Thursday, November 16, 2017

Countries and Governments should invest in People also

BI: Hard Brexit?

Roubini: At the beginning, the Brexit was to lead to the EU disintegrating. The same was thought after Donald Trump became the US President. In my opinion, the contrary happened. Because of the Brexit, you finally started to talk about joint actions against terrorism; such issues as joint defense, additional spending on infrastructure have emerged. Also, I can’t see the domino effect – the worries that other countries will follow the UK example.

BI: And aren’t you afraid of the rising protectionism? Look at Donald Trump’s words about the US leaving the NAFTA, freeze on the TTIP talks, accusing China of currency manipulations?   

Roubini: These are truly serious threats. Some people see the free trade as a reason of unequal distribution of goods. In other words, some companies lose their income, some people lose their jobs, and protectionism is seen as a good solution to these problems. So, the US moves toward the increased protectionism, but we don’t know what shape it will take – hard or soft. The issue is still open.

BI: Do you think it’s a right way?

Roubini: No, I don’t. At the end of the day, protectionism always leads to higher prices for goods in the particular country, hits a consumer and does little to protect jobs or companies. 

In my opinion, in the future new technologies rather than free trade or migration will be a much more disruptive factor causing chaos in the labor market. I support free trade, but it should be beneficial for everybody, the whole society. If there are people who lost their jobs due to lowering of the trade barriers, they should get appropriate support and help; they should change the sector, implement new technologies. In other words, we should invest in people. You can’t just give them a job for some six months and then forget about them. This way, they will feel abandoned, neglected, rejected by globalization.

BI: Now you sound like the International Monetary Fund’s representatives. This year the organization sent a very clear message – it’s necessary to fight income inequalities because they destroy our potential and threaten the economic growth.

Roubini: Because that’s true. It’s high time to state it clearly and loudly – over last years the role of trade unions decreased, the companies went through all kinds of restructuring. Our world has changed. But this is a dangerous road. We have to invest in the social capital, in education. We have to give people strength and the feeling they are able to change something. There are countries without natural resources, like Japan, Singapore, Hong Kong. Why have they succeeded? Because they have invested in their people. This is the key to success. It’s not only about roads, infrastructure, and physical assets. No. First of all, one has to invest in people.