We often hear politicians say that it's all about the economy. Well, it's not. In fact, recent developments show that the excessive pursuit of economic growth has a negative effect upon the health of the population by promoting increased levels of inequality.
Everyday we are bombarded by news concerning how the economy is performing and how the financial markets are responding. Yet, scant attention is paid to the fact that for the average person real wages (taking inflation into consideration) have stagnated for the last 25 years. As well, despite its daily gyrations, the Dow Jones has hovered around 10,000 points for the last ten years, meaning that for the average investor the buy and hold strategy has been a losing proposition
In reality, measuring and managing the economy is all smoke and mirrors for the benefit of the super rich, the top one tenth of the top one percent of the nation's wealthiest.
All the boats definitely don't rise on the same tide. The trillion dollar transfer of wealth from the lower, middle and upper classes to the super rich as result of the bailout of the financial industry bears this out. CEOs within the financial industry continue to receive their multi-million dollar bonuses while millions of formerly employed workers exhaust their unemployment benefits to face a perilous future and, at the same time, miraculously disappear from unemployment statistics so not to disturb the rosy picture those who are supposed to be managing the economy would have us believe.
Even Paul Krugman, the left-of-center nobel prize winning economist, has fallen into the trap of criticizing US economic policy that would have the US fall at its peril into the Japanese syndrome of protracted anemic economic growth. In a brilliant rebuttal, Steven Hill of the Guardian points out:
Japan has been getting a raw deal from the so-called economic experts. Consider this: in the midst of the great recession, the United States is suffering through nearly 10% unemployment, rising inequality and poverty, 47 million people without health insurance, declining retirement prospects for the middle class and a general increase in economic insecurity. Various European nations also are having their difficulties, and no one knows if China is the next bubble due to explode.
How, then, should we regard a country that has 5% unemployment, the lowest income inequality, healthcare for all its people and is one of the world's leading exporters? This country also scores high on life expectancy, low on infant mortality, is at the top in numeracy and literacy, and is low on crime, incarceration, homicides, mental illness and drug abuse. It also has a low rate of carbon emissions, doing its part to reduce global warming. In all these categories, this particular country beats both the US and China by a country mile.
As we can see, higher levels of economic growth do not necessarily bring about an improved quality of life for the majority of people. How the wealth is distributed has a huge impact on the health of population. Consequently, narrowing the public's focus to a single measure, GDP growth, is extremely misleading. Quality of life is measured better by other indicators, the social determinants of health, and in the case of Japan and in other countries where material wealth is distributed more equitably, these nations score much higher on the indicators of public health.
Indeed, sustained annual economic growth of more than 3 percent inflates the value of assets to such a degree that recessions are inevitable, thereby creating opportunities for significant speculative financial gain both on the up and down swing, much to the chagrin of those in the labour market. Such movement creates wealth in the zombie economy at the expense of the value created in the real economy. As a result, income disparities widen within the society, which research demonstrates has a negative effect on the social determinants of health.
So, perhaps a lost decade could bring about some significant improvements to the overall well-being of the population. If there is no or little growth, people no longer subscribe to the believe that because the economic pie is getting bigger, we don't need to look at issues of wealth distribution. On the contrary, sustained periods of no or little economic growth create the political climate from which progressive legislation can be enacted. Furthermore, reduced economic activity also brings with it reduction in levels of green house gases from which everyone gains.
Yes, we need to recalibrate the economy. It's time it served the well-being of the majority of the population instead of increasing the wealth of a privileged few.