Raghuram Rajan, a world-renowned economist and professor, gave a
lecture at The Anderson School at UCLA last week, making it known
he thought capitalism was the economic system most able to improve
financial markets and economies around the world.
Many people in the audience were especially interested in
Rajan’s opinions on finance because he was recently appointed
the economic counselor and director of research at the
International Monetary Fund.
The IMF is an international organization whose responsibilities
include helping economically distressed countries and trying to
maintain worldwide economic stability.
Rajan refrained from telling the audience what his plans for the
IMF were but said he believes more trouble ensues when the IMF
makes additional loans to countries.
During his lecture, Rajan made known his feelings on the
strength of capitalism and the ability of the system to foster
change in developing countries and provide upward mobility for the
poor.
“The poor need access to free, competitive markets and
credit. … These institutions are not created because the poor
have no power and the rich don’t need the institutions. …
The rich have already made it,” Rajan said.
Some audience members connected with Rajan’s
arguments.
“I agree with Rajan; the core of the problem is that the
poor lack access to market and capital,” said Yothin
Jinjarak, a graduate student at UC Santa Cruz who attended the
lecture.
Many in the audience expressed concern about the
institutionalized corruption often found in free market systems and
asked about the problem.
“Money talks, even in a democracy … but corruption can
be controlled; it needs the will and it has to come from the
elite,” Rajan said.
Others in the audience were also concerned with the spread of
globalization and its effects on the rural worker in Indonesia and
the factory worker in Ohio.
In response, Rajan made it known that even if conditions for the
Indonesian worker might resemble that of a sweatshop, and even if
factory workers lost their jobs, he still thought capitalism was
superior.
“The fact is that the Indonesian worker still has a job,
and over time, conditions and wages should get better,” Rajan
said.
In Rajan’s opinion, creating barriers to the free market
system, such a tariffs, would harm the economy. The best way to
deal with economic dilemmas is to adapt in creative ways, Rajan
said.
“The United States has been losing jobs for years, but it
hasn’t been losing money. People just need to adapt to the
changing economy. … Jobs in the steel sector might decrease, but
we can make money by exporting Terminator movies,” Rajan
said.
Rajan added that the unemployed factory worker who lacked the
ability to adapt to the changing economy could be provided for by
the economy.
Not all in attendance agreed with Rajan’s opinions,
finding them too optimistic.
“I think it’s arrogant; do you really think these
yuppies want to pay for unemployed 55-year-olds who can’t
adapt? … There’s not enough money to go around,” said
attendee Sharon Milder.
Others found fault with Rajan’s belief that globalization
was the answer to creating stronger economies.
“I don’t think he’s right. … If we
didn’t have globalization, then our unemployment rate would
be lower,” said Haley Rice, a UCLA alumna in attendance.