Friday, December 30, 2011

Revolutionary Chaos?

Great read from Sergei Karaganov. Some snips:

Here is where we come to grips with an especially remarkable phenomenon. Social protests and revolts have burst in the grassroots of affluent Western societies, and although the demonstrators calling for the occupation of Wall Street and other places refer to the example of the Arab Spring, the causes of protests in the West are certainly not rooted in tyranny combined with corruption, or in informational semi-openness and semi-famine evidenced in the Arab world.

The root-causes are many but there are two major ones.

First, social inequality has grown unabated across the Western world over the past two to three decades. It was fuelled in many ways by the disappearance of the Communist threat. Overwhelmed by own problems, we, Russians, would whine about inequality in this country and yet it was growing everywhere – and was tolerable until a certain moment, as the downfall of Communism and the consequent vast expansion of the capitalist market made the slices of the pie bigger for everyone.

Second, the situation started changing fast in the last decade, when dozens of millions of jobs shifted to Asia, which was inexpensive, increasingly better educated and ready to work hard. The traditionally consistent increase of wellbeing in Europe stalled and then recoiled.

The West, awash with the euphoria of victory over Communism and the seemingly endless economic growth, which was largely fed by external factors, failed to embark on the necessary structural reforms (Germany and Sweden are rare exceptions). Instead of reforms, the outward prosperity became more and more heavily reliant on borrowings.

So what do we do now? Karaganov offers this boilerplate:

The reforms that are essential for raising competitiveness are painful and difficult to implement, as the authorities have to seek electoral consent from the majority whom these reforms unavoidably hit the hardest.

And he offers this this note of promise:

...the newly emerging world brings not only problems but also huge opportunities. Billions of people in Asia have extricated themselves from half-famine. New markets and spheres for applying one’s intellect, education and labor are appearing every minute… Victory in it will be won by those people and countries that are capable of readjusting themselves in advance.

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