The Chairman of Rockerfeller International Ruchir Sharma says that his latest book, 'What Went Wrong With Capitalism' is an ode to the economic system and critiques the gradual fall in its basic principals. His main grouse? The freebie culture.
In an exclusive interview to market veteran Ramesh Damani on NDTV Profit, the former head of emerging markets at Morgan Stanley Investment Management, pointed out that there are two ways of tackling tough economic periods—tightening the money supply and pumping in liquidity.
While erstwhile US Fed Chair Paul Volcker did the former, Alan Greenspan, who followed him in 1987, did the latter. This, according to Sharma, was the start of 'easy money' in the US and gave rise to the feeling that 'The Fed is there' for the market players.
"Despite the wealth creation at the top, if you look at the average person, especially in the western countries, most Americans (two in three) feel that the economy is moving in the wrong direction," explained Sharma. Young Democrats now believe that socialism is better than capitalism, he added.
Capitalism And Populism
The chairman of Rockerfeller International pointed out that both Donald Trump and Kamala Harris, the contenders to be the next US President, are talking about free tariffs and more subsidy, and these are all anti-market strategies.
"The feeling is that capitalism has worked for a few. But why is the average person feeling so disaffected? My book is an ode to capitalism. Capitalism didn't fail but was ruined," Sharma argues.
"I am a firm believer in capitalism, but for me, the definition of capitalism has been severely distorted," he adds.
Sharma blames the bailout culture for the fall. In his latest book, he starts off with a chapter titled, 'None Of Us Are Keynesians Now' which leads into 'The Bailout Culture'.
Sharma also spoke about the 'zombification of capitalism' questioning the decline in productivity rate in the US.
"Zombie companies in the US have increased from 2% in 1990s to 20% now...The middle to small size companies are getting gobbled up," he explained.
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