For more than 30 years there has been healthy economic growth in most of the rich world and yet the well-being of the majority of people has not improved. The gap between rich and poor has widened, millions remain without work and real wages in many countries have stagnated or fallen.
Even so, conventional economists still believe that the answer to these problems is faster economic growth. For decades, they told people that economic growth would bring jobs, better incomes, and higher standards of living. But it has not, says the Club of Rome's new book «Reinventing Prosperity. Managing Economic Growth to Reduce Unemployment, Inequality, and Climate Change.»
The club is an International think tank composed of prominent figures among which there are entrepreneurs, scientists and industrialists. Like US economist Joseph Stiglitz, former Prime Minister of India Manmohan Singh, and German natural scientist and politician Ernst Ulrich von Weizsäcker.
«Yet millions of people in the rich world today live in conditions more like those of Victorian Britain», says the report. In the United States, 49 million people—out of a total population of 320 million—live in poverty.
In Europe, it is one in every seven. In Eastern Europe, Spain, and Greece, poverty affects one in five, with women, single-parent families, and the young worst affected. Including those on very low incomes, a quarter of the population of the developed—rich—world is currently classified as being “at risk of poverty or exclusion.” That is almost 200 million people. As the gap between rich and poor has widened, unemployment has also risen throughout the rich world, and it remains stubbornly high. Particularly badly afflicted are those under the age of twentyfive, though millions of baby-boomers in their fifties and sixties have found themselves without any income, pension, or work prospects too. And there has been a huge increase in the number of under-employed, those who want to work more but cannot find a paid full-time job.
How is it possible? British charity Oxfam puts it simply. There has been a “power grab” by the rich, it says. it accuses the world’s fattest fat cats of manipulating the political system to rig the rules of the game in their favor, so that they are taxed less, regulated less, and scrutinized less. As a result, wealth and income have been moving in the opposite direction from what people believed.
According to the report authors, without change, this situation will not improve. «Conventional solutions cannot reduce inequality and joblessness (or climate change). Nor will a wealth tax, boosting infrastructure spending, or encouraging more entrepreneurs». They seem to offer only a temporary fix helping the poor to earn more and the unemployed to find some work, without offering long-term change.
So, what are we needed for? «Rich-world nations will need to change their economic systems. They will need to step back from today’s economic mantra, which promotes individual freedom, applauds free markets and free trade, and minimizes state influence, and instead rearranges their economies to boost average well-being. Markets and trade should not be left largely unregulated any longer but actively managed. Governments should also be “right sized”, that is, small enough to ensure that they operate efficiently but big enough to be able to do their job well and tackle the challenges that lie ahead».
In conclusion, the report shows alternative ways to reduce unemployment, inequality, and climate change that include: a new definition of paid work, fair taxation on business and resources, restrictions on trade when necessary, the introduction of a basic income for the poorest third of the population, increased paid vacation. Among other things, countries should slow down economic growth to only 1 percent, and promote a one-child policy. «They boost average well-being while at the same time cutting unemployment and reducing inequality, while offering an immediate benefit to the majority».
The authors added that they are aware some of these proposals are radical and will face opposition but feel optimistic that they can be adopted by policy makers.«Our suggestions are feasible because they offer immediate benefits to the democratic majority. They not only create a better world in the long run but also provide benefits to most people in the short-term.»
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