Source: Globe and Mail

Highlights:

Since the late 1970s and throughout the 1980s, governments have been intent on making the labour market more “flexible” – another way of saying that risk was transferred from capital to labour. But workers are also consumers. As corporate profits expanded as a share of national income, households went into debt. What Henry Ford early in the last century had grasped, that paying his workers well meant he had customers for his mass-produced cars, has been largely unlearned in recent years.

No one should underestimate the sophistication of financial markets today. The combination of very bright minds, very powerful information technology and vast amounts of data has spawned financial technology beyond the ken of ordinary mortals. So why, we might ask, has every stage of the present crisis been a surprise?….

….this lack of understanding of the modern-day financial world should worry us all. We do not know what we do not know. But we do know that there is no substitute for sound policy, especially U.S. policy, good behaviour and a sense of balance in markets and in our society. We also know that globalization, with its many benefits, has its costs, too.