Capitalism - cause of Global Economic Crisis Essay

Capitalism - cause of Global Economic Crisis - Essay Example Roubini has little doubts about the fact that capitalism is being doomed because the governments have failed to find out solutions to the problems caused by the system of market economy. The governments and policy makers took a number of different steps to bring the economy back on track but all policy measures taken to prevent the downfall of economic system failed one after the other. As the last resort the governments are trying to bring stability to the economy by cutting the expenditures however this will not be able to bring the economy back to track until new taxes are levied or the previous raised. Most of the countries that are following the principle of market economy have failed to restore the living standard of the public despite giving salary raises and subsidizing commodities because the effect of raised taxes is much higher as compared to the monetary assistances provided by the governments. Injecting more money into the failing economy in the form of bank bailouts is not an available option now for most of the countries because of the increasing political and public pressures because such measures are taken at the expense of public welfare expenditures which is totally unacceptable to the already suffering people, moreover another series of bank bailouts is also economically unfeasible. Currency depreciation is an option because a weaker currency and better trade balance can restore the economic growth but rendering the currencies weak is not an option for economically advanced countries therefore currency wars are currently in order. The Eurozone countries managed to help their cause a bit by the establishment of the European Financial Stabilization Facility but in the current circumstances the ESFS will not be able to pay bailouts for countries as big as Italy or Spain because of the limited assets whereas adding to the assets of ESFS is not possible because currently no country in Europe could sponsor such a move and this will receive resista nce from countries like Germany. In effect, the capitalist system of economy has stuck itself in a circle of self-destruction as suggested by Karl Marx where jobs are being cut because of the lack of demand in the market and this cutting of jobs is further adding to the lack of demand resulting in more job cuts and so on and this is the approach which has been adopted by the followers of the Keynesian system. The world currently is facing the problems which were predicted by the critics of capitalism hundreds of years ago such as poverty, unemployment, hopelessness, lack of basic facilities of life and the most important of all which can be considered as the root cause of these problems is the increasing inequality between people (Roubini, 2011). In the end Roubini suggests that there is a need of â€Å"investing in human capital, skills and social safety nets to increase productivity† and this can surely be the only possible solution to the present economic crisis. According to Roubini the present economic system based on market economy has essentially failed to provide effective solution the problems faced by man therefore a modified capitalist model is required to take over. Sen on the other hand gives prime stress to find out what exactly is the problem with the economic system of the present time and put forwards

NAFTA Case Study Essay Example | Topics and Well Written Essays - 500 words

NAFTA Case Study - Essay Example Nevertheless, this was required if Magma was to survive in the new business climate. In particular with the reduction in tariffs in the Mexican auto sector, how should Magma respond? To being with there are problems and opportunities. How should Magma respond to the problems is a good first question. The problem for its managers is that although there are very low wage employees available there, the Mexican infrastructure and business climate is not easy to work with. Plus, the employees may not cost much, but you get what you pay for (in some respects)—many are not highly skilled. The question facing Magma’s managers is whether it should follow many of the other manufacturers to Mexico. In some ways, this is not such a big problem. The sort of problems Magma foresees in Mexico are not so different than problems facing its competitors and its customers. Everyone is going to have the same limitations. All companies are going to invest in Mexico, but very few are going to jump in with both feet first. Magma should take a cautious approach and should especially review the history of Volkswagen starting up its factory in Mexico. Magma can’t avoi d having zero presence in Mexico, but it should not immediately put all its eggs in one basket. Shifting a small part of its business to Mexico during a trial period would provide managers with more information on which to base a later decision. Going it slow in the beginning is important, but Mexico offers a lot of opportunities to Magma. If predictions hold up, a lot of car manufacturing is going to be done in Mexico in the next few years. While there are a lot of initial problems, none of them are all that structural. The fact that employees are not skilled is a temporary one as is the problem of low-grade steel. It will take time for the market to adjust, but it will adjust, and Mexico will become more competitive. The