were thinking throughout the conference: How will the form of capitalism we all know and love transform in the future, particularly in the face of the market turmoil and government interventions experienced in recent days, weeks, and months?
University Professor and former President of Harvard University, Larry Summers tackled this question head on. While he offered three issues we must consider, namely "the challenge of maintaining stable prosperity and economic growth, the challenge of making sure that that prosperity is widely and legitimately shared, and the challenge of building a global system that works for the citizens of all nations," his message was really one about dealing with the many backlashes that capitalism, and the business leaders who benefit most from it, are likely to face in the future.
The current situation in the economy, Summers submitted, "is unlike anything most of us have ever seen… In the face of such a crisis, there is no substitute for firm, decisive action." Indeed, the current presidential election is a "uniquely important" one in which the choices made will profoundly shape the future.
Regardless of the decisions and choices that the next President makes or the rescue packages that congress has already enacted, we "need a fundamental set of reflections on a financial system." Recounting the crises faced in the last two decades, Summers exclaimed: "20 years. 7 major crises. 1 major crisis every 3 years. I would suggest to you, that that is not good enough." The focus of regulation must therefore shift from the traditional focus on individual institutions to a broader concern for the system as a whole.
As we reflect upon the broader system, we must also reflect upon the winners and losers that the current economic architecture has spawned. Summers elaborated on this by citing three facts.
First, the changes in income distribution since 1979 and today have seen the top one percent gaining about $600 billion and the bottom 80 percent losing about $600 billion. This amounts to a gain of $500 thousand for each person in the top one percent and a loss of $8,000 for each person in the bottom 80 percent. "Think about this number: 600 billion dollars. It is immense compared to any discussion of changing the tax system, any adjustment assistance program."
Be the first to comment on this story