GAM’s chief economist says prosperity requires social cohesion and capitalism alone will not suffice as he delivers his outlook for 2017.
Larry Hatheway says his holiday wish 12 months ago was for distribution of income, dollar stability, greater business investment, increased infrastructure spending and a dose of common sense in politics, but that few of these eventuated.
He says that his only wish now is for greater empathy.
Brexit, Trump and the Italian referendum all pointed towards social division, Hatheway argues.
Capitalism, technological advances, immigration and free trade are beneficial for society, but bring disruption that needs to be addressed, Hatheway argues.
He adds that rising costs of education were perpetuating class differences.
“Capitalism alone will not suffice…lasting prosperity also requires social cohesion and opportunity for all, and it must be compatible with environmental sustainability.”
Public discord is at its worst since the 1960s and possibly the 1930s, Hatheway says.
Despite this, optimism prevails in financial markets, Hatheway points out.
“Tax cuts, increased government spending and deregulation advocated by the incoming Trump Administration are likely to bolster US and global growth.
“Economies in North America, the UK, northern Europe, Japan and China have proven resilient. Peripheral Europe is growing again. Recessions in Russia and Brazil are drawing to a close.
“Commodity prices have stabilised, lending support to many emerging economies.”
But while markets surge on near-term hope, Hatheway says long-term investors should hope for common understanding to deliver enduring optimism.