Photo: AFP
US President Donald Trump, Yoyo moves over tariffs, and the retaliatory response of commercial partners has created global riots and fear that the world’s largest economy may be on the way to recession.
But economic volatility has been the norm for some time, since the global financial crisis, austerity, Brexit, the pandemic, supply chain issues, the cost of living crisis, and where we are currently.
So where did the global economic system go so wrong?
Dr. Cahal Moran is a behavioral economist and a member of the London School of Economics, and said Nine in half Why he believes the world is in his present state – an economic turbulence that never seems to disappear.
“For a long time, the economy has been structured in a way that, there is an average growth, there is GDP growth, there are some technological developments,” he said.
“But many of the things that people really care about really mean stability and economic security, from housing to good jobs, health and education, we kind of neglect these areas.
“I think we are seeing this unfolds, and we saw a lot of political reaction too.”
Moran agreed with GDP pioneer Simon Kuznets, that his measure is not comprehensive and should not be just for the face value.
He said it is just a measure of production and is not a measure of the health of the nation.
“Criticism of this is well known now, but it’s completely neutral if the thing that is happening is good or bad, right?
“Forests to produce wood can increase GDP. If you are divorced, there are legal rates. This will increase GDP. Therefore, it is not necessarily the case that attracts well-being.”
So why are we poorer?
The service costs that used to be provided by the state emerged, which Moran said it was particularly noticeable in the UK.
“The fact is that many of these things that are still provided by the state, services have begun to deteriorate a little,” he said.
“This is true in my home country, in the United Kingdom. We have austerity for so long and student rates, they were presented 20 years and more and they rose.
“They tripled shortly after I went to the university … There were more and more rates introduced into important public services and services for people, but they were also reduced.”
Moran said a report released by the Bennett Institute in Cambridge found that facilities throughout the UK are disappearing, such as doctors, pharmacies and local community centers.
Nevertheless, fees and prices are still increasing, while general services continue to deteriorate, he said.
“I think that’s why people feel that they’re getting poorer because you go to a main street and it’s empty and it’s desolate and there’s not much happening there,” he said.
“There are not many opportunities, there are places embarked, and this is again something that will not necessarily be captured by GDP.”
Moran’s introduction to the economy was as a high school student in 2007, as the world was devastated by a global recession.
He said, though unhappy, helped shape his idea of economy.
“It was the biggest recession in 70 years at the time, and ended up with many people, and threatened people around the world, and at one point it really seemed that money machines stop spitting money,” he said.
“This is what people thought before there were such a massive redemption package. But, in my opinion, we had, in my opinion, the wrong answer to the financial crisis, completely the wrong answer with austerity. We did not address the problems that were exposed by the financial crisis.”
“I think our economies around the world were quite dependent on the financial sector. They depended a lot on the real estate bubble and the credit that accompanies it, and credit cards were supporting consumer spending.”
Moran said the financial collapse highlighted how little he remained, and the lack of growth in industries and public services has become even more evident.
“I don’t think the financial crisis, no matter how terrible it was, had to end where we are now,” he said.
“I think we could have answered a lot, much better, and we could probably have corrected, improved many of the problems that have rotted to this day and only got worse.”
These problems include globalization, he said.
Moran said that although it was a separate issue, it was part of the same ideology, such as free markets and free trade, which would work in the financial sector.
“Globalization meant moving a lot of industry to poorer countries, as we know, China is usually the canonical example, but also many other countries like Bangladesh and Vietnam and export things such as clothing production and toy production.
“What this really meant was that many manufacturing centers and the industry that kept many cities and communities in countries like the US and the United Kingdom, but really around the world … Even in Brazil, that was true. So it’s not just a rich thing in the world.
“Many of these industries have suffered … It’s not like I want to reverse growth in China, that’s not what I’m saying.
“But again, we just didn’t do enough to improve it. I think between the financial crisis, and then the answer to the austerity of deteriorating public services and dull growth, as well as this issue of these communities that were left behind long, under the disguise.
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