Tuesday, January 17, 2017

Davos 2017

Sergio Ermotti (UBS): "We ought to listen to what people say: The benefits of globalization are clearer to emerging economies than to developed countries"

[excerpt from my new book, written 20 years ago]:
[...] The western world has been losing out in this zero sum game, as it has proven to be after all. The West’s initial enthusiasm with globalization and trade liberalization was based on a false premise: i.e. that its saturated economies and increasing returns to scale industries could only survive if and only if the West could expand the international market for its exports. Unfortunately, this didn’t happen. Instead of producing ‘here’ and exporting ‘there’, Foreign Direct Investment (FDI) started to flow ‘there’, producing ‘there’ and, often, re-importing back ‘here’. Profits of European multinational companies have not been repatriated in a way that would allow us to sustain our welfare systems and way of life, developed over decades with the taxes of our fathers and forefathers. These systems are now being unraveled in the pursuit of the Holy Grail of cost competitiveness, and as a result of a mentality of ‘cheap consumerism’ which, if it does not change, it will be signing the economic death certificate of, at least, Europe... HH