PUTIN EXPLAINS WHY WE NEED NEW ECONOMIC POLICIES
By Moon of Alabama.
February 3, 2021 | EDUCATE!
Above photo: Mikhail Klimentyev / POOL / TASS.
This Is Why They Attack Him.
The President of Russia Vladimir Putin has given a great speech to the Davos
2021 online forum organized by the World Economic Forum. As usual it created
little echo in the 'western' media.
Putin sees a new danger of large international conflicts. Economic
imbalances have caused socio-political problems in many countries which,
when externalized, can lead to international conflicts.
To solve this one has to reject the laissez faire doctrines that caused the
economic imbalances. The nation states must intervene more in their
economies. The people must be seen as the ends, not the means of such
economic policy. There must be more international cooperation through global
organizations to enable this everywhere.
There is more in the speech than that. But the above is the core idea. U.S.
neo-liberalism will of course reject such a program.
Following are excerpts that reflect on the above points.
The big picture view points to great danger:
The pandemic has exacerbated the problems and imbalances that built up in
the world before. There is every reason to believe that differences are
likely to grow stronger. These trends may appear practically in all
areas.Needless to say, there are no direct parallels in history. However,
some experts - and I respect their opinion - compare the current situation
to the 1930s. One can agree or disagree, but certain analogies are still
suggested by many parameters, including the comprehensive, systemic nature
of the challenges and potential threats.
We are seeing a crisis of the previous models and instruments of economic
development. Social stratification is growing stronger both globally and in
individual countries. We have spoken about this before as well. But this, in
turn, is causing today a sharp polarisation of public views, provoking the
growth of populism, right- and left-wing radicalism and other extremes, and
the exacerbation of domestic political processes including in the leading
countries.
All this is inevitably affecting the nature of international relations and
is not making them more stable or predictable. International institutions
are becoming weaker, regional conflicts are emerging one after another, and
the system of global security is deteriorating.
Klaus [Schwab] has mentioned the conversation I had yesterday with the US
President on extending the New START. This is, without a doubt, a step in
the right direction. Nevertheless, the differences are leading to a downward
spiral. As you are aware, the inability and unwillingness to find
substantive solutions to problems like this in the 20th century led to the
WWII catastrophe.
Putin then goes into the details of the above theses.
What caused the current economic imbalances?
These imbalances in global socioeconomic development are a direct result of
the policy pursued in the 1980s, which was often vulgar or dogmatic. This
policy rested on the so-called Washington Consensus with its unwritten
rules, when the priority was given to the economic growth based on a private
debt in conditions of deregulation and low taxes on the wealthy and the
corporations.As I have already mentioned, the coronavirus pandemic has only
exacerbated these problems. In the last year, the global economy sustained
its biggest decline since WWII. By July, the labour market had lost almost
500 million jobs. Yes, half of them were restored by the end of the year but
still almost 250 million jobs were lost. This is a big and very alarming
figure. In the first nine months of the past year alone, the losses of
earnings amounted to $3.5 trillion. This figure is going up and, hence,
social tension is on the rise.
At the same time, post-crisis recovery is not simple at all. If some 20 or
30 years ago, we would have solved the problem through stimulating
macroeconomic policies (incidentally, this is still being done), today such
mechanisms have reached their limits and are no longer effective. This
resource has outlived its usefulness. This is not an unsubstantiated
personal conclusion.
According to the IMF, the aggregate sovereign and private debt level has
approached 200 percent of global GDP, and has even exceeded 300 percent of
national GDP in some countries. At the same time, interest rates in
developed market economies are kept at almost zero and are at a historic low
in emerging market economies.
Taken together, this makes economic stimulation with traditional methods,
through an increase in private loans virtually impossible. The so-called
quantitative easing is only increasing the bubble of the value of financial
assets and deepening the social divide. The widening gap between the real
and virtual economies (incidentally, representatives of the real economy
sector from many countries have told me about this on numerous occasions,
and I believe that the business representatives attending this meeting will
agree with me) presents a very real threat and is fraught with serious and
unpredictable shocks.
The economic imbalances create deep socio-political problems:
In this context, I would like to mention the second fundamental challenge of
the forthcoming decade - the socio-political one. The rise of economic
problems and inequality is splitting society, triggering social, racial and
ethnic intolerance. Indicatively, these tensions are bursting out even in
the countries with seemingly civil and democratic institutions that are
designed to alleviate and stop such phenomena and excesses.The systemic
socioeconomic problems are evoking such social discontent that they require
special attention and real solutions. The dangerous illusion that they may
be ignored or pushed into the corner is fraught with serious consequences.
