U.S. Treasury's Lew says inequality a fundamental threat to democracy
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Jack Lew, United States Secretary of the Treasury, adjusts his earpiece during a meeting with students at Autonomous Technological Institute of Mexico (ITAM), in Mexico City, Mexico, September 29, 2016. REUTERS/Edgard Garrido
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By David Milliken and Jemima Kelly
OXFORD, England (Reuters) - U.S. Treasury Secretary Jack Lew on Monday warned that inequality presented a fundamental threat to democracy and free-market capitalism and cautioned against financial system complacency after it weathered the summer's initial "Brexit" shock.
Lew, speaking at the Oxford Union debating club in England, also said he thought there was a bipartisan consensus building in Washington for the next U.S. president and Congress to pursue a corporate tax reform deal that would help to fund infrastructure spending.
On inequality, Lew said that the rise of populism worldwide was fueled by too many people feeling left behind in a globalized economy. This is currently influencing the U.S. presidential election.
"We run the real risk that middle-class, working class people say 'I see the economy is growing, but I don’t see how I am going to benefit from it,'" Lew said. "The danger, if that is where things drift to, is not just a short-term political one. I actually think it is a fundamental threat to liberal democracy and to free market capitalism."
A growing populist backlash against globalization has been cited in the rise of Republican presidential candidate Donald Trump on the back of an anti-trade message, the rise of nationalist political parties in Europe and Britain's June 23 vote to leave the European Union.
Lew said that just because markets quickly absorbed the initial shock of the Brexit vote, banks and other financial institutions should not be complacent.
"In the week after the British referendum I spoke to the heads of almost every big financial institution just to get their assessment of the impact and I don't think any of them was sorry they had more capital," Lew said.
"I'm very proud of the work that we've done on financial reform. I only hope that the fact that we've been able to withstand shocks, like the referendum here in the U.K., doesn't make for a false sense of complacency," Lew added.
Lew added that banks in Europe needed to do more to combat the financing of terrorism, adding that the Treasury was getting better cooperation on such efforts from Gulf countries.
(Reporting by David Milliken and Jemima Kelly; Writing by David Lawder; Editing by Chris Reese and Diane Craft)
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