Yesterday (3/12/2011) I have posted in the blog some extracts from the report of the United Nations on “World Economic Situation and Prospects 2012”. As per this report, USA and European countries and Japan (developed countries) are in no growth or low growth stage and there may be another economic recession soon. The Governments in Europe are facing debt crisis and unable to serve their debts. In USA the Government debt reached equal to the GDP (Gross Domestic Product) and it is still not dangerous. The unemployment is severe in USA and European countries. This situation has affected the developing countries like China, India etc and their growth rate also is slowing down.
In the name of coming out of the “debt crisis” of the Governments, the Governments in Europe are resorting to austerity measures i.e reducing Governemnt jobs, reducing salaries of Government employees, pension cuts, cuts in other social security benefits and other benefits of the people. In the USA also, where the debt of the Government is not as serious as in Europe, the Government is implementing austerity measures. As a result of this situation of severe unemployment coupled with cuts in the existing benefits, there is severe unrest in these countries resulting in several strikes and struggles.
The United Nations, in its above cited report suggested the following measures to avoid another recession and to come out of this situation of no growth or low growth:
a) Governments not in serious debt crisis should take more debt and use it for infrastructure development and employment creation.
b) Governments should avoid austerity measures like wage cut, pension cut, cuts in social security benefits etc since it will lead to further reduction in the demand thereby creating recession.
c) An international mechanism has to be created for helping the countries facing serious debt crisis and also to stabilise the finances.
This is a good proposal. But it is not likely to be implemented by the Governments of USA or Europe. It is because these Goveernments are controlled by the financial capital which is not interested in the growth of the economy, but only interested in getting quick profits in share market gambling and other unproductive activities. In fact the debt crisis of the Governmeents in USA and European countries is only due to the gambling of this financial capital. In the housing loan gambling in USA, and other countries these financial institutions became bankrupt and the Governments were compelled to bail out them by paying astronomical sums to them from their budgets. These bail out packages coupled with the expenditures incurred on welfare measures to the people resulted in the debt crisis for the Governments.
To come out of this situation, it is necessary either to cut back the bail out given to the big private financial institutes or to cut the expenditure on welfare measures. For the financial capital dominating the Governments, crisis means the crisis to them only and solving the crisis means continuing the bailout to them. Hence it compels the Governments to cut the welfare benefits of the people to reduce the Governments’ debt burden. The finance capital insists the Governments to implement fiscal responsibility by cutting the welfare of the people. But for the working people, crisis means unemployment, cuts in salaries, pensions and welfare measures. Therefore to solve the crisis of the finance capital, Governments in USA and Europe are resorting to create crisis for the people.
The UPA Government in India, in the name of second generation reforms, is going ahead to create the same crisis for the people of India. It wants to provide more and more opportunities to this bankrupt international financial capital in various sectors in India. Opening retail sector for FDI, efforts for increasing FDI in various sectors etc are part of these reforms. Because of its dependence on Left Parties, the UPA-I Government could not implement such reforms in a considerable manner. The UPA-II Government is not depending on Left Parties and hence it is now going on full steam to implement the reforms favouring international finance capital at the cost of the people of India. The strengthening of the links of India with this international financial capital will lead to similar recession and slow growth as happening in USA and Europe and will result in untold miseries to the people.
Therefore it is necessary for the working class and the people in USA or Europe or India to fight against this domination of the financial capital and to compel the Governments to implement social sector and infrastructure projects necessary for creation of jobs and for boosting the demand. In America and Europe the Governments should be compelled to stop bailout to the finance capital, to implement employment creation programs by resorting to deficit financing and to restore and continue the welfare schemes. In India it is necessary to stop the indiscriminate invitation to FDI (Foreign Direct Investment) and FII(Foreign Institutional Investors) in the name of shortage of funds for developing the infrastructure. The primary source of funds for development should be Government financing which can be strengthened (a) by stopping the enormous concessions given in the budget to the big capitalists and (b) by deficit financing.
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