![]() In countries like the United States, borrowing seemed to allow ordinary people to share in the rising prosperity. Inequality may have actually stoked this unsustainable model. A runaway financial sector took risk to new heights, making sure that the inevitable fall was especially hard. But the illusion of stability was forever shattered by the wild ride of the global financial crisis. ![]() Growth was driven by too much borrowing in some countries, made possible by too much saving in others. Ominously, inequality in the United States was back at its pre-Great Depression levels on the eve of the crisis.įundamentally, the growth model that co-existed with globalization was unbalanced and unsustainable. In too many countries, inequality increased and real wages stagnated-failing to keep up with productivity-over the past few decades. More unequal countries have worse social indicators, a poorer human development record, and higher degrees of economic insecurity and anxiety. An inequitable distribution of wealth can wear down the social fabric. Lurking behind it was a large and growing chasm between rich and poor-especially within countries. New economic powers have arisen, forever shifting the balance of economic power.īut globalization also had a dark side. A spirit of openness has broken down walls all over the world, allowing for the sharing of information and technology across borders and between people on a scale never before seen in human history. It has helped hundreds of millions of people break the bonds of poverty. Globalization has certainly delivered a lot. In today’s world, these problems are magnified under the lens of globalization. ![]() Adam Smith-one of the founders of modern economics-recognized clearly that a poor distribution of wealth could undermine the free market system, noting that: “The disposition to admire, and almost to worship, the rich and the powerful and…neglect persons of poor and mean condition…is the great and most universal cause of the corruption of our moral sentiments.” This link is too often neglected, but it is an old idea. It is a great pleasure to be here today, to talk about this all-important topic of human welfare and economic stability. NovemBy Dominique Strauss-Kahn, Managing Director, International Monetary Fund Human Development and Wealth Distribution, By Dominique Strauss-Kahn, Managing Director, International Monetary Fund ![]()
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