If you’re the type of person who believes our wonky global economy is fixable, then you may not appreciate what former banker and author Satyajit Das has to say.
“I’m merely looking at the facts and saying the economic model is completely broken and we need to start from scratch,” Satyajit told the ABC this week.
“And I haven’t even begun to talk about things like population issues, demographic issues, environmental issues, resource issues, and the rest,” he added.
The main issue, he says, is that the problems that caused the 2008 economic crisis weren’t addressed, let alone fixed.
Satyajit said he thought it all began to go wrong sometime in the 1970s when growth slowed in the wake of the oil crisis.
“But then the world found a steroid, which was debt, which was used to drive that growth,” he said adding that what occurred in 2008 should have ended that love affair with debt but it didn’t.
Instead of looking at what needed to be done to ensure 2008 didn’t occur again we did the opposite.
“Instead … we’ve relied on more and more debt. And I think it was Einstein who said, that basically ‘doing the same things over and over again and expecting a different result is the first sign of madness’,” Satyajit said.
The world, he said, simply assumed that growth will return and that low inflation rates would be a sufficient way to pay off the debt.
The next crash, Satyajit said, will affect both the financial markets and the real economy which will result in people’s savings being significantly reduced. He said that people now need to talk about how they’re going to manage with less and live more frugally in the future.
But discussion on how everyone’s standard of living is going to drop and how expectations need to be lowered accordingly is not something that politicians like to bring up, he said.
“Because frankly, no politician is going to ever be reelected if he tells everybody that the days of inexhaustible plentitude have been completely exhausted,” Satyajit said.
“It’s very short because I think some of those issues are starting to accelerate. Certainly issues like climate conditions and change, resource issues are much, much constrained,” Satyajit said.
“So those issues have to be confronted if we are to be honest with ourselves and with future generations to come and the entire planet,” he said.
Before being an author and consultant, Satyajit worked in the financial sector for more than three decades in banks such as CitiGroup and Merrill Lynch. He was also a corporate treasurer for the TNT Transport Group. He lives in Sydney, Australia.