Saturday, June 7, 2014

HBR blogs: Western malaise spawns extremist parties

Mr. Haque at Harvard Business Review offers us as good a summary as any of the Western economic malaise [emphasis mine]:

While the super-rich are vastly disproportionately enjoying the fruits of global prosperity, too many are being left behind. What is common in societies with extremists on the rise? The poor and the middle feel cheated — because they are. In the sterile parlance of economics, their wages aren’t comparable to their productivity — but more deeply, their lives are literally not valued in this system. And so they turn, in anger and frustration and resignation, to those who promise them more.

In all these societies, social contracts prize growth over real human development. Economies “grow”; but the benefits of growth are enjoyed vastly disproportionately by a small coterie of people — usually those politically connected; at the very top of a socially constrained pecking order; a caste society. We are told this is capitalism; in fact, it’s a perversion of free markets I call “growthism.”

Indeed, we were never meant to worship at the altar of GDP, the DOW or Nasdaq as real indicators of people's well-being.  

And as I've remarked before, U.S. workers are the most productive in the world; meanwhile, U.S. labor practices are among the most efficient (meaning, hands-off) -- 4th in the 2013-14 WEF rankings -- in the globalized economy. So why do U.S. workers feel so insecure and put-upon?  

As before, John Maynard Keynes foresaw this and pointed the way [emphasis mine]:

Yet, today, the situation Keynes foresaw is repeating itself — only more subtly. The problem today isn’t a small number of creditor nations, to whom the vast benefits of global wealth are flowing. It is a small number of super rich individuals: oligarchs, monopolists, scions. In a sense, the same problem, of vast, unjust imbalances, has reemerged; this time beyond national boundaries. Today, the super-rich and their empires span multiple nation-states; whisked from home to home and country to country by private transport, they use different infrastructure (who cares if roads and airports are crumbling when you’ve got a helipad?), play by different rules (do tax laws really matter if your assets are all offshore?), and even different methods of wielding political influence (why knock on doors when you can fund your own super-PAC?).

Here's how Haque sums it up:

The paradox of prosperity is this. It is at times of little that we must plant the seeds of plenty; not fight another for handfuls of dust. And it is at times of plenty when we must harvest our fields; and give generously to all those who enjoy the singular privilege of the miracle we call life.

(Nope, extremists; that’s not communism — not government redistribution of dust. It is, as Keynes foresaw, just common sense).

Once again I tip my hat to Keynes, a giant among men.

By Umair Haque
June 5, 2014 | HBR Blog Network

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