Saturday, June 22, 2013

Creative Destruction?

The Austrian economist Joseph Schumpeter wrote that capitalism encouraged "creative destruction." Tom Walkom writes that The Great Recession has been all about destruction:

In Canada, we are said to be doing well. The official unemployment statistics show Canadian joblessness at a high but tolerable level of roughly 7 per cent.
But those official statistics disguise the profound changes in work that are taking place — the move from full to part-time employment, the erosion of job security, the growing wage gap between those fortunate enough to be near the top and everyone else.

The powers that be continue to encourage that destruction:

Europe’s effort to integrate diverse countries through a common currency has bankrupted Greece, savaged Cyprus and destroyed job prospects for an entire generation in Spain, Italy and Portugal.

France is in trouble, Britain is fraying around the edges. Even the success stories of globalization — such as Brazil and Turkey — are facing political pushback.

In Turkey, a small dispute over a park led to widespread and violent riots. In Brazil, the trigger for mass protests was an increase in bus fares.
None of this should come as a surprise. Those making economic policy from afar may admire creative destruction. Those being destroyed rarely do.

In Canada that destruction is best illustrated by the evisceration of the Employment Insurance System:

Employment insurance has become particularly irrelevant. A new study by the Canadian Labour Congress calculates that only 35 per cent of the jobless now qualify for EI. In Ontario, the percentage is 25; in Toronto 20.

As CLC senior economist Angella MacEwen explains, this has occurred in part because of government attempts to narrow EI’s scope.
But the other reason is that the slump has gone on so long. Many of the unemployed who at one point did qualify for EI benefits have simply used them up.

There's not much creativity anywhere. Perhaps the powers that be are simply stupid.


karen said...

I have been thinking lately about the connection between imagination and empathy. I think the one is necessary for the other. If they have not the imagination to understand what anyone else might be experiencing, if they think everyone who matters is just like themselves, I don't think it is surprising that they cannot think of creative constructive solutions.

Owen Gray said...

I agree, Karen. It takes imagination to think beyond yourself and your own needs.

The powers that be these days are narcissists. They assume that everyone -- except for the no counts -- agrees with them.

They don't know how to -- nor do they care to -- walk in someone else's shoes.

The Mound of Sound said...

Yet this working class collapse has not prevented the enormous and ongoing transfer of wealth out of the blue and white collar middle class into the accounts of the rentier class.

It's probably not going to mean much to you and me, Owen, but our kids will either have to reform our politics, if that's even possible, or resort to something more radical. If they don't, they're heading for a yoke.

Owen Gray said...

My hunch, Mound, is that Brazil and Turkey are signs of things to come.

Protest starts over something which seems small -- redevelopment of a park, raising bus fares -- then it becomes a full blown protest against the ruling class.

There's lots of pent up anger among the young. And it won't take much to let it out of the bottle.