The global recession has been technically over for some time, but the effects of the recession are still being felt all over the world. And in order to understand the greatest obstacle that still stands between us and a true recovery—a cavalier lack of urgency on the part of our leaders—it’s necessary to look back at the origins of the crisis.
It was a potent mix of causes—including calculated greed and uncalculated recklessness on the part of the world’s financial elite—that unleashed a series of economic plagues upon the world, including mass unemployment, home foreclosures and crippling debt. On top of this, we’re facing a crisis of leadership; many politicians are proposing solutions that will only make the problems worse and continue to reward those who caused the crisis in the first place.
Do you remember when Wall Street was in trouble back in September 2008? The financial and political establishments got together over a weekend and threw everything against the wall to make sure Wall Street was rescued. But when it came to the financial struggles of ordinary people, that same sense of hair-on-fire urgency was completely missing. And unfortunately, the same can be said of many other countries. Bailouts continue in Europe, but it’s the banks, not people, being bailed out.
Around the world, the economic debate has been hijacked by deficit and austerity hawks proposing spending cuts that will not only fall most heavily on working families and keep millions out of work but actually kill the chance for growth and exacerbate the long-term deficit problems they purport to solve. Some of these proposals are coming from well-meaning but deeply wrong-headed officials. Many others are coming from those who are trying to use this crisis to radically roll back society to the days before social insurance and other safety net programmes provided the essential services that helped grow the middle class.
In the US, more than 4 million homes have been foreclosed since 2008. The unemployment rate is 8.2%, and more than 23 million Americans are unemployed or under-employed. This is considered “good news” by many in Washington and the media. But at this rate of growth, as Joseph Stiglitz recently wrote, it could take 13 years to reach full employment. It doesn’t take a Nobel Prize in economics to see that the recovery’s not moving fast. In a recent Gallup poll, 71% of Americans said they “worry a great deal” about the economy—making it our number one national concern.
Meanwhile, politicians are engaging in a misguided debate about budget cuts, instead of brainstorming on ways to increase revenue, growth and jobs, the only real ways to achieve long-term deficit reduction. And America’s middle class, the driver of so much of our creative and economic success, is under assault, taking with it a key component of the American dream: the promise that, with hard work and discipline, our children will have the chance to do better than we did, just as we had the chance to do better than the generation before us.
And the damage is by no means limited to the American middle class. Euro area unemployment is 10.8%, slated to rise as high as 11% by the end of 2012—a record high. Unemployment in the UK is growing—it was 8.4% at the end of 2011. In my native Greece, unemployment is 21%. And in Spain, where the youth unemployment rate exceeds 50%, the term “lost generation” has taken hold.
Pushing back against this dreary reality is a bottom-up dynamic fuelled by social media and community engagement. The push for real solutions is less likely to come from politicians than from millions of people in thousands of communities taking the initiative to share, engage, connect, solve problems and demand some control over their future.
In Abundance: The Future is Better Than You Think, Peter Diamandis and Steven Kotler tell the stories of brilliant and empathetic innovators urgently going about the work of improving the human condition. It’s a reminder of the possibility of changing the world by tapping into our collective intelligence and wisdom. People like Burt Rutan, a Californian aerospace engineer who became frustrated by the state of government-run space exploration and built a human-carrying spaceplane that outperformed the government’s model, at a lower cost.
The authors highlight what they call the “Rising Billion,” the world’s poorest people whose limited circumstances have historically locked them out of the conversation. But by 2020, nearly 3 billion people will be added to the Internet’s community, creating a “giant, collective meta-intelligence,” as the authors describe it.
In the end, we have to decide what kind of society we want to be. It’s certainly in the public interest to continue to have a society with a growing middle class, equal access, and upward mobility. What we don’t have, at least right now, is a political pathway for that widely shared vision. Special interests have seized control of the system and put up roadblocks.
The question is, will those roadblocks lead to cynicism and apathy, or will the people find other pathways? As a congenital optimist, I believe that the people, with the help of technology and social media, will find ways to build a critical mass that will bring about the changes we so desperately need.
Diamandis, Peter and Steven Kotler (2012), Abundance: The Future is Better Than You Think, Free Press, New York.
©OECD Observer No 290-291, Q1-Q2 2012