This is an Age of Anxiety. Larry Elliott writes that it's not hard to understand why:
The past decade has seen the biggest financial crisis in a century, the biggest slump since the Great Depression and the slowest recovery since the second world war. Living standards have flatlined and public spending has been cut.
People are anxious, frustrated and angry. The only real surprise is that they are not angrier. That, though, may only be a matter of time, because rapid technological change is happening at a time when the global economy seems fragile and many people feel they are getting a raw deal. These are perfect conditions for an age of insecurity.
In anxious times, populism and demagogues arise, hand in hand. The OECD has just released a study which explains the present populist wave:
A quick glance at the report on social mobility published by the Organisation for Economic Cooperation and Development last week helps explain why populists are gaining ground. The OECD found that 25 years ago, the disposable income of the richest 10% of the population across its 34 member countries was seven times that of the poorest 10%. It is now nine times as high. Wealth inequality is even more pronounced, with the top 10% owning half the wealth and the bottom 40% just 3%.
What’s more, there is less chance of a child born into a poor family making good than there once was. The OECD found that upward mobility for people with lower educated parents tended to increase for children born between 1955 and 1975 but stagnated for those born thereafter. “Families and communities in many countries seem to be trapped on the bottom rungs of the ladder.”
It is possible for children with a disadvantaged background to get up the ladder but it is a long and painful process. In the average OECD country it would take five generations for somebody born into the poorest 10% of the population to achieve average (mean) earnings.
In the past, institutions arose to counter balance the changes which swept through society:
The three previous industrial revolutions all caused technological disruption and led to significant job replacement. They also led to income inequality, because those with the greatest skills were able to stay one step ahead of the machine. Workers did not always benefit fully or immediately from the pick-up in productivity associated with periods of technological change, which were often long as well as difficult for those affected.
But institutions developed to ensure that the fruits of growth were shared. These took many forms: compulsory schooling, the spread of higher education, the development of central banks, the emergence of credit unions and friendly societies, the arrival of trade unions to represent workers, and the creation and expansion of the welfare state during the 20th century.
At the moment, spearheaded by the blind and the furious -- people like Mr. Trump -- those institutions are being torn apart. Without them, life will become, in Hobbes' phrase, nasty, brutish and short.
Clearly, the crunch is upon us.
Image: Huffington Post
8 comments:
Economist James Galbraith, son of John Kenneth, looked at our smartphones and the services and equipment they displaced. Just a smartphone represents a massive loss of what had formerly been paid work. People who once might have paid many hundreds of dollars for a state of the art camera, lenses, etc. now have an equally capable camera with digital processing capability that comes with the phone. People once paid for fax machines to receive electronic messages. Now your phone does far more than any fax technology and it communicates wirelessly with your computer and printer.
He also observed how business now handle downturns. As before they often resort to layoffs but now when the market returns they're not likely to rehire former employees. Instead they turn to automation, doing far more with far fewer employees. Once again, the loss of paid work.
Galbraith sees no prospect of this changing. Instead he thinks it can only continue, worsen. The last thing the rank and file have going for them is that ours remains a consumer economy. That leaves capital needing a sufficient mass of consumers to buy their stuff which dictates that some new means of distributing wealth must be found. The odds on favourite, in his view, is implementation of a guaranteed minimum wage. Getting there, however, promises to be tumultuous.
Even some conservatives, like Hugh Segal, see a guaranteed annual income as a sine qua non in the new economy, Mound. But, as you say, getting there will be a Herculean struggle. Vision -- that is both wide and deep -- is hard to come by these days.
Quite aside from the way smartphones are built, look at what's in them. The first computer I had anything to do with was the size of a couple of cars and made mostly of steel and copper. A smartphone is far more powerful, does a great deal more, is faster and has very little of either steel or copper. The mining industry took a hit.
Likewise, modern cars use a few hundred pounds less copper and steel. Again, mining takes a hit. Cars now use so much computing power that there is a joke in the industry that the wheels are necessary to move the computer around.
I could go on but you get the idea. The digital revolution not only alters the way we do things but also the materials we use. Traditional industries and their employees are being hit hard.
Precisely, Toby. The digital revolution has changed the products and the way labour is organized to produce them. An economy is built around on the circulation of money. If that money is concentrated in the hands of the few, there will be too few consumers to buy the goods and services produced.
Another gem from CBC's Under the influence
http://www.cbc.ca/radio/undertheinfluence/how-self-driving-cars-will-change-your-life-1.4705374
TB
.. .goodnight and good luck - Edward R Murrow
https://m.youtube.com/watch?v=NbAb7Ek8z5Y#fauxfullscreen
A memorable sign off of course.. but the 4 minute speech
in its entirety is loaded.. a raking broadside at television
and a warning look into the future..
Which is where we are now, many years later
Yes, we have Fox TV & highly advanced cel phones
and an American president addicted to both plus Twitter
& out there delusional on some flat earth surreal planet..
spinning and spinning his fantasy..
Indeed 'just wires and lights in a box' (Murrow)
sums up Fox' Trump et al and the other buffoons
Thanks for the link, TB. Another example of how the digital revolution is changing the workforce -- and how we need to develop institutions to deal with the changes.
Television is at the heart of Trump's rise, Sal. In fact, he sees his presidency as a television show; and he is obsessed with its ratings. Murrow knew why the term "boob tube" might be the appropriate moniker for television. Trump has made that moniker a reality.
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