At 22:49 07/10/2013, you wrote:
http://www.nytimes.com/2013/10/07/opinion/when-wealth-disappears.html?nl=opi
nion&emc=edit_ty_20131007
The writer is chief economist at a bank. His thesis: the future will not
resemble the past. Important.
As the themes of this is so similar to the posting I wrote to my own list
(on the same day!), perhaps I'd better send it along here.
Keith
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A NEW SORT OF SOCIALISM
Japan exemplifies a modern economic feature which both politicians and many
big businessmen would not like to hear. It is that the mass of the
populations in the advanced countries are now largely content with their
personal stock of household goods and personal ornaments. They are
comfortable with their way of life and their leisure pursuits. They haven't
the energy or time to want any more of the chain of uniquely new consumer
goods or services that characterized the industrial revolution from the
18th century until the 1980s when the personal computer appeared on the
scene. Besides, are there any uniquely new consumer items? The latest hot
product, the all-singing all-dancing mobile phone is only an amalgam of
innovations invented a century ago. The same goes for the latest geegaw,
the Samsung computer-watch on sale this week.
From now onwards, I suggest, people will only like to replace some of
their goods as they become worn out or break down. Consumer goods are also
going to be cheaper than they are now as south-east Asian countries such as
Thailand, Vietnam. Laos, Malaysia and Burma are now investing hugely in
infrastructure and enterprise regions in order to compete with China. As
consumer spending in the West accounts for about 65% of total economic
activity (GDP) hitherto then this suggests that annual growth rates in the
already advanced countries in the future are going to be much less than the
typical 2% to 4% growth rates of England, then Germany, then America and
half-a-dozen more countries in Europe in the last 250 years.
Japan, with the highest personal incomes and standard of living in the
world some 20 years ago, was the first advanced country to succomb to
approximately 0% GDP growth. It was the first country to experience the
stay-at-home bachelor -- either because he doesn't want the responsibility
of marriage (and the expense of buying a house and a new stock of consumer
goods) or because he was out of work. More recently, it is the same in
Singapore (the present holder of the world record in personal income). Both
countries are desperate and are making immense efforts to shake themselves
out of their go-slow. Japan is now trying Keynesianism by printing
gargantuan amounts of money -- something it promised not to do at the last
G20 meeting -- while Singapore is going to relocate its vast docks
infrastructure in order to build a new high-tech city.
We in Europe and America blame our near-0% GDP growth on the 2008 credit
crunch. But there were already more than a few signs of something going
seriously wrong in our economies. Excluding the 10% of the population with
high and rising incomes, the mean earnings of the rest of the population
has been going down for the last 15 years. Even before then a married
couple could only survive if both of them worked. Not only that, they
couldn't afford more than one or two children; they were also increasingly
parking their aged parents in sometimes atrocious governmental nursing
homes instead of keeping them at home.
Does all this mean gloom? Not at all. Due to the increasing amount of
research in the evolutionary life sciences -- genetics and neuroscience in
particular -- we can expect a great expansion in service industries such as
health care and education in due course. But if we're not making new
wonder goods where is the profit incentive to come from? Where will
subsequent investment come from? The answer lies in the most important
economic sector of them all. This is energy. The corporation, or
megametropolis or even small country that makes its infrastructure and its
existing production methods steadily more efficient in energy use from year
to year will be gaining a profit and thus able to invest further. This
would only be very slight, insufficient to attract most of our present sort
of entrepreneurs, but sufficient to be moving forward. Economic growth in
the future might only be 0.1% per year and this will require community
effort and community reward. Will innovations disappear? Of course not.
The true innovator, be he poet or engineer, artist or businessman, composer
or scientist, searches for its own sake, not for reward. The era of the
super-rich will be over. The post-industrial era -- if we survive the
chaotic financial mess that we're in now -- will be a sort of new socialism
that's not imposed from above.
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