Today I learned something from a popular Chinese Economy commentary talk show 石评财金分析, about globalization. He said, globalization has benefit us but also bring in bad consequences. The benefit of course is the international trading that increase the economy pie of the world. The consequences is it has widen the gap between the rich and the poor. This is one of the important reason why the demand is so difficult to pick up after 2008/2009 financial crisis.
In the globalization world, money flow freely. The rich countries flow the money to poorer and developing countries and inflate the all the asset prices. What happen to the majority poorer people in developing country? They do not gain anything. In fact, they feel the pressure getting harder and harder to survive. The rich controls the game and gain from the poor to make them richer, while the poor stay poor and helpless. The only way for the people is to walk down the street to protest, later may be the government will implement protectionism trade policies, and hurt the global economy further.
After 2008/2009 crisis, the demand drop substantially following the burst of bubbles. Governments realized the structural problems of the widening gap between the rich and the poor, but all prefer to inject more money into the economy to save the market. The short term countermeasure although worked, but create numerous of bad consequences, such as the increase of public debt of some European countries, Spain bank's problems because of the country's housing bubbles, inflated asset price and municipal debt bubble in China. However, with all the monetary measures, after more than 3 and a half years, the demand still very weak globally, and the rich and poor gap keep widening.
I think step aside the short term economy gain, it is better to solve the structural problem before the people riot intensify and cause serious violences and spread to all the world.
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