Friday, 19 April 2013
More jobs, not more "stuff", needed.
The Reinhart and Rogoff theory, that a Debt/GDP ratio greater that 90% causes economies to shrink by 0.1% per year rather than grow, has now been blown out of the water. Apparently they got something wrong in their spreadsheet and, had they used the tool correctly, they should have come up with a growth figure of +2.2%. So bang goes the philosophy underpinning George Osborne's economic policy of putting deficit reduction above all else.
It is amazing that the Reinhart-Rogoff theory ever had any credence. After all the Debt/GDP ratios of most of the countries involved in the Second World War were way over 100% in 1945, and all of them, using Keynesian policies, have grown spectacularly since then. All that is lacking today is the will.
However, today's problem is a very different one to that of 1945, or even 1975. Most developed economies have now quite enough "stuff" for all their citizens to enjoy a comfortable and fulfilling life. Indeed, there is now evidence that demonstrates to the satisfaction of many that, beyond a certain point (estimated to be a per capita income of about the equivlaent of $US17 000,) more "stuff" doesn't acutaly increase happiness and fulfillment at all. And there is also ample eveidence that continued over-exploitation of our planet's scarce resources and the reusltant poisoning and degredation will make continued comfortable living unsustainable.
Our "mature" economies have now therefore reached the stage where what we need is more jobs rather than more "stuff." Rather than by more growth what we now need is a more equitable sharing of the jobs.
In Britain this week unemployment is reported to have risen by a further 70 000 in the last quarter, and youth unemployment is edging towards 1 000 000. That latter figure represents about one in five of our young people. A job represents not just a means of obtaining "stuff" but also a sense of identiy, usefulness and self-worth.
I have no idea at what stage the sociology equivalents of Reinhart and Rogoff think the unemployment/employment ratio in society becomes unsustainable, but I suspect we are approaching the crisis point. The sense of uninvolvement felt by unemployed people must surely also be exacerbated by the publication of the obscene rewards which those at the top of our society are granting themselves.
If society is to remain cohesive we must as a matter of urgency address ourselves to sharing the work as well as the rewards more equitably. This surely implies some of us (Dinkies?) working less in order to enable others to achieve the self-respect engendered by contributing to, rather than being supported by, society.
This issue hardly appears at all on today's political agenda, and it should.