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What New Economy?

Coen Van Wyk

Posted on March 19, 2021 14:39

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One of the lessons to be learned from the ongoing pandemic is that our economic models need urgent revising. The systems we have at present are creaking, giving wrong signals, and are increasingly out of touch with the reality of our lives.

Most governments run Ponzi schemes – they depend on growth to generate income, in effect mortgaging the future earnings to pay for the present. Pension funds, for instance, often pay out to present pensioners what workers are putting aside for their retirement.

And when the growth stops, or even slows down, they are in trouble. Economic systems, and governments’ management thereof, works in a similar way: spend now and our children will pay.

The Coronavirus crisis slowed down the global economy, and many government institutions are coming to a grinding halt.

In the year since the pandemic struck, many countries are reporting a decrease in babies being born, in many cases a dramatic decrease. At the same time, plunging fertility rates worldwide mean that there will be fewer workers to earn pension benefits for today’s young people when they retire. In the US it is expected that retirees will, by the 2030s, outnumber children.

At the same time, economic models, premised on the dream of upward mobility, allow for the following to be possible: "In the US 8% of children raised in the bottom 20% of the economy rise to the top 20%, while in Denmark the figure is 15%." 

The Friedman doctrine that businesses should focus on the maximization of profit to the exclusion of all other considerations has become accepted thinking also in so-called socialist societies, where oligarchs take the place of entrepreneurs and seek to maximize profits for the party. Yet now a doyen of South African enterprise has challenged that.

Raymond Ackerman, businessman extraordinaire, still does store visits at 90, wrote an open letter to all South Africans. His advice is that, to be successful, “you’ve got to really care about your community, care about your society, and care about your people.” He adds: “The role of business … is to give back and to do good…, to make changes in the country that affects people.”

At a time when stock markets are booming while unemployment figures are up, when old established business are retrenching, when civil servants, furloughed at home demand salary increases and taxes are going up while services are not being delivered, when expensive shopping malls are standing empty while consumers are exhausting the last of their savings, these words ring true.

Bhutan, where the Constitution sets goals based on the Gross National Happiness. A country with one of the lowest COVID figures worldwide. Photo Wikipedia CC BY-SA 2.5

A sustainable economy, based not on maximum financial gearing, but aiming at maximum stability and most efficient use of resources, of best service to people and the generation of their happiness should be the aim for our future.

Coen Van Wyk

Posted on March 19, 2021 14:39

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Companies are still hiring even as coronavirus pandemic cripples economy.             

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