Clash of Economic Traditions (Models) : Gurumurthy ----------------------------------------- Article : thehindubusinessline/opinion/clash-of-economic-traditions/article5146670.ece ----------------------------------------- Our policymakers are pushing a US-UK (Anglo-Saxxon) economic model, driven by financial markets rather than banks. But our people, like Germans and Japanese, would have none of it. At the G20 summit in April 2009 where the world leaders were struggling to stem the financial tsunami, French President Nicolas Sarkozy threatened to wreck the summit in a rumpus over the “Anglo-Saxon model”. The Anglo-Saxon model was till then a subject of debate in the guild of economists. But post 2008-meltdown, it turned into a political issue between France and Germany on one side, and the US and the UK on the other. France and Germany blamed the Anglo-Saxon – read the US – model for the mess in the world economy. Sarkozy’s threat to walk out if the Summit did not devise steps to reverse the Anglo-Saxon policies and practices in financial markets led to the G20’s powerful campaign against the tax havens. The G20 also disowned the old Washington consensus which was the mother of the Anglo-Saxon financialism. The Anglo-Saxon financial model evolved mainly in the US and was followed by the other English speaking nations — Canada, the UK, Ireland, Australia, and New Zealand. The model is “capital market based” — that is finance mediated mainly by stock markets “at arms length”. The other financial model, known as “Continental” Europe’s, is mainly “bank-based” — that is, finance largely intermediated by banks. The financial model intermediated by banks operates on ‘relational’ basis. Read the complete article on the link provided. --------------------------------- Swaminathan Gurumurthy Sandeep Jain
Posted on: Sun, 22 Sep 2013 15:44:44 +0000
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