The factors that caused the Global Financial Crisis of 2008 have not been addressed, notes Satyajit Das in this brilliantly clear-eyed account of the state of the world economy. Global debt today is higher than it was before the crisis. The big banks, bailed out by taxpayers at the height of the GFC, are now bigger than ever, by an astonishing 40 per cent. The problem of unfunded and unsustainable welfare entitlements remains unresolved. In most developed countries, economic growth, employment, income and investment are still struggling to return to pre-crisis levels. Meanwhile the developing countries have not become the new drivers of global prosperity they were expected to be.
The crux of the issue, argues Das, is that economic growth cannot continue indefinitely. The reasons for this include demographic changes, lower rates of innovation, slower improvements in productivity, the increasing scarcity of natural resources, the impact of global warming, the reversal of globalisation, and the rising inequality within and between nations. The strategies deployed by governments to promote growth have failed. What's really needed is unpopular structural change, which will result in a reduction in wealth and living standards. World leaders know what to do, they just don 't know how to get re-elected after they 've done it. People don 't want to hear that their time of plenty has reached the end.
Starting with the long period of expansion that followed the end of World War II, A Banquet of Consequences traces the cycle of booms and busts that culminated in the GFC, working through to the present day and outlining a future without growth. It looks at the ill-advised policies implemented by governments that have left jobs, investment and living standards stagnant while driving prices of shares, property and financial investment ever higher, creating the conditions for a financial crash on a scale even larger than the last crisis.
The end of growth has vast consequences for us all, among them the increasing difficulty of finding a secure job with an adequate wage, buying a house and saving for retirement, a loss of trust in banks and political processes, and, perhaps most importantly, the impact on future generations, who will be forced to bear the cost of the problems.