In this case, society will still be divided politically and socially. This
is bound to happen because people are dissatisfied not by some abstract
issues but by real problems that concern everyone regardless of the
political views that people have or think they have. Meanwhile, real
problems evoke discontent.
The danger rises when the socio-political problems get externalized:
And finally, the third challenge, or rather, a clear threat that we may well
run into in the coming decade is the further exacerbation of many
international problems. After all, unresolved and mounting internal
socioeconomic problems may push people to look for someone to blame for all
their troubles and to redirect their irritation and discontent. We can
already see this. We feel that the degree of foreign policy propaganda
rhetoric is growing.We can expect the nature of practical actions to also
become more aggressive, including pressure on the countries that do not
agree with a role of obedient controlled satellites, use of trade barriers,
illegitimate sanctions and restrictions in the financial, technological and
cyber spheres.
Such a game with no rules critically increases the risk of unilateral use of
military force. The use of force under a far-fetched pretext is what this
danger is all about. This multiplies the likelihood of new hot spots flaring
up on our planet. This concerns us.
What can be done to prevent the danger which arises from socio-political
problems caused by imbalanced economies?
Clearly, with the above restrictions and macroeconomic policy in mind,
economic growth will largely rely on fiscal incentives with state budgets
and central banks playing the key role.Actually, we can see these kinds of
trends in the developed countries and also in some developing economies as
well. An increasing role of the state in the socioeconomic sphere at the
national level obviously implies greater responsibility and close interstate
interaction when it comes to issues on the global agenda.
.
It is clear that the world cannot continue creating an economy that will
only benefit a million people, or even the golden billion. This is a
destructive precept. This model is unbalanced by default. The recent
developments, including migration crises, have reaffirmed this once again.
We must now proceed from stating facts to action, investing our efforts and
resources into reducing social inequality in individual countries and into
gradually balancing the economic development standards of different
countries and regions in the world. This would put an end to migration
crises.
The essence and focus of this policy aimed at ensuring sustainable and
harmonious development are clear. They imply the creation of new
opportunities for everyone, conditions under which everyone will be able to
develop and realise their potential regardless of where they were born and
are living.
Here Putin sets the goals for national strategies:
I would like to point out four key priorities, as I see them. This might be
old news, but since Klaus has allowed me to present Russia's position, my
position, I will certainly do so.First, everyone must have comfortable
living conditions, including housing and affordable transport, energy and
public utility infrastructure. Plus environmental welfare, something that
must not be overlooked.
Second, everyone must be sure that they will have a job that can ensure
sustainable growth of income and, hence, decent standards of living.
Everyone must have access to an effective system of lifelong education,
which is absolutely indispensable now and which will allow people to
develop, make a career and receive a decent pension and social benefits upon
retirement.
Third, people must be confident that they will receive high-quality and
effective medical care whenever necessary, and that the national healthcare
system will guarantee access to modern medical services.
Fourth, regardless of the family income, children must be able to receive a
decent education and realise their potential. Every child has potential.
This is the only way to guarantee the cost-effective development of the
modern economy, in which people are perceived as the end, rather than the
means. Only those countries capable of attaining progress in at least these
four areas will facilitate their own sustainable and all-inclusive
development. These areas are not exhaustive, and I have just mentioned the
main aspects.
A strategy, also being implemented by my country, hinges on precisely these
approaches.
What should be done globally:
We are open to the broadest international cooperation, while achieving our
national goals, and we are confident that cooperation on matters of the
global socioeconomic agenda would have a positive influence on the overall
atmosphere in global affairs, and that interdependence in addressing acute
current problems would also increase mutual trust which is particularly
important and particularly topical today.Obviously, the era linked with
attempts to build a centralised and unipolar world order has ended. To be
honest, this era did not even begin. A mere attempt was made in this
direction, but this, too, is now history. The essence of this monopoly ran
counter to our civilisation's cultural and historical diversity.
The reality is such that really different development centres with their
distinctive models, political systems and public institutions have taken
shape in the world. Today, it is very important to create mechanisms for
harmonising their interests to prevent the diversity and natural competition
of the development poles from triggering anarchy and a series of protracted
conflicts.
To achieve this we must, in part, consolidate and develop universal
institutions that bear special responsibility for ensuring stability and
security in the world and for formulating and defining the rules of conduct
both in the global economy and trade.
It is no wonder that the neo-liberal 'west' constantly attacks Putin and at
the same time takes care that his speech gets as little attention as
possible. It is dangerous because it could give the deplorables some ideas.
It is also sad that no 'western' politician I am aware of would ever give
such a speech.