The U.S. Treasury Secretary Jack Lew on Monday has spoken out in favor of the need to guard against complacency in the financial system in the aftermath of the British referendum to stay out of the European Union and also how inequality can destabilize the pillars on which a strong democracy rests. He was speaking at the Oxford Union Society debating club in England.
Why complacency in the financial system can hurt
Jack Lew has explained that he had spoken to the administration of major financial institutions the world over in the aftermath of the Brexit vote which was expected to snowball into a major economic crisis. Lew also said that he is happy with the good work the US administration and its collaborators are doing globally to minimize the impact of major socio-economic and political crises in the world which often makes world markets jittery. However, he also felt that rising up to accept and defeat repeated global challenges shouldn’t create a false sense of complacency in the financial system and world administrations.
It could be inferred from his statements that he was against complacency because that could lead to fall in the level of preparation and global cooperation that is needed to thwart the advance of these destabilizing forces. Improving the ecosystem of global cooperation and maintaining a state of readiness and alert are essential for preempting such catastrophes that shake the foundations of the global economy. He also said that there was a bipartisan consensus building in Washington for the next U.S. President and Congress to take up the task of bringing about major corporate tax reforms that would lead to creation of wealth that can be used to fund infrastructure development in the country. That is how benefits of economic growth can percolate down to the lowest strata and lead to more equitable distribution of wealth and opportunities.
Inequality is a fundamental threat to democracy
Inequality is detrimental to a healthy democracy and he feels that the hubbub against globalization, free trade and free market capitalism have happened as a large section of the society who belongs to the middle class or the working classes have been left behind. Mr. Lew said that many have started to feel that although the economy is growing in size, they have not been benefited in any way.
He also feels that if this imbalance is not corrected soon, a situation may arise where divisive forces would become a fundamental threat to the tenets of free market capitalism and global cooperation leading to what in effect would be a return to the pre-globalization era. Mr. Jack Lew also made it clear that the U.S. expected more from European financial institutions to combat the menace of financing of terrorism and he concluded by saying that the U.S. has received better cooperation from the Gulf countries in this regard.