Wednesday 11 March 2015

When is too much really too much? And the overweight of the financial sector in the economy


I think this article that summarizes Cecchetti's main idea that the financial sector may be currently too big for the current economic models is a good read - I really recommend it, especially as the plumbing analogy really helps one to understand the problem.

Monday 2 March 2015

Is the European Left focusing on the right battle?

Over the past few years I have seen a striking silence over one of the biggest changes the world is seeing.

Over the last decade, the weight of Labour in countries' income has been shrinking considerably, while Capital has been gaining steady ground. And this under a complete silence from the educated European Left (not Syriza and Podemos, but the socially educated Left that is the backbone of Europe's social status and welfare state) that prefers to focus on Greece's debts (mainly caused by a poor economic management from the country at micro and macro-economical levels).

This is a global trend, let's be honest. The world global population still grows faster than global GDP, and that drives a Supply surplus on the economy, that tends to be compensated by Labour costs. Not even the fact we currently claim we are in a talent economy disguises it - that is true for a short number of professionals (IT engineers are typically the best example) and countries (niches in South-East Asia, Africa,...), but not for the whole population that fits in Labour extensive production networks.

But the silence that we all hear on this subject is deafening. Instead of renewing its approach to focus on salary gains indexed to productivity gains, the European Left tends to focus on less working hours, high pensions or fixed salaries - that are impossible to bear on the long term. And this puts in an extra weight on the global economy, that depends greatly on the economical power of the masses for Consumption.