Doha and Disparity

The Financial Times has two important editorials today.

The first one expresses the serious danger the world economy would face if the current Doha trade round fails. Recent stagnation in negotiations along with political calls for a more protectionist approach give cause for concern.

"Erosion of WTO principles and disciplines would replace the rule of law with the law of the jungle. Nations' use of trade policies as offensive political and economic weapons would no longer be restrained by multilateral rules, increasing the risk of economic conflict. And as rival trade deals proliferated, global markets would fragment.

The world has already been down that path: it led ultimately to economic depression, tyranny and war. It must not, and need not, risk repeating the same disastrous mistake. But avoiding it will take far stronger leadership and a much bigger commitment of political capital than has been apparent in the Doha talks so far."

The second editorial discusses increasing gap between America's super rich and the middle class.

"Since 1973, the income of the top 10 per cent of American earners has grown by 111 per cent, while the income of the middle fifth has grown by only 15 per cent. That trend has become more pronounced in the last few years. Between 1998 and 2004, the median income of American households fell by 3.8 per cent. This coincided with annual productivity growth in excess of 3 per cent in most of those years. You do not need to take a definitive stance on why America's high productivity growth has been so disproportionately captured by a small percentage of Americans to agree that it makes for a potentially volatile political scenario."

Also, Robert Rubin announced today the creation of the Hamilton Project, a new platform to develop market-based solutions to America's problems.