US President Barack Obama’s top economic adviser, Lawrence Summers, urged world leaders to focus on boosting world demand ahead of next month’s G20 summit in London.
Summers, who heads the White House’s National Economic Council, said there was need for “extraordinary public action” and urged leaders to take coordinated steps to pump more money into the global economy.
“There’s no place that should be reducing its contribution to global demand right now,” Summers said in an interview yesterday with the Financial Times, early editions of which were available late on Sunday.
“It is really the universal demand agenda,” he said.
“The right macroeconomic focus for the G20 is on global demand and the world needs more global demand,” he said.
The former treasury secretary under US president Bill Clinton spoke weeks before the April 2 G20 summit in London on tackling the world economic crisis.
His comments were published after Obama said on Saturday that he expected to have “all the pillars in place” this year for a US economic recovery.
“How long it will take before recovery actually translates into stronger job markets and so forth is going to depend on a whole range of factors, including our ability to get other countries to coordinate and take similar actions,” he told the New York Times.
He said that regions like Europe also needed to deal with structural “weaknesses,” which were “actually greater than some of the weaknesses here.”
Eurozone countries have been criticized for their failure to forge a common approach to the crisis, which has shaken some eastern and central European nations particularly hard.
The Republicans in the US have sharply criticized Obama’s plans to revive the economy as too big spending.
While making a strong case for state intervention to prop up the markets, Summers denied the market was fundamentally broken and needed to be replaced with a completely different model.
“This notion that the economy is self-stabilizing is usually right but it is wrong a few times a century. And this is one of those times ... there’s a need for extraordinary public action at those times,” he said.
Summers went on to insist that the existing capitalist system should be returned to health.
“There will be those who, just as in the 1930s, tried to learn the lesson that market capitalism didn’t work and needed to be replaced with an entirely different model,” he said.
“I don’t think that’s right,” he said.
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