"Morality cannot be legislated but behavior can be regulated. Judicial decrees may not change the heart, but they can restrain the heartless.”
Martin Luther King
This is like a bad dream, as though we have learned nothing and are doomed to repeat the worst episodes in history.
When capitalism goes bad and turns predatory, in the latter stages it turns on itself and begins to cannibalize its own customers, suppliers, and eventually self-destructs.
I would take issue with Heiner Fassbeck about slack wages starting in the US with the financial collapse. The history of median wages show a stagnation beginning to set in almost 20 years ago, as well-paying manufacturing jobs were arbitraged to developing countries with lower standards of living, fewer human rights, and less regard for pollution.
Unrestrained globalism inevitably drives all to the lowest common denominator. And if oligarchies with virtual slave labor economies exist, the world will emulate them.
This is the big lie from economics with regard to the necessity of globalism and 'free trade' superior to all other moral claims and considerations.
I have just finished an interview with my friend Ilene of MarketShadows newsletter, and in there I reiterate my forecast for stagnation leading to stagflation. Stagflation is the result of the egregious policy error of not reforming the system that led to the collapse, but rather bending monetary policy to support the unsustainable. And, may I dare add, corruptly so, with an increasing lack of transparency, active perception manipulation, and increasingly audacious acts of deception. The amount of blatant lying being done in this latest Presidential campaign is truly breathtaking. It will get worse.
Japan was caught in a credibility trap for twenty years given their essentially single party government in partnership with the powerful corporate combines or keiretsu. And Japan is still caught up within it although their power is beginning to wane. The primary difference is that Japanese crony capitalism is not so casually brutal to their own people who happen to be unfortunate, although it does manifest in negligent disasters like Fukushima and occasional financial frauds and insider scandals.
The US and Europe are on a similar trajectory. The good news is that there is nothing mathematical or deterministic about a stagflationary outcome. The bad news is that powerful forces are aligned against changing it, and they believe in the principle that history does not judge the victors. So they are quite determined to win.